Capital transfers
In 1998 M acquired all of the shares in H. The contribution of H's shares to M was exempt from capital duty under the Netherlands law on the taxation of legal transactions. A co-operative was subsequently established and M became a member by transferring its shares in H to the co-operative in exchange for membership rights. Thereafter H's stock was quoted on the Amsterdam stock exchange. The Netherlands tax office assessed M to capital duty so M appealed. The matter was ultimately referred to the European Court of Justice.
The court had to determine whether Article 7(1)(bb) of Council Directive (EEC) 69/335 (concerning indirect taxes on the raising of capital) should be interpreted as meaning that if a company within five years after the acquisition of shares in the course of a share merger that was exempt from capital duty ceased to...
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