Visit the global automotive industry news blog with European automotive industry news.

GlobalAutoTV

"Global Executive Coaching and the Bottom Line"
Franz Neumeyer

euro resources

Need an office in Europe or Eastern Europe? Office suites, meeting rooms, virtual offices, network access

free downloads

EASTERN EUROPE: "Investing in Central and Eastern Europe" white paper by Dresdner Bank

EASTERN EUROPE: "Investing in Central and Eastern Europe" white paper by Dresdner Bank. 46 pages.

proceed to download

eJournals

backEUROtalk May, 2012

Cross Border Mergers in Europe

Following the implementation of the cross-border merger directive in European national laws, the cross-border merger has proven to be an effective instrument for multinationals with presence in European Member States to consolidate, integrate and rationalize European business activities in one legal entity. The cross-border merger may result in additional synergies and more critical mass, reducing the administration and overhead expenses and harmonizing the decision and management structure within Europe.

Legal aspects

The cross-border merger of companies is based on domestic merger law of the European Member States involved. As a result of a cross-border merger, the acquiring company will, under a universal title by way of absorption, acquire all assets and liabilities of the company ceasing to exist. The company ceasing to exist will cease to exist without a liquidation procedure.

To view chart, please click here.

Tax aspects

From a corporate income tax perspective, in general the company ceasing to exist would be deemed to realize a capital gain upon the moment of the merger insofar the fair market value of the assets and the liabilities exceeds the fiscal book value of those assets and liabilities, as if the assets and liabilities were transferred. Such capital gain may - in principle - be subject to corporate income tax, provided none of the gains are exempt under the applicable participation exemption regime and no loss compensation is possible in the Member State in which the company ceasing to exist resides. In addition, the applicable tax laws may provide for a special facility under which a merger may be tax exempt. In order to apply for this facility all assets and liabilities that are transferred should remain subject to taxation in the Member State in which the company ceasing to exist resided (i.e. form a permanent establishment after the cross-border merger).

Source: Baker & McKenzie - GAI

For more information or to contact Baker & McKenzie, please click here.

previous page

go top

search our site