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University of Augsburg German and European Company Law Prof. Dr. Otmar Thömmes 5 / 6 July 2013. Iconography. Entity Symbols. Corporation. Individual. Partnership. Branch. Agenda. Part A: Introduction Company Restructuring – Transactions in Practice Funding of Companies

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slide2

Iconography

Entity Symbols

Corporation

Individual

Partnership

Branch

slide3

Agenda

Part A: Introduction

  • Company Restructuring – Transactions in Practice
  • Funding of Companies
  • Tax Implications of Asset vs. Cash contributions
  • Single Asset Transfer vs. Universal Succession
  • Relocation of Seat

Part B: Company Restructurings

  • Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level
  • Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies
  • The European Company Law Statute (SE-Statute)
slide5

Part A: Introduction

  • Company Restructuring – Transactions in Practice
  • Funding of Companies
  • Tax Implications of Asset vs. Cash contributions
  • Single Asset Transfer vs. Universal Succession
  • Relocation of Seat
slide7

I. Company Restructuring – Transactions in Practice

  • Joint Ventures
    • Partnerships
    • Joint Subsidiaries
  • Holding Companies
  • European Company – SocietasEuropaea (SE)
  • Further Pan-European Legal Forms of Entities
  • Mergers
  • Division
slide8

I. Company Restructuring – Transactions in Practice

1. Joint Ventures

A

B

A

B

50%

50%

50%

50%

Subsidiary

Partnership

Other forms of Joint Ventures

  • Contractual Joint Ventures (without formation of a partnership or subsidiary)
  • Silent partnerships or participations
slide9

I. Company Restructuring – Transactions in Practice

1. Joint Ventures - Terminology

Subsidiary: Corporation in which another corporation (parent company) owns at least a majority of the shares

Wholly owned If parent owns 100% of the

subsidiary: shares in the subsidiary

Shareholding or Ownership of shares in a

participation: subsidiary

(Partnership) interest: Ownership in a partnership

slide10

I. Company Restructuring – Transactions in Practice

1. Joint Ventures - Legal Terms of Subsidiaries

  • Generally all forms of corporations possible
  • In practice, most commonly: GmbH or limited liability companies e.g.
    • in UK Ltd Limited company
    • in F SARLSociété à responsabilitélimitée
    • in NL BVBeslotenvennootschap
slide11
English Terms

Civil Law Partnership

General Partnership

Limited Partnership

Limited Partnership on shares

Legal Forms in Germany

GbR

OHG

KG (in particular GmbH & Co. KG)

KGaA

I. Company Restructuring – Transactions in Practice

1. Joint Ventures - Legal Terms of joined partnerships

For JV most commonly GbR or OHG

slide12

I. Company Restructuring – Transactions in Practice

  • 1. Joint Ventures - Classification (I)

How to classify foreign entities in Germany – Classification Criteria according the BMF (March 19, 2004, BStBl. I 2004, 411)

The foreignentityneedstobeexaminedwetheritresembles a German legal entityfromwithrespectto ist legal andeconomicstructure

  • Examiationofthe legal specificfeaturesundertheforeigncivillaw
  • Examinationwethertheassorted legal featuresresemble a German legal form or not
  • Eventuallytheeconomicstructuremay also betakenintoaccount
slide13

I. Company Restructuring – Transactions in Practice

  • 1. Joint Ventures - Classification (II)
slide14

I. Company Restructuring – Transactions in Practice

  • 1. Joint Ventures - Classification (III)
slide15

I. Company Restructuring – Transactions in Practice

2. Holding Companies (I)

A

A

Holding

Sub

Sub

Sub

Sub

  • Joint ownership in subs through intermediary holding company
  • Term Holding: A company where sole or primary purpose it is to own shares in other companies (at least two) and exercise the shareholder rights. Holding can also be engaged in the financing of its subsidiaries (so-called “Finance Holding”).
slide16

I. Company Restructuring – Transactions in Practice

2. Holding Companies (II)

US Parent

Use of Holdings for purposes of coordinating shareholder rights in regional subsidiaries, so-called regional holdings.

EU Holding

LACRO Hold.

AP Holding

Africa Hold.

D

FR

I

MEX

BRA

ARG

CH

IND

MAL

SA

ANG

KEN

slide17

I. Company Restructuring – Transactions in Practice

2. Holding Companies (III)

US Parent

German

HoldCo

UK HoldCo

French

HoldCo

Italian

HoldCo

German Subs

UK Subs

French Subs

Italian Subs

  • Use of Holdings for purposes of coordinating shareholdings in same country subsidiaries, so-called country holdings.
slide18

I. Company Restructuring – Transactions in Practice

2. Holding Companies (IV) - Tax Reasons

  • Alienation (e.g. sale) of shares often tax exempt at holding level
  • Group financing: Holding takes out a loan and provides financing to its subsidiaries
  • Tax consolidation – Group taxation Aggregation of profits and losses for tax purposes
slide19

I. Company Restructuring – Transactions in Practice

3. European Company - SocietasEuropaea (SE)

  • Joint Holding Company
  • (see Art. 2 (2), Art. 32 et seq. SE Statute)
  • Joint Subsidiary Company
  • (see Art. 2 (3), Art. 35 et seq. SE Statute)
slide20

I. Company Restructuring – Transactions in Practice

4. Further Pan-European Legal Forms of Entities

  • European Economic Interest Grouping (EEIG)
    • (Council Regulation (EEC) No 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG).
  • European Cooperative Society (SCE)
    • (Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE). Council Directive 2003/72/EC of 22 July 2003 supplementing the Statute for a European Cooperative Society with regard to the involvement of employees.)
  • Not yet available: European Private Company Statute (SPE)
    • (Proposal for a Council Regulation of 25 June 2008 on the Statute for a European Private Company.)
  • Not yet available: FundatioEuropaea (FE)
    • (Proposal for a Council Regulation of 08 February 2012 on the Statute for a European Foundation Statute (FE).)
slide21

I. Company Restructuring – Transactions in Practice

5. Mergers

Increasing intensity of collaboration

  • Joint Ventures
  • Holding Companies
  • Legal Merger
slide22

I. Company Restructuring – Transactions in Practice

5. Mergers a) Terminology

  • The term “Merger” is in Anglo-Saxon countries often used to describe the acquisition by one company of the majority of the shares in another company
  • “Mergers and Acquisitions” (M&A), in these countries, means the acquisition of an enterprise by another enterprise
  • “Legal Merger” is frequently used to distinguish a European type of merger, i.e. the amalgamation of two companies into one, from the Anglo-Saxon type of merger by acquisition
slide23

