Corporation Tax Act 2009 section 339

Issues of new securities on certain cross-border reorganisations

Section 339 sets out the conditions under which the loan relationship continuity rules apply where securities are exchanged for securities in another company as part of a cross-border reorganisation between companies resident in different EU member states.

• The section applies where securities representing a loan relationship are exchanged for securities in another company, and the chargeable gains reorganisation rules treat the old and new holdings as the same asset (or would do so but for the qualifying corporate bond rules).
• The original securities being exchanged must consist of or include an asset that represents a loan relationship.
• The two companies involved must be resident in different EU member states, meaning each is subject to tax as a resident in its state and is not treated as resident outside the EU under any double taxation treaty.
• The exchange must not already fall within the rules for European cross-border transfers of business or European cross-border mergers.