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Finance Bill


Finance Bill
Part 3 — Stamp taxes

41

 

Stamp duty and stamp duty reserve tax

50      

Power to extend exceptions relating to recognised exchanges

(1)   

The Treasury may by regulations extend the application of the provisions

mentioned in subsection (2) to any market (specified by name or by

description) which—

5

(a)   

is not a recognised exchange, but

(b)   

is a multilateral trading facility (or, assuming compliance with the

provisions of Title II of the Directive (authorisation and operating

conditions), would be such a facility).

(2)   

The provisions referred to in subsection (1) are—

10

(a)   

sections 80A and 80C of FA 1986 (stamp duty: exceptions for sales to

intermediaries and for repurchases and stock lending), and

(b)   

sections 88A and 89AA of that Act (stamp duty reserve tax: exceptions

for intermediaries and for repurchases and stock lending).

(3)   

In this section—

15

“the Directive” means Directive 2004/39/EC of the European Parliament

and of the Council of 21 April 2004 on markets in financial instruments;

“multilateral trading facility” has the same meaning as in the Directive

(see Article 4(15));

“recognised exchange” means any of the following—

20

(a)   

an EEA exchange,

(b)   

a recognised foreign exchange,

(c)   

a recognised foreign options exchange,

within the meaning of the provisions mentioned in subsection (2).

(4)   

Regulations under this section may provide for the application of the

25

provisions mentioned in subsection (2) subject to any adaptations appearing to

the Treasury to be necessary or expedient.

(5)   

In subsection (1)(b) the words “(or, assuming compliance with the provisions

of Title II of the Directive (authorisation and operating conditions), would be

such a facility)” shall cease to have effect on such day as the Treasury may by

30

order appoint.

(6)   

Section 117 of FA 2002 (power to extend the exceptions in subsection (2) to any

market prescribed by order under section 118(3) of the Financial Services and

Markets Act 2000) shall cease to have effect on such day as the Treasury may

by order appoint.

35

(7)   

The power to make regulations or an order under this section is exercisable by

statutory instrument.

(8)   

A statutory instrument containing—

(a)   

regulations under this section, or

(b)   

an order under subsection (5),

40

   

shall be subject to annulment in pursuance of a resolution of the House of

Commons.

 
 

Finance Bill
Part 4 — European company statute

42

 

Part 4

European company statute

51      

Chargeable gains

(1)   

After section 140D of TCGA 1992 (transfer of non-UK trade) insert—

“Formation of SE by merger

5

140E    

Merger leaving assets within UK tax charge

(1)   

This section applies where—

(a)   

an SE is formed by the merger of two or more companies in

accordance with Articles 2(1) and 17(2)(a) or (b) of Council

Regulation (EC) 2157/2001 on the Statute for a European

10

Company (Societas Europaea),

(b)   

each merging company is resident in a member State,

(c)   

the merging companies are not all resident in the same State,

and

(d)   

section 139 does not apply to any qualifying transferred assets.

15

(2)   

Where this section applies, qualifying transferred assets shall be treated

for the purposes of corporation tax on chargeable gains as if acquired

by the SE for a consideration resulting in neither gain nor loss for the

transferor.

(3)   

For the purposes of subsections (1) and (2) an asset is a qualifying

20

transferred asset if—

(a)   

it is transferred to the SE as part of the process of the merger

forming it, and

(b)   

subsections (4) and (5) are satisfied in respect of it.

(4)   

This subsection is satisfied in respect of a transferred asset if—

25

(a)   

the transferor is resident in the United Kingdom at the time of

the transfer, or

(b)   

any gain that would have accrued to the transferor, had it

disposed of the asset immediately before the time of the

transfer, would have been a chargeable gain forming part of the

30

transferor’s chargeable profits in accordance with section 10B.

(5)   

This subsection is satisfied in respect of a transferred asset if—

(a)   

the transferee SE is resident in the United Kingdom on

formation, or

(b)   

any gain that would accrue to the transferee SE were it to

35

dispose of the asset immediately after the transfer would be a

chargeable gain forming part of the SE’s chargeable profits in

accordance with section 10B.

