Sélecteur de langues
Brussels, 17 February 2005
The European Commission has welcomed the adoption by the EU's Council of Finance Ministers of a proposal to amend the EU Directive that provides for tax deferral in the case of cross-border mergers and divisions of companies, transfers of assets and exchanges of shares (90/434/EEC). The amendment that is based on a Commission proposal of October 2003 (see IP/03/1418) will, in particular, broaden the existing Directive's scope to cover a larger range of companies including the European Company (see IP/01/1376) and the European Co-operative Society (see IP/03/1071); provide for a new tax-neutral regime for the transfer of the registered office of a European Company or of a European Cooperative Society between Member States; clarify that the Directive applies in the case of the conversion of branches into subsidiaries; and cover a new type of operation, known as a 'partial division' or 'split-off'.
"I welcome the decision of the Council to adopt this Directive that will extend to a much larger range of companies a set of tax rules that facilitate cross-border corporate re-structuring" commented Taxation and Customs Commissioner László Kovács. "Despite some compromises that had to be made in order to achieve agreement, this Directive is an important step forward in our endeavours to remove the tax obstacles that companies currently encounter when exercising their freedom to operate across borders within the Internal Market".
The new Directive expands and updates the existing "Mergers" Directive that provides for tax deferral in the case of cross-border mergers and divisions of companies, transfers of assets and exchanges of shares. Its main effects are as follows:
The Council did not agree to the Commission's proposal to state explicitly that gains on securities and assets exchanged in cross-border mergers and divisions should not be taxed twice, in different Member States, when ultimately disposed of. The Council also qualified the Commission's proposal that fiscally transparent entities should explicitly be covered by the provisions of the Directive. In order to close what it perceived to be potential tax loopholes, the Council wished to leave a substantial amount of discretion in these matters to the individual Member States.
For further information on the Mergers Directive see: