Document background
The Tax Indemnity Letter is a crucial document in Irish business transactions where one party needs to protect another against specific tax liabilities or risks. It is commonly used in corporate acquisitions, group restructurings, or complex business arrangements where historical or future tax exposures need to be allocated between parties. The letter typically includes detailed provisions about the scope of tax matters covered, notification requirements, payment obligations, and claim procedures. Under Irish law, the Tax Indemnity Letter must comply with local tax legislation, including the Taxes Consolidation Act 1997 and relevant Finance Acts. The document is particularly important in transactions where tax due diligence has identified specific risks or where general protection against unknown tax liabilities is required. It serves as a key risk management tool, providing certainty and protection for the indemnified party while clearly defining the obligations of the indemnifying party.
