Revenue Note for Guidance

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Revenue Note for Guidance

PART 21

MERGERS, DIVISIONS, TRANSFERS OF ASSETS AND EXCHANGES OF SHARES CONCERNING COMPANIES OF DIFFERENT MEMBER STATES

CHAPTER 1

Mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States

Overview

Chapter 1 of this Part implements the EU Directive of 19 October 2009 (2009/133/EC) (which replaces Council Directive 90/434/EEC of 23 July 1990) on cross-border mergers, divisions, partial divisions, transfers of assets and exchanges of share between companies from different Member States. The main purpose of the Directive is to provide tax neutrality in relation to cross-border mergers, divisions, transfers of assets and exchanges of shares; however it makes similar provision in relation to the transfer of the registered office of an SE or SCE between Member States.

Because it is generally not possible under existing EU or domestic company law for cross-border mergers and divisions (or partial divisions) of the type envisaged in the Directive to take place, relief is not specifically provided in respect of such transactions. However, Chapter 1 of Part 21 gives the Revenue Commissioners general authority to grant the reliefs provided by the Directive in respect of any parts of the Directive to which effect is not given by specific measures (section 637).

Chapter 4 of Part 19 provides the reliefs required by the Directive in relation to exchanges of shares. Part 21 specifically provides relief for transfers of assets. The situations covered are —

  • the transfer of a trading operation in Ireland in return for securities in the company which takes over the trading operation (section 631),
  • the transfer of assets by a company to its parent company (section 632), and
  • the transfer by an Irish company of a foreign branch in return for securities in the receiving company (section 634).

Chapter 1 of this Part also extends to development land the reliefs available on amalgamation or reconstruction of companies (section 633).

630 Interpretation (Part 21)

A number of words and phrases are defined for the purposes of Chapter 1 of Part 21, including:

“bilateral agreement” is a double taxation treaty.

“company” is a company from a Member State.

“company from a Member State” adopts the meaning set out in the Directive. This definition clarifies the meaning of “company”. Under the Directive a company must —

  • take one of the forms listed in the annex to the Directive,
  • be tax resident in a Member State and not be tax resident outside of the EU, and
  • be liable to one of the taxes specified in Article 3 of the Directive.

“the Directive” means Council Directive 2009/133/EC of 19 October 2009, as amended, 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.

“receiving company” and “transferring company” is, respectively, the company receiving assets or transferring assets in the course of a transfer.

“SE Regulation” means Council Regulation (EC) No. 2157/2001 of 8 October 2001, on the Statute for a European Company (SE).

“SCE Regulation” means Council Regulation (EC) No. 1435/2003 of 22 July 2003, on the Statute for a European Cooperative Society (SCE).

“transfer” is the transfer by a company of the whole or part of a trade to another company in return for securities in that other company, other than a transfer referred to in section 633D. The term “transfer” as used in section 633D refers to the transfer of all the assets and liabilities of a company and is not limited to the transfer of a trade, in line with the requirements of Article 7 of Council Directive 2009/133/EC.

Relevant Date: Finance Act 2021