(6)   

For the purposes of this section a company is resident in a member State

if—

40

(a)   

it is within a charge to tax under the law of the State as being

resident for that purpose, and

 
 

Finance Bill
Part 4 — European company statute

43

 

(b)   

it is not regarded, for the purposes of any double taxation relief

arrangements to which the State is a party, as resident in a

territory not within a member State.

(7)   

This section does not apply to the formation of an SE by merger if—

(a)   

it is not effected for bona fide commercial reasons, or

5

(b)   

it forms part of a scheme or arrangements of which the main

purpose, or one of the main purposes, is avoiding liability to

corporation tax, capital gains tax or income tax;

   

and section 138 (clearance in advance) shall apply to this subsection as

it applies to section 137 (with any necessary modifications).

10

140F    

Merger not leaving assets within UK tax charge

(1)   

This section applies where—

(a)   

an SE is formed by the merger of two or more companies in

accordance with Articles 2(1) and 17(2)(a) or (b) of Council

Regulation (EC) 2157/2001 on the Statute for a European

15

Company (Societas Europaea),

(b)   

each merging company is resident in a member State,

(c)   

the merging companies are not all resident in the same State,

(d)   

in the course of the merger a company resident in the United

Kingdom (“company A”) transfers to a company resident in

20

another member State (“company B”) all assets and liabilities

relating to a business which company A carried on in a member

State other than the United Kingdom through a permanent

establishment, and

(e)   

the aggregate of the chargeable gains accruing to company A on

25

the transfer exceeds the aggregate of any allowable losses so

accruing.

(2)   

Where this section applies, for the purposes of this Act—

(a)   

the allowable losses accruing to company A on the transfer shall

be set off against the chargeable gains so accruing, and

30

(b)   

the transfer shall be treated as giving rise to a single chargeable

gain equal to the aggregate of those gains after deducting the

aggregate of those losses.

(3)   

Where this section applies, section 815A of the Taxes Act shall also

apply.

35

(4)   

Subsections (6) and (7) of section 140E apply for the purposes of this

section as they apply for the purposes of that section.

140G    

Treatment of securities issued on merger

(1)   

This section applies where—

(a)   

an SE is formed by the merger of two or more companies in

40

accordance with Articles 2(1) and 17(2)(a) or (b) of Council

Regulation (EC) 2157/2001 on the Statute for a European

Company (Societas Europaea),

(b)   

each merging company is resident in a member State,

(c)   

the merging companies are not all resident in the same State,

45

and

 
 

Finance Bill
Part 4 — European company statute

44

 

(d)   

the merger does not constitute or form part of a scheme of

reconstruction within the meaning of section 136.

(2)   

Where this section applies, the merger shall be treated for the purposes

of section 136 as if it were a scheme of reconstruction.

(3)   

Where section 136 applies by virtue of subsection (2) above section

5

136(6) (and section 137) shall not apply.

(4)   

Subsections (6) and (7) of section 140E apply for the purposes of this

section as they apply for the purposes of that section.”

(2)   

Subsection (1) shall have effect in relation to the formation of an SE which

occurs on or after 1st April 2005.

10

52      

Intangible fixed assets

(1)   

After paragraph 85 of Schedule 29 to FA 2002 (intangible fixed assets: gains and

losses: transfer of trade) insert—

“Formation of SE by merger

85A   (1)  

This paragraph applies where—

15

(a)   

an SE is formed by the merger of two or more companies in

accordance with Articles 2(1) and 17(2)(a) or (b) of Council

Regulation (EC) 2157/2001 on the Statute for a European

Company (Societas Europaea),

(b)   

each merging company is resident in a member State,

20

(c)   

the merging companies are not all resident in the same State,

and

(d)   

paragraph 84 above does not apply to any qualifying

transferred assets.

