Press Release: Company taxation: Commission welcomes agreement on improvements to Mergers Directive

The European Commission welcomed the adoption on 17 February 2005 by the EU's Council of Finance Ministers of a proposal to amend the EU Directive that provides for tax deferral in the case of cross-border mergers and divisions of companies, transfers of assets and exchanges of shares (90/434/EEC). The amendment that was based on a Commission proposal of October 2003 (see IP/03/1418) was intended, in particular, to broaden the existing Directive's scope to cover a larger range of companies including the European Company (see IP/01/1376) and the European Co-operative Society (see IP/03/1071); provide for a new tax-neutral regime for the transfer of the registered office of a European Company or of a European Cooperative Society between Member States; clarify that the Directive applies in the case of the conversion of branches into subsidiaries; and cover a new type of operation, known as a 'partial division' or 'split-off'.