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Mergers
The European Union's Council of Finance Ministers has adopted a proposal to amend the EU directive that provides for tax deferral in the case of cross-border mergers and divisions of companies, transfers of assets and exchanges of shares (90/434/EEC). The amendment, based on a Commission proposal of October 2003, will:
Mergers
The European Union's Council of Finance Ministers has adopted a proposal to amend the EU directive that provides for tax deferral in the case of cross-border mergers and divisions of companies, transfers of assets and exchanges of shares (90/434/EEC). The amendment, based on a Commission proposal of October 2003, will:
- broaden the existing directive's scope to cover a larger range of companies including the European company and the European co-operative society;
- provide for a new tax-neutral régime for the transfer of the registered office of a European company or of a European co-operative society between Member States;
- clarify that the directive applies in the case of the conversion of branches into subsidiaries; and
- cover a partial division or split-off , whereby an existing company transfers one or more of its branches of activity to an existing or newly created sister company.
The Council did not agree that gains on securities and assets exchanged in cross-border mergers and divisions should not be taxed twice in different Member States when ultimately disposed of. It also qualified the proposal that fiscally transparent entities should explicitly be covered by the provisions of the directive. In order to close potential tax loopholes, the Council wished to leave considerable discretion in these matters to the individual Member States.
(European Commission press release IP/05/193 dated 17 February 2005.)
