Mergers & Divisions [EU]
Mergers, divisions and contributions of assets
This Directive introduces a common system of taxation for cross-border restructuring operations.
Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States [See amending acts].
Summary
Each Member State applies the Directive to mergers, divisions, transfers of assets and exchanges of shares in which companies from two or more Member States are involved.
A merger or similar operation does not give rise to any taxation of capital gains calculated by reference to the difference between the real values of the assets and liabilities transferred and their values for tax purposes – at the time of the operation in question but only when such gains are actually realized.
Member States are required to take the necessary measures to ensure that provisions or reserves partly or wholly exempt from tax may be carried over by the permanent establishments of the receiving company which are situated in the Member State of the transferring company.
The allotment of securities representing the capital of the receiving or acquiring company to a shareholder of the transferring or acquired company must not give rise to any taxation of the income, profits or capital gains of that shareholder.
Where the assets transferred in a merger, a division or a transfer of assets include a permanent establishment of the transferring company which is situated in a Member State other than that of the transferring company, the latter State must renounce any right to tax that permanent establishment.
The taxation of capital gains derived from cross-border company restructuring carried out in the form of mergers, divisions, transfers of assets or exchanges of shares is deferred until a later disposal of the assets.
Council Directive 2005/19/EC amends Directive 90/434/EEC in order to improve the system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States. Amendments are proposed to:
- widen the scope of the Directive to cover divisions in which the company transferring one or more branches of activity is not dissolved, transfers from the head office of a European Company (SE) or European Cooperative Society (SCE) in one Member State to another Member State and other types of companies, in particular SEs, SCEs and entities considered fiscally transparent;
- permit Member States not to apply the provisions of the Directive when taxing a direct or indirect shareholder of certain corporate taxpayers;
- clarify the application of the rules to operations regarding conversion of branches into subsidiaries;
- amend the definition of exchange of shares.
References
| Act | Entry into force | Deadline for transposition in the Member States | Official Journal |
| Directive 90/434/EEC | 30.07.1990 | 01.01.1992 | OJ L 225 of 20.08.1990 |
| Amending act(s) | Entry into force | Deadline for transposition in the Member States | Official Journal |
| Directive 2005/19/EC | 24.03.2005 | 01.01.2006 01.01.2007 |
OJ L 58 of 04.03.2005 |
| Directive 2006/98/EC | 1.1.2007 | 01.01.2007 | OJ L 363 of 20.12.2006 |
Common system of taxation:
Mergers, divisions, transfers of assets, exchanges of shares
and transfer of the registered office of an SE or SCE
This Directive introduces a common system of taxation for cross-border restructuring operations.
Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States.
Scope
This Directive applies to:
mergers, divisions, transfers of assets and exchanges of shares in which companies from two or more EU countries are involved;
the transfer of the registered office between EU countries of a Societas Europaea (European Company) (SE) or aEuropean Cooperative Society (SCE).
Rules applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares
A merger, division or partial division does not give rise to any taxation of capital gains – calculated by reference to the difference between the real values of the assets and liabilities transferred and their values for tax purposes – at the time of the operation in question but only when such gains are actually realized.
EU countries are required to take the necessary measures to ensure that provisions or reserves partly or wholly exempt from tax may be carried over by the permanent establishments of the receiving company which are situated in the Member State of the transferring company.
The allotment of securities representing the capital of the receiving or acquiring company to a shareholder of the transferring or acquired company must not give rise to any taxation of the income, profits or capital gains of that shareholder.
Rules applicable to the transfer of the registered office of an SE or SCE
Where an SE or an SCE transfers its registered office from one EU country to another or becomes resident in another EU country, that transfer shall not give rise to any taxation of the income, profits or capital gains of the shareholders. However, EU countries may tax the gain arising out of the subsequent transfer of the securities representing the capital of the SE or of the SCE that transfers its registered office.
In the same case, EU countries shall take the necessary measures to ensure that, where provisions or reserves properly constituted by the SE or the SCE before the transfer of the registered office are partly or wholly exempt from tax and are not derived from permanent establishments abroad, such provisions or reserves may be carried over, with the same tax exemption, by a permanent establishment of the SE or the SCE which is situated within the territory of the EU country from which the registered office was transferred.
This Directive repeals Directive 90/434/EC.
References
Official Journal
Directive 2009/133/EC
15.12.2099
–
OJ L 310, 25.11.2009
Directive 2013/13/EU
01.7.2013
OJ L 141, 28.5.2013
RELATED ACTS
2012/772/EU : Commission Recommendation of 6 December 2012 on aggressive tax planning [Official Journal L 338 of 12.12.2012].
Aggressive tax planning consists in taking advantage of the technicalities of a tax system or of mismatches between two or more tax systems for the purpose of reducing tax liability. The aim of the recommendation is to encourage EU countries to ensure that the conventions aiming to avoid double taxation do not lead to non-taxation and to adopt a common general anti-abuse rule to counteract practices such as artificial arrangements.