Corporation Tax Act 2009 section 687

Disapplication of Chapter where transparent entities involved

Section 687 disapplies the loan relationships merger rules where one or more of the merging companies is a "transparent entity" — that is, a company resident in a member state that has no ordinary share capital.

• A "transparent entity" is a company resident in a member state that does not have ordinary share capital
• The section applies whenever one or more of the merging companies meets this definition
• Where a merger causes the assets and liabilities of a transparent entity to be transferred to another company, the loan relationships merger rules in Chapter 10 do not apply to that transfer
• The disapplication only relates to the transfer from the transparent entity itself — transfers between non-transparent companies involved in the same merger may still be within scope