Commentary

D1.664 Intangible assets and EU cross border mergers

Corporate tax
Corporate tax | Commentary

D1.664 Intangible assets and EU cross border mergers

Corporate tax | Commentary

D1.664 Intangible assets and EU cross border mergers

Specific provisions1 have been introduced to deal with the transfer of intangible assets on certain cross-border mergers.

The equivalent provisions on a merger involving the transfer of loan relationships and derivative contracts are at D1.769 and D1.8103 respectively. The capital gains treatment and further consequential amendments are at D6.530–D6.532.

Intangible assets remaining in UK and EU merger

Where intangible assets, that are chargeable intangible assets in the hands of the transferor immediately before the transfer and also in the hands of the transferee immediately after the transfer, are transferred in the course of a genuine commercial merger2, the transfer of such assets is to be done on a tax-neutral basis for UK purposes3. A chargeable intangible asset is broadly one within the computational rules of the corporate intangible regime.

This means that the transferor and transferee must either be UK resident companies or trading in the UK through a permanent establishment and the intangible fixed asset is attributable to the activities of that permanent establishment.

This provision will not apply if4:

  1.  

    •     if the provisions of a company reconstruction involving the transfer of a business apply (see D1.661)5

  2.  

    •     one or more of the merging companies is a transparent entity and the assets and liabilities of a transparent entity are transferred to another company in the course of the merger (see D1.663 for the meaning of a transparent entity)

If one or more of the merging parties is transparent then, as for a transfer of a UK

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