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Finance Bill


Finance Bill
Part 4 — European company statute

44

 

(b)   

each merging company is resident in a member State,

(c)   

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

and

(d)   

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

reconstruction within the meaning of section 136.

5

(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

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

(4)   

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

10

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.

52      

Intangible fixed assets

(1)   

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

15

losses: transfer of trade) insert—

“Formation of SE by merger

85A   (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

20

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

25

(d)   

paragraph 84 above does not apply to any qualifying

transferred assets.

      (2)  

Where this paragraph applies a transfer of qualifying transferred

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

paragraph 140).

30

      (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,

(b)   

it is a chargeable intangible asset in relation to the transferor

immediately before the transfer, and

35

(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

merger only if—

(a)   

it is effected for bona fide commercial reasons, and

40

(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.

 
 

Finance Bill
Part 4 — European company statute

45

 

      (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).

      (6)  

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

member State if—

5

(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.”

10

(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

(1)   

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

losses: transfer of non-UK trade) insert—

15

“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

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

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

20

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 (“the transferor”) transfers to a company resident

25

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

through a permanent establishment,

(e)   

the transfer includes the whole of the assets of the transferor

30

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

transferor immediately before the transfer, and

(ii)   

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

35

realisation exceed the cost recognised for tax

purposes, and

(g)   

no claim is made under paragraph 86 above in relation to

those assets.

      (2)  

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

40

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

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

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

45

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

had actually been charged.

 
 

Finance Bill
Part 4 — European company statute

46

 

      (3)  

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

in paragraph 87.

      (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

5

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.

      (5)  

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

10

if—

(a)   

it is not effected for bona fide commercial reasons, or

(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.

15

      (6)  

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

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

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

20

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

      (7)  

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

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.

25

54      

Loan relationships

(1)   

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

losses: continuity of treatment for groups) insert—

“Formation of SE by merger

12B   (1)  

This paragraph applies where—

30

(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,

35

(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

United Kingdom and within the charge to

40

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

corporation tax in accordance with section 11 of the

45

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),

 
 

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.

 
 

 
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