Finance Bill

House of Commons

Session 2005 - 06
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Finance Bill

Finance Bill
Part 4 — European company statute
48

(b)
each merging company is resident in a member State,
(c)
the merging companies are not all resident in the same State,
and
(d)
either—
(i)
immediately after formation the SE is resident in the
5
United Kingdom and within the charge to
corporation tax in accordance with section 6 of the
Taxes Act, or
(ii)
immediately after formation the SE is not resident in
the United Kingdom but is within the charge to
10
corporation tax in accordance with section 11 of the
Taxes Act 1988.
      (2)
Where this paragraph applies, the transfer in the course of the
merger of rights or liabilities under a derivative contract shall be
disregarded except—
15
(a)
for the purpose of determining the debits or credits to be
brought into account in respect of exchange gains or losses
and identifying the company which is to bring them into
account, and
(b)
for the purpose of identifying the company in whose case a
20
debit or credit which does not relate to the transfer is to be
brought into account.
      (3)
Where this paragraph applies, the transferor and the transferee
companies of a right or liability under a derivative contract shall be
deemed, except for the purposes specified in sub-paragraph (2)(a)
25
and (b), to be the same company.
      (4)
Paragraph 30 shall apply, with any necessary modifications, in
relation to this paragraph as in relation to paragraph 28.
      (5)
Sub-paragraphs (2) and (3) shall apply in relation to a merger only
if—
30
(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.
      (6)
But sub-paragraph (5) shall not have the effect of preventing sub-
35
paragraphs (2) and (3) from applying if before the merger Her
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
40
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
relief arrangements to which the State is a party, as resident
45
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.

Finance Bill
Part 4 — European company statute
49

56
Capital allowances
(1)
After section 561 of CAA 2001 (transfer of UK trade to company in another
member State) insert—
“561A
     Transfer during formation of SE by merger
(1)
This section applies to the transfer of a qualifying asset as part of the
5
process of a merger to which section 140E of TCGA 1992 (formation of
SE by merger) applies.
(2)
Where this section applies to a transfer—
(a)
the transfer does not give rise to any allowance or charge under
this Act,
10
(b)
anything done to or by the transferor in relation to assets
transferred is to be treated after the transfer as having been
done to or by the transferee (with any necessary apportionment
of expenditure being made in a reasonable manner), and
(c)
section 343 of ICTA 1988 (company reconstruction without
15
change of ownership) shall not apply.
(3)
In subsection (1) “qualifying asset” has the same meaning as
“qualifying transferred asset” in section 140E of TCGA 1992.”
(2)
Subsection (1) shall have effect in relation to a transfer made on or after 1st
April 2005.
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57
Stamp duty reserve tax
(1)
At the end of section 99(4) of FA 1986 (stamp duty reserve tax: interpretation:
chargeable securities) add—

                      “, or
(d)
they are issued or raised by an SE (whether or not in the course
25
of its formation in accordance with Article 2 of Council
Regulation (EC) 2157/2001 on the Statute for a European
Company (Societas Europaea)) and, at the time when it falls to
be determined whether the securities are chargeable securities,
the SE has its registered office in the United Kingdom.
30
(4A)
“Chargeable securities” does not include securities falling within
paragraph (a), (b) or (c) of subsection (3) above if—
(a)
they are securities issued or raised by an SE (whether or not in
the course of its formation in accordance with Article 2 of
Council Regulation (EC) 2157/2001 on the Statute for a
35
European Company (Societas Europaea)), and
(b)
at the time when it falls to be determined whether the securities
are chargeable securities, the SE has its registered office outside
the United Kingdom;”.
(2)
Subsection (1) shall have effect for the purposes of determining, in relation to
40
anything occurring on or after 1st April 2005, whether securities (whenever
issued or raised) are chargeable securities for the purposes of Part IV of FA
1986.