I. Company Restructuring – Transactions in Practice

5. Mergers b) Legal Mergers (I)

Pre-Merger-Situation

SH 3

SH 4

SH 1

SH 2

Company A

Company B

slide24

I. Company Restructuring – Transactions in Practice

5. Mergers b) Legal Mergers (II)

Post-Merger-Situation: Merger by acquisition

SH 1

SH 2

SH 3

SH 4

Company A

Branch B

Transferring company B ceases to exist, company A receives the assets of company B and operates the branch(es) formerly operated by company B.

slide25

I. Company Restructuring – Transactions in Practice

5. Mergers b) Legal Mergers (III)

Post-Merger-Situation: Merger by formation of a new company

SH 1

SH 2

SH 3

SH 4

Company C

Branch B

Branch A

Transferring company A and B cease to exist, new company C receives the assets of companies A and B and operates the branch(es) formerly operated by A and B.

slide26

I. Company Restructuring – Transactions in Practice

5. Mergers b) Legal Mergers (IV)

Upstream-merger

Pre-merger-situation

Post-merger-situation

Company A

Company A

Company B

The parent company receives the assets of the subsidiary, the subsidiary ceases to exist.

slide27

I. Company Restructuring – Transactions in Practice

5. Mergers b) Legal Mergers (V)

Downstream-merger

Pre-merger-situation

Post-merger-situation

Company A

Company B

Company B

Branch

The subsidiary receives the assets of the parent company, the parent company ceases to exist.

slide28

I. Company Restructuring – Transactions in Practice

5. Mergers b) Legal Mergers (VI)

  • Characteristics of a “legal merger”
  • Transferring company(ies) cease(s) to exist as legal entity(ies)
  • No liquidation
  • Absorption by the receiving company of the assets and liabilities of the transferring company
  • No requirement of single asset transfers
  • Universal succession
slide29

I. Company Restructuring – Transactions in Practice

  • 5. Mergers c) European Company Law Measures relative to Mergers
  • Company Law Directive of 5 April 2011, 2011/35/EU (OJ L 110 of 29.04.2011, p. 1) concerning mergers of public limited liability companies (replacing Third Company Law Directive of 9 October 1978, 78/855/EEC (OJ L 295 of 20.10.1978, p. 36) regarding domestic merger)
  • Directive of 26 October 2005, 2005/56/EC (OJ L 310, p. 1) on cross-border mergers of limited liability companies
  • SE-Statute of 8 October 2001 (OJ L 294 of 10.11.2001, p. 1): Formation of a SE through a merger of two public limited companies, see Art. 2 (1) of the Statute
slide30

I. Company Restructuring – Transactions in Practice

6. Division (I)

Pre-division-situation

Post-division-situation

“split-off”

SH 1

SH 2

SH 1

SH 2

Company A

Company B

“split-up”

SH 1

SH 2

Company A

Company B

Company C

slide31

I. Company Restructuring – Transactions in Practice

6. Division (II)

Two forms of Division:

  • Complete division of company A into two companies B and C; also called “split-up”
  • Incomplete division of company A, i.e. company A does not cease to exist; also called “split-off”
slide32

I. Company Restructuring – Transactions in Practice

6. Division (III)

  • Sixth Company Law Directive 82/891/EEC of 17 December 1982 on (domestic) divisions of public limited companies (i.e. within one Member State), OJ L 378, 31.12.1982, p. 47
  • No proposal yet for cross-border division i.e. concerning companies from different Member States
slide34

Part A: Introduction

  • Company Restructuring – Transactions in Practice
  • Funding of Companies
  • Tax Implications of Asset vs. Cash contributions
  • Single Asset Transfer vs. Universal Succession
  • Relocation of Seat
slide35

II. Funding of Companies

  • 1. Funding of Companies - Overview
  • Asset Contribution versus Cash Contribution
  • Funding of Contributions – Equity or Cash

Funding of companies

Equity

Debt

Cash Contribution

Asset Contribution

- against new shares

- against increase of reserves

slide36

II. Funding of Companies

  • 1. Funding of Companies - Overview
  • Equity (Shareholder Capital)
  • Debt (loans)

Equity Funding requires either increase in share capital or (deemed) contribution to the capital reserves.

Debt Funding requires a loan agreement between the receiving company and the funding company.

slide37

II. Funding of Companies

  • 2. Key features of Equity vs. Loan Financing
  • Equity Funding does not require the receiving company to pay interest
  • Loan funding requires interest to be paid by recipient company
  • Interest free Loans can pose severe tax issues, e.g. deemed income recognition
  • Hybrid Forms of Equity/Loan Financing e.g. profit participation loans, silent partnerships, jouissance rights (Genussrechte), convertible loans
slide38

II. Funding of Companies

  • 3. Asset vs. Cash Contribution
  • Cash contribution is simple, quick and does not raise specific requirements
  • Asset contribution requires valuation of assets if made in exchange for (new) shares – Increase of stated share capital
  • Principle of Maintenance of Capital
slide39

II. Funding of Companies

  • 3. Asset vs. Cash Contribution a) Company law treatment of
  • asset contribution (I)
  • Legal basis: Sec. 27, 183 AktG, Sec. 5, 56 GmbHG
  • In return shares are issued to the contributing company
  • Acquisition costs: Sec. 255 para. 1 HGB:
    • Acquisition costs are all expenses made to acquire assets and liabilities of a company
    • No specific legal provisions for the evaluation of a contribution in kind
slide40

II. Funding of Companies

  • 3. Asset vs. Cash Contribution a) Company law treatment of
  • asset contribution (II)
  • Literature developed principles for evaluation – basis for evaluation is the value of the issued shares
  • Value of the issued shares and therefore acquisition costs of the shares equals the Fair Market Value (FMV) of the contributed assets
  • Difference between FMV and book value of asset = capital gain
slide41

II. Funding of Companies

  • 3. Asset vs. Cash Contribution b) Company law treatment of
  • cash contribution (I)
  • Cash contribution in exchange for new shares – Increase of stated share capital
  • Formal requirement: Notarization under German Law (see Sec. 23 AktG, Sec. 2 GmbHG)
  • Cash injection requirements: complete injection (Volleinzahlung), partial injection (Teileinzahlung), Sec. 36, 36a AktG, Sec. 7 (2),(3) GmbHG
slide42

II. Funding of Companies

  • 3. Asset vs. Cash Contribution b) Company law treatment of
  • cash contribution (II)
  • Cash contribution without issuance of new shares
  • No increase of stated share capital
  • So-called deemed contribution (verdeckteEinlage)
  • Mere increase of value of existing shares
  • No notarization required
slide44

Part A: Introduction

  • Company Restructuring – Transactions in Practice
  • Funding of Companies
  • Tax Implications of Asset vs. Cash contributions
  • Single Asset Transfer vs. Universal Succession
  • Relocation of Seat
slide45