      (2)  

Where this paragraph applies a transfer of qualifying transferred

25

assets is treated for the purposes of this Schedule as tax-neutral (see

paragraph 140).

      (3)  

For the purposes of sub-paragraphs (1) and (2) an asset is a

qualifying transferred asset if—

(a)   

it is transferred as part of the process of the merger,

30

(b)   

it is a chargeable intangible asset in relation to the transferor

immediately before the transfer, and

(c)   

it is a chargeable intangible asset in relation to the transferee

immediately after the transfer.

      (4)  

Sub-paragraph (2) shall apply in relation to the formation of an SE by

35

merger only if—

(a)   

it is effected for bona fide commercial reasons, and

(b)   

it does not form part of a scheme or arrangements of which

the main purpose, or one of the main purposes, is avoiding

liability to corporation tax, capital gains tax or income tax.

40

      (5)  

Paragraph 84(6) (and therefore paragraph 88) shall apply, with any

necessary modifications, in relation to sub-paragraph (4) above as in

relation to paragraph 84(5).

 
 

Finance Bill
Part 4 — European company statute

45

 

      (6)  

For the purposes of this paragraph a company is resident in a

member State if—

(a)   

it is within a charge to tax under the law of the State as being

resident for that purpose, and

(b)   

it is not regarded for the purposes of any double taxation

5

relief arrangements to which the State is a party, as resident

in a territory not within a member State.”

(2)   

Subsection (1) shall have effect in relation to the formation of an SE which

occurs on or after 1st April 2005.

53      

Intangible fixed assets: permanent establishment in another member State

10

(1)   

After paragraph 87 of Schedule 29 to FA 2002 (intangible fixed assets: gains and

losses: transfer of non-UK trade) insert—

“Formation of SE by merger: transfer of non-UK trade

87A   (1)  

This paragraph applies where—

(a)   

an SE is formed by the merger of two or more companies in

15

accordance with Articles 2(1) and 17(2)(a) or (b) of Council

Regulation (EC) 2157/2001 on the Statute for a European

Company (Societas Europaea),

(b)   

each merging company is resident in a member State,

(c)   

the merging companies are not all resident in the same State,

20

(d)   

in the course of the merger a company resident in the United

Kingdom (“the transferor”) transfers to a company resident

in another member State (“the transferee”) the whole or part

of a trade that, immediately before the transfer, the transferor

carried on in a member State other than the United Kingdom

25

through a permanent establishment,

(e)   

the transfer includes the whole of the assets of the transferor

used for the purposes of the trade or part,

(f)   

the transfer includes intangible fixed assets—

(i)   

that are chargeable intangible assets in relation to the

30

transferor immediately before the transfer, and

(ii)   

in the case of one or more of which the proceeds of

realisation exceed the cost recognised for tax

purposes, and

(g)   

no claim is made under paragraph 86 above in relation to

35

those assets.

      (2)  

Where tax would, but for the Mergers Directive, have been

chargeable in the member State in which the permanent

establishment is located, Part 18 of the Taxes Act 1988 (double

taxation relief), including any arrangements having effect by virtue

40

of section 788 (double taxation agreements), shall have effect as if the

amount of tax that would, but for the Mergers Directive, have been

charged in respect of the transfer of the chargeable intangible assets,

had actually been charged.

      (3)  

In this paragraph “the Mergers Directive” has the same meaning as

45

in paragraph 87.

 
 

Finance Bill
Part 4 — European company statute

46

 

      (4)  

For the purposes of this paragraph a company is resident in a

member State if—

(a)   

it is within a charge to tax under the law of the State as being

resident for that purpose, and

(b)   

it is not regarded, for the purposes of any double taxation

5

relief arrangements to which the State is a party, as resident

in a territory not within a member State.

      (5)  

This paragraph does not apply to the formation of an SE by merger

if—

(a)   

it is not effected for bona fide commercial reasons, or

10

(b)   

it forms part of a scheme or arrangements of which the main

purpose, or one of the main purposes, is avoiding liability to

corporation tax, capital gains tax or income tax.