Finance Bill
Part 4 — European company statute
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58
Bearer instruments: stamp duty and stamp duty reserve tax
(1)
In section 90(3C)(a) of FA 1986 (stamp duty reserve tax: bearer instruments)
after “United Kingdom” insert “(other than an SE which has its registered office
outside the United Kingdom following a transfer in accordance with Article 8
of Council Regulation (EC) 2157/2001 on the Statute for a European Company
5
(Societas Europaea))”.
(2)
In section 90(3E)(a) of FA 1986 (stamp duty reserve tax: bearer instruments)
after “United Kingdom” insert “(other than an SE which has its registered office
outside the United Kingdom following a transfer in accordance with Article 8
of Council Regulation (EC) 2157/2001 on the Statute for a European Company
10
(Societas Europaea))”.
(3)
In paragraph 11 of Schedule 15 to FA 1999 (bearer instruments) for the
definition of “UK company” substitute—
““UK company” means—
(a)
a company that is formed or established in the United
15
Kingdom (other than an SE which has its registered
office outside the United Kingdom following a transfer
in accordance with Article 8 of Council Regulation (EC)
2157/2001 on the Statute for a European Company
(Societas Europaea)), or
20
(b)
an SE which has its registered office in the United
Kingdom following a transfer in accordance with Article
8 of that Regulation; ”.
(4)
This section shall have effect for the purposes of determining whether or not
stamp duty or stamp duty reserve tax is chargeable in respect of anything done
25
on or after 1st April 2005.
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Consequential amendments
(1)
In section 815A(1) of ICTA (transfer of a non-UK trade) after “section 140C”
insert “or 140F”.
(2)
In section 35(3)(d)(i) of TCGA 1992 (re-basing to 1982, &c.) after “140A,” insert
30
“140E,”.
(3)
In section 140A of TCGA 1992 (transfer of UK trade)—
(a)
in subsection (1)(b) for “securities” substitute “shares or debentures”,
and
(b)
in subsection (7) omit the definition of “securities”.
35
(4)
In section 140C of TCGA 1992 (transfer of non-UK trade)—
(a)
in subsection (1)(c) for “securities” substitute “shares or debentures”,
and
(b)
in subsection (9) omit the definition of “securities”.
(5)
In paragraph 88(1) and (5) of Schedule 29 to FA 2002 (intangible fixed assets:
40
gains and losses: transferred assets: application for clearance) after “85(5),”
insert “85A(5), 87A(6),”.
(6)
In paragraph 127 of that Schedule (acquired assets to be treated as existing
assets) after sub-paragraph (1)(b)(ii) insert—

                                         “, or
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Finance Bill
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                                         (iii) section 140E of that Act (transfer on formation of
                                                 SE by merger),”.
(7)
Subsections (3) and (4) shall have effect in relation to an issue effected on or
after 1st April 2005.
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Residence
5
(1)
After section 66 of FA 1988 (company residence) insert—
“66A
Residence of SE
(1)
This section applies to an SE which transfers its registered office to the
United Kingdom (in accordance with Article 8 of Council Regulation
(EC) 2157/2001 on the Statute for a European Company (Societas
10
Europaea)).
(2)
Upon registration in the United Kingdom the SE shall be regarded for
the purposes of the Taxes Acts as resident in the United Kingdom; and
accordingly, if a different place of residence is given by any rule of law,
that place shall not be taken into account for those purposes.
15
(3)
The SE shall not cease to be regarded as resident in the United Kingdom
by reason only of the subsequent transfer from the United Kingdom of
its registered office.
(4)
In this section “the Taxes Acts” has the same meaning as in the Taxes
Management Act 1970.”
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(2)
In section 249(3) of FA 1994 (certain companies to be treated as non-resident)
after “resident there)” insert “, by virtue of section 66A of that Act (residence of
SE)”.
(3)
Subsection (1) shall have effect in relation to the transfer of a registered office
which occurs on or after 1st April 2005.
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61
Continuity for transitional purposes
(1)
If at any time a company ceases to be resident in the United Kingdom in the
course of the formation of an SE by merger (whether or not the company
continues to exist after the formation of the SE) the provision specified in
subsection (3) shall apply after that time, but in relation to liabilities accruing
30
and matters arising before that time—
(a)
as if the company were still resident in the United Kingdom, and
(b)
where the company has ceased to exist, as if the SE were the company.
(2)
If at any time an SE transfers its registered office from the United Kingdom and
ceases to be resident in the United Kingdom, the provision specified in
35
subsection (3) shall apply after that time, but in relation to liabilities accruing
and matters arising before that time, as if the SE were still resident in the
United Kingdom.
(3)
The provision mentioned in subsections (1) and (2) is Schedule 18 to FA 1998
(tax returns, assessments, &c.).
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