III. Tax Implications of Asset vs. Cash contributions

  • 1. Cash Contribution (I)
  • Receiving company receives cash payment
  • Cost of acquisition of the shares determined by the amount of cash contributed
  • Cash does not contain built-in-gains
slide46

III. Tax Implications of Asset vs. Cash contributions

  • 1. Cash Contribution (II)

Before the contribution:

Company A

Fixed assets: 5,0 Mio Equity: 10,0 Mio

Current assets

Cash: 5,0 Mio

Total: 10,0 Mio Total: 10,0 Mio

After the contribution:

Company B (subs)

(Parent) Company A

Cash: 0,5 Mio Equity: 0,5 Mio

Total: 0,5 Mio Total: 0,5 Mio

Fixed assets: 5,0 Mio Equity: 10,0 Mio

Shares in affiliated

companies 0,5 Mio

Cash: 4,5 Mio

Total: 10,0 Mio Total: 10,0 Mio

slide47

III. Tax Implications of Asset vs. Cash contributions

  • 2. Asset Contribution (I)

Shares granted in exchange for contribution of single assets:

  • undisclosed reserves of assets contributed are generally subject to income taxation
  • acquisition costs of the shares granted are amounting to the fair market value of the assets contributed (Sec. 6 para. 6 EStG)
  • fair market value is determined in Sec. 9 BewG
slide48

III. Tax Implications of Asset vs. Cash contributions

  • 2. Asset Contribution (II)

Company A

Before the contribution:

Fixed assets: 5,0 Mio Equity: 10,0 Mio

Current assets

Cash: 5,0 Mio

Total: 10,0 Mio Total: 10,0 Mio

Contribution of assets with book value of 0,5 Mio and market value of 2,0 Mio

After the contribution:

Company B (subs)

(Parent) Company A

Assets: 2,0 Mio Equity: 2,0 Mio

Total: 2,0 Mio Total: 2,0 Mio

Fixed assets: 4,5 Mio Equity: 10,0 Mio

Shares in affiliated Profit/Gain: 1,5 Mio

companies: 2,0 Mio

Cash: 5,0 Mio

Total: 11,5 Mio Total: 11,5 Mio

The assets contributed do not form a branch of activity/participation interest within the sense of Sec. 20 (1) UmwStG➔ disclosure of built-in-gains

slide49

III. Tax Implications of Asset vs. Cash contributions

  • 2. Asset Contribution (III)
  • Shares granted in exchange for contribution of
    • a branch of activity
    • a participation interest or
    • shares granting a majority of voting rights to the recipient of the shares
  • Receiving company may choose between the book value or the fair market value if the conditions of Sec. 20 (2) s. 2 or 21 (1) s. 2 UmwStG respectively are met
    • Book value: contribution is tax neutral
    • Fair market value: undisclosed reserves are subject to corporate income tax
slide50

III. Tax Implications of Asset vs. Cash contributions

  • 2. Asset Contribution (IV)

Company A

Before the contribution:

Fixed assets: 5,0 Mio Equity: 10,0 Mio

Current assets

Cash: 5,0 Mio

Total: 10,0 Mio Total: 10,0 Mio

Contribution of assets with book value of 0,5 Mio and market value of 2,0 Mio

After the contribution:

Company B (subs)

(Parent) Company A

Assets: 0,5 Mio Equity: 0,5 Mio

Total: 0,5 Mio Total: 0,5 Mio

Fixed assets: 4,5 Mio Equity: 10,0 Mio

Shares in affiliated

companies 0,5 Mio

Cash: 5,0 Mio

Total: 10,0 Mio Total: 10,0 Mio

The assets contributed form a branch of activity/participation interest within the sense of Sec. 20 (1)/21 (2) UmwStG➔ no disclosure of built-in-gains under the conditions of Sec. 20 (2) s. 2 / Sec. 21 (2) UmwStG

slide52

Part A: Introduction

  • Company Restructuring – Transactions in Practice
  • Funding of Companies
  • Tax Implications of Asset vs. Cash contributions
  • Single Asset Transfer vs. Universal Succession
  • Relocation of Seat
slide53

IV. Single Asset Transfer vs. Universal Succession

Two forms of single asset transfers:

1. Contribution in kind

2. Share for share exchange transactions

slide54

IV. Single Asset Transfer vs. Universal Succession

  • 1. Contribution in kind
  • Each asset has to be transferred individually
  • Contracts between the transferring company and a third party concerning the assets (i.e. rental contracts) have to be adapted in order to replace the transferring company with the receiving company
  • The third party of a contract may object the transfer of the obligations resulting from a contract
  • Tax neutral only if the asset contributed is a partnership interest or the assets contributed form a branch of activity (BetrieboderTeilbetrieb) according to Sec. 20 (1) UmwStG
slide55

IV. Single Asset Transfer vs. Universal Succession

  • 2. Share-for-share-exchange-transactions (I)
  • Acquiring company issues new shares to the transferring company in exchange for a shareholding in the acquired company
  • Tax neutral only under the conditions of Sec. 21 (1) s. 2 UmwStG
  • The majority of shareholders in the acquired company has to accept the offer of the acquiring company in order to achieve a qualifying shareholding (i.e. the majority of voting rights) in the acquired company
  • A subsequent (legal) merger may be necessary in order to combine the undertakings of the acquired and the acquiring company
slide56

IV. Single Asset Transfer vs. Universal Succession

  • 2. Share-for-share-exchange-transactions (II)

Before the share-for share transaction

After the share-for share transaction

Company A

Company A

Company B

Company B

Company C

Company C

Company A transfers its shareholding in company C to company B and receives (new) shares in exchange for the shareholding transferred.

slide57

IV. Single Asset Transfer vs. Universal Succession

  • 3. Universal Succession (I)

Three forms of universal succession transactions:

  • Legal merger (see above)
  • Division (see above)
  • Partnership collapsing into a single partner
slide58

IV. Single Asset Transfer vs. Universal Succession

  • 3. Universal Succession (II)

Legal and tax consequences of a universal succession:

  • Successor takes over the legal position of the transferring company concerning the assets that are subject to the universal succession
  • As a general rule: Carry-over of book values
  • All rights and obligations are transferred to the new owner
slide59

IV. Single Asset Transfer vs. Universal Succession

  • 3. Universal Succession (III)

Partnership collapsing into a single partner (1)

  • Retirement of a partner results in a partnership with only one single partner
  • Partnership ceases to exist
  • All assets and liabilities collapse into the remaining partner
  • The remaining partner takes over the legal position of the partnership
  • All rights and obligations are transferred to the single partner
slide60

IV. Single Asset Transfer vs. Universal Succession

  • 3. Universal Succession (IV)

Partnership collapsing into a single partner (2)

Partner 1

Partner 2

Partner 1

Partner 2

cancellation of partnership

OHG/KG

Branch of Activity

Partnership ceases to exists, if only one partner remains. Assets are directly attributed to the partner.