      (6)  

Sub-paragraph (5) shall not affect the operation of this paragraph in

any case where, before the transfer, Her Majesty’s Revenue and

15

Customs have, on the application of the transferor, notified the

transferor that they are satisfied that the merger will be effected for

bona fide commercial reasons and will not form part of any such

scheme or arrangements as are mentioned in sub-paragraph (5)(b).

      (7)  

An application under sub-paragraph (6) must be made in accordance

20

with paragraph 88.”

(2)   

Subsection (1) shall have effect in relation to the formation of an SE which

occurs on or after 1st April 2005.

54      

Loan relationships

(1)   

After paragraph 12A of Schedule 9 to FA 1996 (loan relationships: gains and

25

losses: continuity of treatment for groups) insert—

“Formation of SE by merger

12B   (1)  

This paragraph applies where—

(a)   

an SE is formed by the merger of two or more companies in

accordance with Articles 2(1) and 17(2)(a) or (b) of Council

30

Regulation (EC) 2157/2001 on the Statute for a European

Company (Societas Europaea),

(b)   

each merging company is resident in a member State,

(c)   

the merging companies are not all resident in the same State,

and

35

(d)   

either—

(i)   

immediately after formation the SE is resident in the

United Kingdom and within the charge to

corporation tax in accordance with section 6 of the

Taxes Act, or

40

(ii)   

immediately after formation the SE is not resident in

the United Kingdom but is within the charge to

corporation tax in accordance with section 11 of the

Taxes Act 1988.

 
 

Finance Bill
Part 4 — European company statute

47

 

      (2)  

Where this paragraph applies, the transfer in the course of the

merger of an asset or liability which represents a loan relationship

shall be disregarded except—

(a)   

for the purpose of determining the debits or credits to be

brought into account in respect of exchange gains or losses

5

and identifying the company which is to bring them into

account, and

(b)   

for the purpose of identifying the company in whose case a

debit or credit which does not relate to the transfer is to be

brought into account.

10

      (3)  

Where this paragraph applies, the transferor and the transferee

companies of an asset or liability which represents a loan

relationship shall be deemed, except for the purposes specified in

sub-paragraph (2)(a) and (b), to be the same company.

      (4)  

Paragraph 12(2A) shall have effect (with any necessary

15

modifications) in relation to this paragraph as in relation to

paragraph 12.

      (5)  

Sub-paragraphs (2) and (3) shall apply in relation to the formation of

an SE by merger only if—

(a)   

it is effected for bona fide commercial reasons, and

20

(b)   

it does not form part of a scheme or arrangements of which

the main purpose, or one of the main purposes, is avoiding

liability to corporation tax, capital gains tax or income tax.

      (6)  

But sub-paragraph (5) shall not have the effect of preventing sub-

paragraphs (2) and (3) from applying if before the merger Her

25

Majesty’s Revenue and Customs have on the application of the

merging companies notified them that Her Majesty’s Revenue and

Customs are satisfied that sub-paragraph (5) will not have that effect.

      (7)  

For the purposes of this paragraph a company is resident in a

member State if—

30

(a)   

it is within a charge to tax under the law of the State as being

resident for that purpose, and

(b)   

it is not regarded for the purposes of any double taxation

relief arrangements to which the State is a party, as resident

in a territory not within a member State.”

35

(2)   

Subsection (1) shall have effect in relation to the formation of an SE which

occurs on or after 1st April 2005.

55      

Derivative contracts

(1)   

After paragraph 30A of Schedule 26 to FA 2002 (derivative contracts: profits:

groups) insert—

40

“Formation of SE by merger

30B   (1)  

This paragraph applies where—

(a)   

an SE is formed by the merger of two or more companies in

accordance with Articles 2(1) and 17(2)(a) or (b) of Council

Regulation (EC) 2157/2001 on the Statute for a European

45

Company (Societas Europaea),

 
 

 
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