Select view:

Taxes Consolidation Act, 1997 (Number 39 of 1997)

615 Company reconstruction or amalgamation: transfer of assets.

[CTA76 s127; CGT(A)A78 s13]

(1) In this section—

scheme of reconstruction or amalgamation” means a scheme for the reconstruction of any company or companies or the amalgamation of any 2 or more companies;

trading stock” has the same meaning as in section 89.

[1]>

(2) Subject to this section, where—

(a) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company’s business to another company,

(b) at the time of the transfer both companies are resident in the State, and

(c) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities of the business),

then, in so far as relates to corporation tax on chargeable gains, the 2 companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by means of the transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 556 the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company’s acquisition of the assets.

<[1]

[1]>

(2) (a) Subject to this section, where—

(i) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company’s business to another company,

(ii) (I) the company acquiring the assets is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time, and

(II) the company from which the assets are acquired is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately [4]>before that time,<[4][4]>before that time,<[4]

[4]>

and

<[4]

(iii) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities [3]>of the business),<[3][3]>of the business), and<[3]

[7]>

[5]>

(iv) the company acquiring the assets is not an authorised investment company (within the meaning of Part XIII of the Companies Act 1990) that is an investment undertaking (within the meaning of section 739B),

<[5]

<[7]

[7]>

(iv) the company acquiring the assets is not—

(I) an authorised investment company (within the meaning of [9]>Part XIII of the Companies Act 1990<[9][9]>Part 24 of the Companies Act 2014<[9]) that is an investment undertaking (within the meaning of section 739B), or

(II) an authorised ICAV (within the meaning of section 2 of the Irish Collective Asset-management Vehicles Act 2015 (No. 2 of 2015)),

<[7]

then, in so far as relates to corporation tax on chargeable gains, both companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by means of the transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 556 the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company’s acquisition of the assets.

(b) For the purposes of paragraph (a)—

(i) an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain, and

[11]>

(ii) a reference to a company shall apply only to a company which, by virtue of the law of a [2]>Member State of the European Communities<[2][2]>relevant Member State<[2], is resident for the purposes of tax in such a Member State, and for this purpose “tax”, in relation to a [2]>Member State of the European Communities<[2][2]>relevant Member State<[2] other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.

<[11]

[11]>

(ii) a reference to a company shall apply only to a company which, by virtue of the law of a relevant Member State, is resident for the purposes of tax in such a Member State, and for this purpose—

relevant Member State’, in addition to the meaning assigned to that expression by section 616(7), shall be deemed to include the United Kingdom;

tax’, in relation to a relevant Member State other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.

<[11]

<[1]

[10]>

(2A) (a) In this subsection “division”, “merger”, “successor company” and “transferor company” have the same meaning as in section 638A.

(b) This section shall apply as if the transfer from a transferor company of all its assets to a successor company as a result of a merger or a division were the transfer of the whole of the company’s business and all the liabilities of the transferor company were the liabilities of the business of that transferor company where, immediately before the merger or division, the transferor company carried on a business.

<[10]

(3) This section shall not apply in relation to an asset which until the transfer formed part of trading stock of a trade carried on by the company making the disposal, or in relation to an asset which is acquired as trading stock for the purposes of a trade carried on by the company acquiring the asset.

[6]>

(4) (a) This section shall not apply in relation to the transfer of a specified intangible asset within the meaning of section 291A where the company acquiring the asset and the company from which the asset is acquired jointly so elect by giving notice, not later than 12 months from the end of the accounting period in which the company acquired the asset, to the Collector-General in such manner as the Revenue Commissioners may require.

(b) Where—

(i) an election is made under paragraph (a) in relation to the transfer of a specified intangible asset, and

(ii) that transfer is not a transfer to which section 400(6) applies,

then, for the purposes of computing any chargeable gain, the transfer of that asset shall be treated, as respects—

(I) the disposal by the company from which the asset was acquired, and

(II) the acquisition by the company acquiring the asset,

as having been made for a consideration equal to the market value of the asset on the date of that transfer.

<[6]

[8]>

(4A) (a) In this subsection—

arrangement” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

tax” means income tax, corporation tax or capital gains tax.

(b) This section shall not apply to a scheme of reconstruction or amalgamation involving the transfer of the whole or part of a company’s business to another company unless it is shown that the reconstruction or amalgamation is effected for bona fide commercial reasons and does not form part of an arrangement the main purpose, or one of the main purposes, of which is the avoidance of liability to tax.

<[8]

[1]

[-] [+]

Substituted by FA01 s38(1)(a). Applies as respects a disposal on or after 15 February 2001.

[2]

[-] [+] [-] [+]

Substituted by FA02 s36(a).

[3]

[-] [+]

Substituted by FA08 s42(1)(a)(i). Applies as respects a transfer, or as the case may be a disposal, on or after 18 February 2008.

[4]

[-] [+] [-]

Substituted by FA08 s42(1)(a)(i). Applies as respects a transfer, or as the case may be a disposal, on or after 18 February 2008.

[5]

[+]

Inserted by FA08 s42(1)(a)(ii). Applies as respects a transfer, or as the case may be a disposal, on or after 18 February 2008.

[6]

[+]

Inserted by FA09 s13(1)(e). Applies to expenditure incurred by a company after 7 May 2009.

[7]

[-] [+]

Substituted by FA15 s40(a). Comes into operation on 1 January 2016.

[8]

[+]

Inserted by FA15 s41(1). Applies to disposals made on or after 22 October 2015.

[9]

[-] [+]

Substituted by FA17 sched2(1)(ad)(i). Deemed to have come into operation on 1 June 2015.

[10]

[+]

Inserted by FA17 sched2(1)(ad)(ii). Deemed to apply to disposals made on or after 1 June 2015.

[11]

[-] [+]

Substituted by the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020 s56. Comes into operation on 31 December 2020 as per S.I. No. 723 of 2020.