slide62

Part A: Introduction

  • Company Restructuring – Transactions in Practice
  • Funding of Companies
  • Tax Implications of Asset vs. Cash contributions
  • Single Asset Transfer vs. Universal Succession
  • Relocation of Seat
slide63

V. Relocation of Seat

  • 1. Terminology – Term “Seat”
  • Statutory Seat or Registered Seat
  • Place of Management (and Control) or Head Office
  • Use of term in practice often ambiguous
  • Most commonly “transfer of seat” refers to a company whose place of management is relocated to a state other than that of its incorporation
slide64

V. Relocation of Seat

  • 2. Determination of statutory seat
  • Statutory Seat is determined by articles of association, Sec. 4a GmbHG; Sec. 5 AktG
    • must be located within Germany
    • no connection to the place of management and control necessary (as it was the case prior to 1 November 2008)
  • Art. 7 SE-Statute: The statutory seat of an SE shall be located in the same MS as its head office (“Hauptverwaltung”)
slide65

V. Relocation of Seat

  • 3. Relocation of statutory seat
  • Sec. 45 AktG limited to relocations of statutory seat within Germany
  • Change of statutes
  • Decision of general meeting
  • Registration
  • No specific provision governing domestic relocation of GmbH and SE
slide66

V. Relocation of Seat

  • 4. Relocation of head office
  • No formal decision by general meeting required
  • Domestic relocation of head office does not require the company to also relocate statutory seat any more (Sec. 5 (2) AktG, 4a (2) GmbHG and 2 SEAG abolished)
  • In case of an outbound transfer of the head office the “Real seat doctrine” should no longer apply
slide67

V. Relocation of Seat

  • 5. “Real seat doctrine” and “Incorporation doctrine” (I)

“Real seat doctrine”

  • Applicable company law depends on the jurisdiction where the actual center of administration (“headquarter”) of a company is located
  • Severe consequences may arise for dual-resident companies

“Incorporation doctrine”

  • Determines the applicable law according to the statutory seat of a company
slide68

V. Relocation of Seat

  • 5. “Real seat doctrine” and “Incorporation doctrine” (II)

The “real seat doctrine” was developed for

  • Fraudulent activities

It has been applied in practice for the following reasons

  • Prevent the undermining of capitalization requirements
  • Prevent undermining of the German workers participation rules
  • Protection of creditors
  • Protection of the public
slide69

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law a) Art. 49 TFEU

Freedom of establishment and transfer of seat

  • Art. 49 TFEU:

“Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.

Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 48, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the chapter relating to capital.”

slide70

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law a) Art. 54 TFEU

Freedom of establishment and transfer of seat

  • Art. 54 TFEU:

“Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Community shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States.

‘Companies or firms’ means companies or firms constituted under civil or commercial law, including cooperative societies, and other legal persons governed by public or private law, save for those which are non-profit-making.”

slide71

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law a) 2005/19/EC

Recital 6 of the Directive 2005/19/EC of 17 February 2005 amending Directive 90/434/EEC 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States, OJ L 58 of 4.3.2005, p. 19:

“The transfer of the registered office is a means of exercising freedom of establishment as provided for in Articles 43 and 48 [now: Art. 49 and 54] of the Treaty. No assets are transferred and the company and its shareholders do not derive any income, profits or capital gains from it. …”

slide72

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law b) Daily Mail

Case law of the European Court of Justice in the cases

  • Daily Mail

ECJ of27.9.1988, Case 81/07, The Queen v H. M. Treasury andCommissionersof Inland Revenue, ex parte Daily Mail and General Trust plc., ECR 1988, p. 5483

United Kingdom

The Netherlands

Daily Mail plc.

Daily Mail

Place ofmanagementand control to beshifted to The Netherlands

SubCo 1

SubCo 2

SubCo 3

slide73

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law b) Daily Mail
  • Facts:

Daily Mail plc., a British holding company, wanted to transfer its place of central management and control to The Netherlands and applied for permission of the British Treasury. According to the applicable UK Income and Corporation Taxes Act 1970 a corporation resident for tax purposes in the UK may cease to be resident only with the consent of the Treasury.

  • Legal background:

Tax residency for UK tax purposes is determined by the place of central management and control. Built-in gains in shares held by that company are no longer subject to UK corporation tax in case of cessation of the tax residency. For Dutch tax purposes, capital gains taxation is calculated on the basis of the value of the shares at the time of beginning of tax residency in the Netherlands.

  • Decision:

Denial of consent is compatible with the freedom of establishment. The freedom of establishment does not confer the right on a company incorporated under the legislation of a Member State and having its registered office there to transfer its central management and control to another Member State.

slide74

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law c) Centros
  • Centros

ECJ of 9.3.1999, Case C-212/97, Centros Ltd. v Erhvervs- og Selskabsstyrelsen, ECR 1999, p. I-1459

United Kingdom

Denmark

Mr.B

Mrs.B

Centros Ltd.

Branch

slide75

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law c) Centros
  • Facts:

A Danish couple formed Centros Ltd. under UK law in order to avoid Danish minimum capital requirements applying on formation of a Danish private limited company.

No business to be conducted in the UK.

Centros Ltd. applied for registration of a branch in Denmark. The Danish authorities refused to register the branch on grounds of circumvention of national law

  • Decision:

Refusal of registration infringes freedom of establishment of the Centros Ltd. Avoidance of national provisions on minimum capital requirements not a valid justification for a discrimination of a company formed under the laws of another Member State.

slide76

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law d) Überseering
  • Überseering

ECJ of 5.11.2002, Case C-208/00, Überseering BV v NordicConstruction Company Baumanagement GmbH (NCC), ECR 2002, p. I-9919

The Netherlands

Germany

A

B

Überseering BV

NCC GmbH

Legal Proceedings

slide77

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law d) Überseering
  • Facts:

In legal proceedings between Überseering BV and NCC GmbH before a German Civil Court the latter questioned the legal capacity of Überseering BV due to a deemed transfer of the head office from The Netherlands to Germany on application of the “real seat doctrine”.

  • Decision:

A Member State may not disregard the legal capacity of a company that was established properly under the laws of another Member State and according to the laws of that State a transfer of the head office to abroad does not have legal consequences for that company.

slide78

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law e) Inspire Art
  • Inspire Art

ECJ of 30.9.2003, Case C-167/01, Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art. Ltd, ECR 2003, p. I-10155

United Kingdom

The Netherlands

A

Sole shareholder and director of Inspire Art

Dutch resident

Inspire Art Ltd.

