Transfer or division of UK business
Prior to the UK's exit from the EU, under the EU Mergers Directive, provisions which allowed for special treatment for capital gains purposes where a business is transferred between EU companies were incorporated into UK legislation, see D6.5221.
The Taxes (Amendments) (EU Exit) Regulations 2019, SI 2019/689 make amendments to the UK legislation that implements the provisions of the EU Mergers Directive, so that the effect of the directive is preserved in the UK after IP completion day.
However, while the UK position might be preserved, the merger may nonetheless trigger tax liabilities in the other member state. The Mergers Directive is designed to remove the taxation of income, profits and capital gains that would otherwise be triggered on the reorganisation of companies involving companies of two or more EU member states. From IP completion day the UK is regarded as a third country, so that the benefit of the Mergers Directive in the other EU member state will be denied for transactions involving the UK.
As a result, tax charges may be triggered on a cross-border merger. The exact impact will depend on the relevant domestic laws of each company involved and the double tax treaties