The following Tax guidance note provides comprehensive and up to date legal information covering:
This Practice Note is about the conditions that a statutory (ie dividend) demerger, whether direct or indirect, must satisfy if it is to qualify as an exempt distribution, and therefore not result in an income tax (or corporation tax on income) charge for the shareholders.
For background on why a company might carry out a demerger, and an introduction to the other ways in which a demerger may be structured, see Practice Note: Demergers—an introduction to the tax issues.
For information on:
what a statutory demerger is
the difference between the direct and indirect routes
the circumstances in which a company might choose to carry out a statutory demerger
the steps involved
the tax implications, and
why it is important for a statutory demerger to qualify as an exempt distribution
see Practice Note: Statutory demergers.
The following conditions must be met for the transfer of shares under a direct statutory demerger to be treated as an exempt distribution.
Both the distributing company and each subsidiary whose shares are distributed (together with the distributing company, known as the relevant companies) must be resident in a Member State of the EU at the time of the distribution.
As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
0330 161 1234
To view our latest legal guidance content,sign-in to Lexis®PSL or register for a free trial.