No business activities at the place of registration

Branch

slide79

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law e) Inspire Art
  • Facts:

The Amsterdam Chamber of Commerce and Industry wanted to subject Inspire Art. Ltd. according to the WFBV, the Dutch Law on pseudo foreign companies. The status of a pseudo foreign company would have brought about for Inspire Art Ltd. the obligation to comply with minimum capital and disclosure requirements. In case of failing to fulfill these requirements, the directors would be liable for the company’s liabilities.

The single purpose for the establishment of Inspire Art und UK laws was to make use of the more liberal minimum capitalization rules under UK company law.

  • Decision:

According to the ECJ further requirements set up for registration of a branch and obligations for foreign corporations as contained in the WFBV infringe the freedom of establishment

slide80

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law f) SEVIC
  • SEVIC Systems

ECJ of 13.12.2005, Case C-411/03, SEVIC Systems AG, ECR 2005, p. I-10805

Germany

Luxembourg

SEVIC Systems AG

Security Vision Concept SA

Application for registration of cross-border merger to German Local Court of Neuwied

slide81

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law f) SEVIC
  • Facts:

SEVIC applied for registration in the commercial register, in accordance with the UmwG. The German Local Court of Neuwied refused to register the merger between SEVIC and Security Vision, a subsidiary established in Luxembourg, on the ground that the German law on company restructurings provided for mergers between companies established in Germany only.

  • Judgment:

Articles 43 EC and 48 EC preclude Member States from restricting merger transactions to domestic entities only. A merger by dissolution without liquidation of one company and transfer of the whole of its assets to another company must be open also to entities which are established in another Member State if in a comparable domestic situation a merger would be feasible.

slide82

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law g) Cartesio
  • Cartesio

ECJ of 16.12.2008, Case C-210/06, Cartesio OktatóésSzolgáltatóbt,

ECR 2008, p. I-9641

Hungary

Italy

A

A

Cartesio

ApplicationtoHungariancommercialcourttorecordnew“operational headquater“ in Italy.

slide83

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law g) Cartesio
  • Facts:

Cartesio is a limited partnershipconstituted in accordancewithHungarianlaw and registered in Hungary. Itsubmitted an application to thecommercialcourt to amenditsregistration in thelocalcommercialregister so as to record an Italianaddressasnew operational headquarters. The commercialcourtrejectedCartesio’sapplication. It hold thatHungarianlawdid not offercompaniesthepossibilityof transferring their operational headquarters to another Member State whileretainingtheir legal statusas a companygovernedbyHungarianlaw. In order to changeits operational headquarters, Cartesio wouldfirsthave to bedissolved in Hungary and thenreconstitutedunderItalianlaw.

  • Opinion of AG PoiaresMaduro:

Relocation to another MS should fall within the scope of the freedom of establishment; grounds of general public interest may justify restrictions but not dissolution of the company in each case of relocation.

slide84

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law g) Cartesio
  • Judgment:

MS are not prohibited from disregarding legal entities upon a mere relocation of head office to another MS. A simultaneous relocation of head office and statutoryseatin another MS falls within the scope of the freedom of establishment.Provided that the MS where the new seat shall be located, provides for the necessary legal framework, the former home state of the relocating company may not deny the legal capacity of the entity.Winding up of an entity upon a relocation to another company is tolerable only if is serves overriding requirements in the public interest.

slide85

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law h) VALE
  • VALE

ECJ of 12.7.2012, Case C-378/10, VALE Építési Kft., NJW 2012, 2701

Italy

Hungary

VALE

VALE

Application to Hungariancommercialcourt to register VALE after havingbeendeletedfromthetraderegistry in Italy. VALE also applied to showdeleted (Italian) entityaspredecessorofnewHungarianentity in traderegister.

slide86

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law h) VALE
  • Facts:
  • VALE COSTRUZIONI S.r.l., an Italy-based entity, intended to transfer its legal and factual seat to Hungary while terminating all its activities in Italy as well as its legal existence under Italian law. By relocation to Hungary, VALE intended to become a Hungarian company operating under the name of VALE ÉpítésiKft. and governed by Hungarian company. In its application for registration to the Hungarian company register, it requested to enter VALE COSTRUZIONI S.r.l. as legal predecessor of VALE ÉpítésiKft. in the trade register.
  • The court of registration rejected the application arguing that under Hungarian law the registration of a foreign company as a legal predecessor of a Hungarian company is not possible.
  • The Hungarian Supreme Court requested a preliminary ruling from the ECJ asking whether the Hungarian company law not allowing for a conversion of a company of another MS into a Hungarian company are compatible with the freedom of establishment as set out in the former Articles 43 and 48 EC (now Articles 49 and 54 TFEU).
  • Opinion of AG Jääskinendelivered on 15 December 2011
  • AG: VALE can rely on the freedom of establishment. He indentified the transfer of seat as a ‘cross-border new establishment’ situation and held that the rejection constituted an infringement of the freedom of establishment which is not justified.
slide87

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law h) VALE
  • Judgment:

Articles 49 and 54 TFEU must be interpreted as precluding national legislation which enables companies established under national law to convert, but does not allow, in a general manner, companies governed by the law of another MS to convert to companies governed by national law by incorporating such a company.

Articles 49 and 54 TFEU must be interpreted, in the context of cross-border company conversions, as meaning that the host MS is entitled to determine the national law applicable to such operations and thus to apply the provisions of its national law on the conversion of national companies governing the incorporation and functioning of companies, such as the requirements relating to the drawing-up of lists of assets and liabilities and property inventories. However, the principles of equivalence and effectiveness, respectively, preclude the host MS from

- refusing, in relation to cross-border conversions, to record the company which has applied to convert as the ‘predecessor in law’, if such a record is made of the predecessor company in the commercial register for domestic conversions, and

- refusing to take due account, when examining a company’s application for registration, of documents obtained from the authorities of the MS of origin.

slide88

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law i) OLG Nürnberg
  • Higher Regional Court Nürnberg, 13.2.2012, Case 12 W 2361/11

(The Higher Regional Court (OLG) in Nürnberg is one of three appellate courts in civil, family and criminal matters for the State of Bavaria.)

