D6.522 Transfer of UK business to a company resident in an EU member state
Specific provisions1 apply where the whole or part of a UK business is transferred to an EU resident company in exchange for securities issued by the transferee company. These provisions give effect to the EC Mergers Directive (No 2009/133/EC; formerly No 90/434/EEC) dealing with cross-border business reorganisations.
Some definitions in this legislation refer to EU laws which would not have been relevant after IP completion day2. However, in order to retain legal continuity, the legal position existing immediately before the UK left the EU has been preserved, to a large degree, by taking a snapshot of the EU law that applied in the UK at that point and bringing it within the UK's domestic legal framework as a new category of law — retained EU law3. These rules can then be amended in the UK by regulations where EU law does not operate effectively or function appropriately or sensibly4. For more on retained EU law see A2.202.
In situations where the provisions apply, a claim5 can be made for the transfer of any capital assets to be treated as made for such a consideration as gives rise to neither a gain nor a loss to the transferor company6. The transferee is therefore treated as taking over the assets at their historic cost (plus indexation allowance where relevant); however, the securities issued by the transferee company as consideration for the transfer are treated as acquired by the transferor company