Commentary

B7.530 International partnership mergers

Business tax
Business tax | Commentary

B7.530 International partnership mergers

Business tax | Commentary

B7.530 International partnership mergers

The most significant tax-related obstacle to merger arises when the parties to a potential merger account on a different basis.

For domestic mergers, where all the parties are UK partnerships, this is not an issue as all UK-resident partnerships have to account for tax purposes on the basis of generally accepted accounting practice.

However this is not the case for many international mergers. The cash basis still largely prevails in the US and in much of continental Europe and this means that there is inevitably a problem in UK partnerships seeking to merge with partnerships practising in those countries. Depending on which of the merging partnerships is the dominant one, this might require the overseas partnership to change to a full-earnings basis of accounting if full financial integration of the two partnerships is to be achieved.

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