Corporation Tax Act 2009 section 431

Introduction to Chapter

Section 431 sets out the conditions under which the special loan relationship rules for European cross-border mergers apply, including the different categories of merger that qualify.

• The Chapter covers four types of cross-border merger: formation of a European Company (SE), formation of a European Co-operative Society (SCE), absorption of one or more companies into an existing company, and combination of two or more companies into a new company in exchange for shares or debentures
• The merging companies must be resident in the UK or an EU member state, but not all in the same state, and the receiving company must be within the charge to UK corporation tax immediately after the merger
• Additional conditions apply depending on the merger type: for most mergers, assets must be transferred in exchange for shares or debentures; for mergers into existing or new non-SE/SCE companies, each transferor must cease to exist without going into formal liquidation
• Even where the receiving company is not within the charge to corporation tax (condition D not met), the reorganisation rules for loan relationships can still apply if a UK-resident company transfers all assets and liabilities of a permanent establishment in a member state — including a loan relationship — to another company in a member state