Luxembourg

Germany

Sarl

GmbH

Application for registration of cross-border transfer of seat to Germany to the Local Court of Fürth.

slide89

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law i) OLG Nürnberg
  • Facts:
  • A Luxembourg limited liability company intended to relocate head office and statutory seat from Luxembourg to Germany and to take the form of a German GmbH. The German local court Fürth refused the registration of the GmbH in the commercial register.
  • Judgement:
  • German company law does not allow a relocation of head office and statutory seat under change of legal form.
  • Sec. 4a GmbHG does not mention the transfer to Germany of a company under foreign law in Germany.
  • Sec. 122a et seqUmwG provides for a cross-border merger only.
  • A change of legal form is provided in Sec. 1 (1) No. 4, 190 et seqUmwG only for domestic entities.
  • The 14th EU Company Law Directive has not been adopted.
  • ECJ Cartesio contains requirements for the emigration State but not for the host State. Thus, no possibility for a foreign entity to relocate to Germany.
slide90

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law j) National Grid Indus
  • National Grid Indus

ECJ of 29.11.2011, Case C-371/10, National Grid Indus BV v. Inspecteur van de Belastingdienst Rijnmond (kantoor Rotterdam), IStR 2012, 282

Netherlands

United Kingdom

National Grid Indus BV

National Grid Indus BV

Place ofmanagementand controlshifted to UK

Transfer of place of management and control of Dutch National Grid Indus to UK. No p.e. remains in The Netherlands. Immediate taxation of built-in-gains in the assets by Dutch tax authorities in line with freedom of establishment of National Grid Indus BV?

slide91

V. Relocation of Seat

  • 6. Cross-Border Mobility of Companies and EC Law j) National Grid Indus
  • Facts:
  • National Grid Indus (NGI) involved a Dutch resident company that transferred its place of effective management to the U.K. in 2000. At the time of the transfer, NGI held a sterling receivable with built-in gains due to an increase in the exchange rate for the British pound. Under Dutch corporate law, the move to the U.K. did not affect the company’s legal personality. After the move, NGI qualified as a U.K. tax resident under the Netherlands-U.K. tax treaty. NGI ceased to be a Dutch tax resident and the Dutch tax authorities levied an immediate exit charge on the unrealized gains on the company’s assets, i.e. on its currency gains.
  • Judgement:
  • ECJ ruled on 29 November 2011 that EU MS, in principle, may impose an exit charge on unrealized gains upon the transfer of a company’s place of effective management to another MS. However, the exit charge infringes the freedom of establishment if it is levied at the time of emigration, without offering the emigrating company the option to request a deferment of tax collection.
  • Two statements of the Court relating to a MS’s ability to charge interest and to require a bank guarantee have caused some confusion.
slide92

V. Relocation of Seat

  • 6. Cross-Border Mobility … k) Scope of application of the “real seat
  • doctrine” after the Überseering decision
  • According to the reasoning of the ECJ in its Überseering-decision every Member State has to acknowledge the legal order of other Member States. The location of its registered office, central administration or principal business constitutes the connecting factor with the legal system of a Member State. A company established properly under the laws of that Member State and exercising the rights granted by the freedom of establishment, has to be recognized by any other Member State.
  • The Member State where a company is established and registered is therefore free to apply its own legal principles determining the applicable law for the company. Other Member States (i.e. also the Member State where the central management and control is located) have to recognize that decision. Therefore only the State of incorporation is free to apply the real seat doctrine to companies incorporated under its laws. The state of the head office may apply the real seat doctrine by reference to the laws of the state of incorporation only if the state of incorporation applies the real seat doctrine.

NOTE: The real seat doctrine may not prohibit legal entities to leave a Member State by relocating both its head office and its statutory seat to another Member State.

slide93

V. Relocation of Seat

  • 6. Cross-Border Mobility … l) Recent developments

Recent developments – further restrictions of the real seat doctrine’s

scope?

  • Regulation No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), OJ L 294, of 10.11.2001, p. 1 requires in its Art. 7 an SE to keep its head office in the State where its registered office is located (see also Art. 64 of the Statute for legal consequences for an SE that does not comply with the obligation or Art. 7). Therefore, an SE may only transfer its registered office and its head office only simultaneously to another Member State. The Statute therefore does not question the real seat doctrine that may still be applied by certain Member States.
  • The same is true for an European Cooperative Society (see Art. 6 of the Regulation No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE), OJ L 207, 18.8.2003, p. 1).
  • According to Art. 11 para 2 of the pre-draft of a Directive regarding the transfer of seat of companies (a German version was published in ZIP 1997, 1727) the concept of the abovementioned regulations will also be used for that Directive. However, work on proposal of the Commission has been stopped in 2007.
slide94

V. Relocation of Seat

  • 6. Cross-Border Mobility … m) Relocation from abroad

Simultaneous relocation of statutory seat and head office and its company law and tax law treatment

  • Relocation from abroad
    • Company law treatment

According to settled German case law a relocation of registered office cannot be registered as the corporation has not been formed properly under German company law (see OLG Zweibrücken, decision of 27.6.1990, DB 1990, 1660). Such a company may invoke Art. 49, 54 TFEU to achieve registration maintenance of legal capacity.

    • Tax law treatment

A relocation of a company to Germany may result in a capital gains taxation of a German PE, if any, if the identity of the corporation changes in the course of the relocation. In case of a registration of a foreign corporation in the German trade register, i.e. a cross-border conversion (already executed by some registration offices), the legal capacity of the corporation is maintained, no capital gains taxation will take place. Assets which are transferred to Germany (“Verstrickung”) are recorded in the companies tax balance sheet at fmv (sec. 4 (1)7; Sec. 6 (1) No. 5a EStG).

slide95

V. Relocation of Seat

  • 6. Cross-Border Mobility … n) Relocation to abroad
  • Relocation to abroad
    • Company law treatment:

According to settled case law the transfer of the registered office and head office of a German corporation results in a winding-up of the corporation irrespective whether the new State of residency follows the real seat doctrine or the incorporation doctrine. The decision of the general meeting is deemed to be a decision of winding-up (see, for example, decision of BayObLG of 7.5.1992, GmbHR 1992, 529). The relocating company needs to invoke the ECJ’s principles developed in the Cartesio-decision in order to maintain its legal capacity.

    • Tax law treatment:

The transfer of a companies registered office and head office results in a taxation of built-in-gains as far as Germany loses the right to tax profits from the alienation of assets of the relocating company, Sec. 12 para 1 KStG. In case of a relocation to a third country, liquidation taxation takes place, Sec. 12 para 3 KStG. All built-in gains are subject to capital gains taxation upon the time of the relocation. The German Federal Tax Court ruled in its decision of 17.7.2007 that Germany does not loose taxing rights upon a transfer of assets to abroad. The decision may render Sec. 12 (1) KStG inapplicable in cases where a company relocates to abroad. Germany has amended its legislation stating that a transfer of an asset to a foreign PE actually results in a loss of taxing right (Sec. 4 para 1 s. 4 EStG)

slide96

V. Relocation of Seat

  • 7. Future developments – abolition of “real seat doctrine”?
  • From 1 Jan 2006 the Amendment Directive to the Merger Directive had to be implemented by Member States in domestic law.
  • The Amendment Directive covers also the transfer of the registered office. According to the new Art. 10b-d (now: Art. 12-14) of the Merger Directive in its amended version tax deferral credit is granted as far as the assets of the relocation company are still attributed to a PE in the State of former residency.
  • Implementation took place (SEStEG) effective as of 1 Jan 2006.
  • Note: These provisions do only apply to the transfer of the registered seat of an SE or an SCE. National kinds of companies are not covered. These companies need to invoke the freedom of establishment principle.
slide98

