Taxation (International and Other Provisions) Act 2010

F1 118 Introduction to section 119 U.K.

(1) Section 119 applies if each of conditions A to E is met and—

(a) in the case of a merger within subsection (2)(a) or (b), condition F is met,

(b) in the case of a merger within subsection (2)(c), conditions F and G are met, and

(c) in the case of a merger within subsection (2)(d), condition G is met.

(2) Condition A is that—

(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) No. 2157/2001 on the Statute for a European company (Societas Europaea),

F2 (b) an SCE is formed by the merger of two or more co-operative societies, at least one of which is a [F3 registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014 or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969], in accordance with Articles 2(1) and 19 of Council Regulation (EC) No. 1435/2003 on the Statute for a European Co-operative Society (SCE),

(c) a merger is effected by the transfer by one or more companies of all their assets and liabilities to a single existing company, or

(d) a merger is effected by the transfer by two or more companies of all their assets and liabilities to a single new company (other than an SE or an SCE) in exchange for the issue by the transferee, to each person holding shares in or debentures of a transferor, of shares or debentures.

(3) Condition B is that each merging company is resident in a [F4 relevant state].

(4) Condition C is that the merging companies are not all resident in the same [F5 relevant state].

(5) Condition D is that in the course of the merger a company resident in the United Kingdom (“company A”) transfers to a company resident in [F6 a] member State all assets and liabilities relating to a business which company A carried on in a member State F7 ... through a permanent establishment (but see subsection (9)).

(6) Condition E is that the transfer mentioned in subsection (5) includes—

(a) the transfer of an asset or liability representing a loan relationship,

(b) the transfer of rights and liabilities under a derivative contract, or

(c) the transfer of intangible fixed assets—

(i) that are chargeable intangible assets in relation to company A immediately before the transfer, and

(ii) in the case of one or more of which the proceeds of realisation exceed the cost recognised for tax purposes.

(7) Condition F is that—

(a) the transfer of assets and liabilities to the transferee in the course of the merger is made in exchange for the issue of shares or debentures by the transferee to each person holding shares in or debentures of a transferor, or

(b) paragraph (a) is not met in relation to the transfer of those assets and liabilities only because, and only so far as, the transferee is prevented from so issuing such shares or debentures by section 658 of the Companies Act 2006 (general rule against limited company acquiring own shares) or by a corresponding provision of the law of [F8 a] member State preventing such an issue.

(8) Condition G is that in the course of the merger each transferor ceases to exist without being in liquidation (within the meaning given by section 247 of the Insolvency Act 1986).

(9) In the case of a merger within subsection (2)(a) or (b), in determining whether section 119 applies in respect of such a transfer as is mentioned in subsection (6)(c), condition D is regarded as met even if all liabilities relating to the business which company A carried on are not transferred as mentioned in subsection (5).

(10) For the purposes of this section, a company is resident in a [F9 relevant state] if—

(a) it is within a charge to tax under the law of the [F10 relevant state] as being resident for that purpose, and

(b) it is not regarded, for the purpose of any double taxation relief arrangements to which the [F10 relevant state] is a party, as resident in a territory not within a [F9 relevant state].

(11) In this section—

• “co-operative society” means a [F11 registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014, a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969] or a similar society governed by the law of a member State, F12 ...

• [F13 “relevant state” means the United Kingdom or a member State,]

• “SE” and “SCE” have the same meaning as in CTA 2009 (see section 1319 of that Act),

• “the transferee” means—

  (a)

  in relation to a merger within subsection (2)(a), the SE,

  (b)

  in relation to a merger within subsection (2)(b), the SCE, and

  (c)

  in relation to a merger within subsection (2)(c) or (d), the company to which assets and liabilities are transferred, and

• “transferor” means—

  (a)

  in relation to a merger within subsection (2)(a), a company merging to form the SE,

  (b)

  in relation to a merger within subsection (2)(b), a co-operative society merging to form the SCE, and

  (c)

  in relation to a merger within subsection (2)(c) or (d), a company transferring all of its assets and liabilities.

Textual Amendments

F1 S. 118(11) amendment to earlier affecting provision 2014 c. 14 Sch. 4 para. 171(3) (1.8.2014) by Finance Act 2014 (c. 26), Sch. 39 paras. 14(b), 15

F2 S. 118(2)(b) amendment to earlier affecting provision 2014 c. 14 Sch. 4 para. 171(2) (1.8.2014) by Finance Act 2014 (c. 26), Sch. 39 paras. 14(a), 15

F3 Words in s. 118(2)(b) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 171(2) (with Sch. 5) (as amended by 2014 c. 26, Sch. 39 paras. 14(a), 15)

F4 Words in s. 118(3) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F5 Words in s. 118(4) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(b) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F6 Word in s. 118(5) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(c)(i) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F7 Words in s. 118(5) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(c)(ii) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F8 Word in s. 118(7)(b) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(d) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F9 Words in s. 118(10) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(e)(i) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F10 Words in s. 118(10) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(e)(ii) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F11 Words in s. 118(11) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 171(3) (with Sch. 5) (as amended by 2014 c. 26, Sch. 39 paras. 14(b), 15)

F12 Words in s. 118(11) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(f)(i) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

F13 Words in s. 118(11) inserted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 18(4)(f)(ii) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)