Part B: Company Restructurings

  • Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level
    • Civil Law Treatment
    • Tax Law Treatment
  • Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies
    • Civil Law Treatment
    • Tax Law Treatment
  • The European Company Law Statute (SE-Statute)
slide100

Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level

  • Civil Law Treatment
    • Issues to be resolved
      • aa) Protection of the shareholders
      • bb) Protection of the creditors
      • cc) Employee rights
    • b) Legal provisions applying to Company Restructurings at domestic level
      • aa) Community Law framework
      • bb) Domestic Civil Law
  • 2. Tax Law Treatment
    • Tax Issues to be resolved
    • Tax Law Provisions applying to Company Restructurings
      • aa) Regulations in EStG / KStG
      • bb) Types of Reorganizations covered by the UmwStG
slide102
I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment a) Issues to be resolved

aa) Protection of minority shareholders

Conflicting interests may exist:

Minority shareholders  majority shareholders

Dilution of the portfolio due to issuing of new shares (relative interest in the new company decreases)

Economic value of the shares may decrease due to insufficient consideration (granted on the basis of valuation report)

Countermeasures: legal proceedings according to German Spruchverfahrensgesetz (SpruchG)

slide103
I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment a) Issues to be resolved

bb) Protection of creditors

  • In case of restructuring with universal succession: old debtor automatically replaced with new debtor (creditor has no say)
  • Assets subject to liability may be reduced
  • Consequence: possibly lower chances to claim the outstanding debt

cc) Employee rights

  • New contract partner / employer
  • In case of restructuring without universal succession:
    • working contracts have to be individually transferred (Transfer of assets)
    • Company worker participation may be endangered:
      • Transfer of a branch of activity
      • Fall below threshold values determining duty to implement worker participation
1 civil law treatment b legal provisions applying to company restructurings at domestic level

1. Civil Law Treatment b) Legal Provisions applying to company restructurings at domestic level

slide105

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying to company restructurings at domestic level

aa) Community Law framework

i) Company Law Directive 2011/35/EU of 5 April 2011

concerning mergers of public limited liability companies, OJ L 110 of 29.04.2011, p. 1 replacing Third Council Directive 78/855/EEC of 9 October 1978 concerning mergers of public limited liability companies (OJ L 295 of 20.10.1978, p. 36), as amended by the various Acts of Accession and Directive 2007/63/EC of 13.11.2007ii) Sixth Council Directive 82/891/EEC of 17 December 1982

concerning the division of public limited liability companies, OJ L 378 of 31.12.1982, p. 47 and Directive 2007/63/EC of 13.11.2007

iii) Council Directive 2001/23/EC of 12 March 2001

on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, OJ L 82 of 22.03.2001, p. 16 (replacing Directive 77/187/EEC of 14 February 1977)

slide106

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying to company restructurings at domestic level

Types of restructurings

Four Types of Restructurings (“Umwandlungen”) according to the

German Reorganization Act (UmwG):

  • Merger
  • Division
  • Conversion
  • Transfer of Property

bb) Domestic Civil LawUmwG

AktG

GmbHG

MitbestG

DrittelbG

1 civil law treatment b legal provisions applying to restructurings at domestic level merger

1. Civil Law Treatment b) Legal Provisions applying to restructurings at domestic levelMerger

slide108

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law MERGER (I)

Types of restructurings: merger (“Verschmelzung”)

Transferring entity(ies) transfers all its assets to

  • an alreadyexistingentity (“Verschmelzung durch Aufnahme”)
  • a newly formed entity (“VerschmelzungzurNeugründung”).

Dissolution of the transferring company(ies) without liquidation.

Shareholding/Interest in the transferring company is eliminated and is replaced by a shareholding in the receiving company.

merger by acquisition
Merger by Acquisition

Pre-Merger Situation

SH A

SH B

Corporation X

Corporation Y

Post-Merger Situation

SH A

SH B

Corporation X

(operating also thebusiness

offormer Corp. Y)

merger by forming a new entity
Merger by forming a new entity

Pre-Merger Situation

SH A

SH B

Corporation X

Corporation Y

Post-Merger Situation

SH A

SH B

Corporation Z

(operatingthe businesses of

former Corp. Y andformer Corp. X)

slide111

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law MERGER (IV)

Procedure:

Merger Contract, sec. 4 UmwG

Key features pursuant to sec. 5 UmwG

Merger Report, sec. 8 UmwG, Art. 9 Merger Directive (2011/35/EU)

Audit of the Merger, sec. 9 et seq. UmwG, Art. 10 Merger Directive

Shareholders resolution, sec. 13 UmwG, Art. 7 Merger Directive

Registration, Publication, Art. 18 Merger Directive

Legal consequences of registration, sec. 20 UmwG,

Art. 19 Merger Directive

slide112

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law MERGER (V)

Merger Contract, sec. 4 UmwG

To be signed by the representative bodies

To be notarized

Needs approval (previously or subsequently to the signature)

of the shareholders of the entities involved in order to come

into effect

Key features pursuant to sec. 5 UmwG

Name or business name and the seat of each of the entities involved

Terms agreed regarding the transfer of assets as a whole and the consideration in form of interest in the receiving company

The ratio of exchange of interests and, where relevant, the consideration in cash or information about the membership in the receiving company

Effective date of the merger

slide113

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law MERGER (VI)

Merger Report: sec. 8 UmwG, Art. 9 Merger Directive (2011/35/EU)

To be drafted by the representative bodies

Aims at providing information about the merger to the shareholders

Shall explain the merger in detail

Shall especially address the ratio of the exchange of shares

Not necessary if shareholders waive it or if all shares in the transferring company are held by the receiving company (upstream merger)

slide114

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law MERGER (VII)

Audit of the Merger: sec. 9 et seq. UmwG, Art. 10 Merger Directive

Independent auditors must examine the merger

Auditors are appointed by the representative bodies or upon application, by the court where one of the involved entities has its seat

Audit report has to address (sec. 12 UmwG):

- whether the exchange ratio is appropriate- whether a possible cash consideration is sufficient- which methods were used for examination of appropriateness of the consideration

From 2009 onwards: Shareholders may waive the audit (Directive 2007/63/EC of 13 November 2007 amending Council Directives 78/855/EEC and 82/891/EEC as regards the requirement of an independent expert’s report on the occasion of merger or division of public limited liability companies, OJ L 300 of 17.11.2007, p. 47)

slide115

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law MERGER (VIII)

Shareholders’ resolution

Shareholders’ resolution has to approve the merger contract

Three-quarter majority of the shareholder meeting needed

Approval must be certified by a notary

Registration, Publication, Art. 18 Merger Directive

Representative bodies of the entities involved may apply for registration in the commercial register where the entities are registered, Sec. 16 UmwG

Prior to the registration of the merger in the register of the receiving entity the registration in the commercial register of the transferring entity has to take place, Sec. 19 UmwG

Publication of the registration, Sec. 19 (3) UmwG

slide116

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law MERGER (IX)

Legal consequences of registration,

sec. 20 UmwG, Art. 19 Merger Directive:

Transfer of the assets as a whole takes effect (“universal succession”)

The transferring company ceases to exist

The shareholders of the transferring company become shareholder of the receiving company

Rights and obligations of third parties are transferred to the receiving company

1 civil law treatment b legal provisions applying to restructurings at domestic level division

1. Civil Law Treatment b) Legal Provisions applying to restructurings at domestic levelDivision

slide118

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law DIVISION (I)

Types of restructurings: Division (“Spaltung“)

(1) Split-up (“Aufspaltung“)

Sec. 123 (1) UmwG, Art. 1, 2 (1), 21 (1) Division Directive (82/891/EEC)Transferring entity divides up its assets and transfers these assets to two or more

  • alreadyexistingentities (“Aufspaltung zur Aufnahme“) and/or
  • newlyformedentities(“Aufspaltung zur Neugründung“).

Dissolution of the transferring company without winding up.

split up
Split-up

Pre-Division Situation

SH A

SH B

Corporation Y

Post-Division Situation

SH A

SH B

Corporation X

Corporation Z

slide120

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law DIVISION (III)

(2) Split-off (“Abspaltung”)

Sec. 123 (2) UmwG, Art. 25 Division Directive (82/891/EEC)

Transferring entity divides up its assets and transfers only one or more parts of it to

  • alreadyexistingentities (“Aufspaltung zur Aufnahme”) and/or
  • newlyformedentities (“Aufspaltung zur Neugründung“).

The receiving entity issues new shares to the shareholder of the transferring entity.The transferring company continues to exist.

split off
Split-off

Pre-Division Situation

SH A

SH B

Corporation Y

Post-Division Situation

SH A

SH B

Corporation Y

Corporation Z

slide122

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law DIVISION (V)

(3) Hivedown (“Ausgliederung”)

Sec. 123 (3) UmwG, nomatch in Division Directive (82/891/EEC)

Transferring entity divides up its assets and transfers only one or more parts of it to

  • alreadyexistingentities (“Aufspaltung zur Aufnahme”) and/or
  • newlyformedentities (“Aufspaltung zur Neugründung“).

The receiving entity issues new shares to the transferring entity.The transferring company continues to exist.

hive down
Hive Down

Pre-Division Situation

SH A

Corporation X

Post-Division Situation

SH A

Corporation X

Corporation Y

slide124

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law DIVISION (VII)

Procedure of a Division

No differences to the procedure for a merger

Many of the provisions governing a merger apply by way of reference

Conclusion of a division and takeover contract, Sec. 126 UmwG (or plan in case of a division by forming a new entity) -> must determine which assets are to be transferred to which entity or remain in the transferring entity (Art. 3 Division Directive)

Division report, Sec. 127 UmwG, Art. 7 Division Directive

Audit requirement (exception: hive down), Sec. 125 UmwG; from 2009 on shareholder may waive the audit

Approval of the shareholders’ meetings

Registration in the register and publication

slide125

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law DIVISION (VIII)

Legal consequences of the registration of a Division

The transfer of assets as a whole takes effect (“universal succession”)

The transferring entity ceases to exist in case of a split-up

The interest in the receiving company is issued to its new owner (shareholder of the transferring company or transferring company itself respectively)

1 civil law treatment b legal provisions applying to restructurings at domestic level conversion

1. Civil Law Treatment b) Legal Provisions applying to restructurings at domestic level Conversion

slide127

I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law CONVERSION

Types of restructurings: Conversion (“Formwechsel”)

The entity continues to exist but changes its legal form Identity before and after the conversion

No transfer of property to another entity

slide128

1. Civil Law Treatment b) Legal Provisions applying to restructurings at domestic levelTransfer of Property

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law Transfer of Property

Types of restructurings: Transfer of property (“Vermögensübertragung”)

Applicable in cases where a capital company transfers property to a public entity or property is transferred between insurance companies where one of the companies is a mutual or a public insurance company. No possibility to issue shares or a participation in the receiving company in consideration for the shares issued.

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1. Civil Law Treatment b) Legal Provisions applying to restructurings at domestic level Contribution of Assets

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law Contribution of assets

Types of restructurings: Contribution of assets

Can be effected by way of

  • a split-up, split-off or a hive-down resulting in a universal succession
  • a contribution of assets by way of transfer of single assets
  • major importance in practice for reorganizations as especially in cross-border situations the only feasible way to effect a tax neutral reorganization
  • the exchange of shares is one form of a contribution of assets
slide132

1. Civil Law Treatment b) Legal Provisions applying to restructurings at domestic level Certain Aspects of Interest

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law

Certain aspects of interest: Protection of minority shareholders

Legitimate claim for cash compensation of the shareholders in case of the change of the legal form of shares (e.g. GmbH converted into AG) - (sec. 29-31, 34, 36 (1) (1), 125, 135 (1) (1), 176 (1), 177 (1) 207-212 UmwG). A cash compensation offer must already be included in the underlying transformation contract (e.g. merger contract) and is subject to legal revision (sec. 34, 212 UmwG). Prerequisite for the legitimate claim is the raise of objections in the general meeting of the shareholders against the transformation resolution.

Shareholder of transferring company may claim cash compensation if the conversion ratio of the shares is considered to be to low (sec. 15, 125, 176 (1) 177 (1) 196 UmwG).

Owner of rights in transferring company must receive comparable rights in acquiring company (sec. 23, 36 (1) (1), 125, 176 (1) 177 (1), 205, 206 UmwG).

Members of management may be hold liable for damages to shareholders due to the transformation (sec. 25-27, 36 (1), 125, 176 (1), 177 (1) 205, 206 UmwG).

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law

Further factors to pay attention to

Information duties (minimum content of the transformation contract (sec. 5 (1), 126 (1), 194 UmwG); Publication duties and duties to provide access to the contracts for information and revision purposes (sec. 42, 47, 63, 216, 251 UmwG); Transformation report has to be drawn up (sec. 8, 127, 192 UmwG); Information duties concern: transformation contract, exchange ratio of the shares, amount of the cash compensation); sometimes the last three balance sheets have to be made accessible to the shareholders (sec. 49 (2), 63 (1) (2) UmwG).

Transformation contract has to be revised by independent auditors sec. 12, 30 UmwG (from 2009 on shareholders may waive the audit, see above).

Majority of ¾ for the transformation resolution in the general meeting of the shareholders required (sec. 50, 65 UmwG).

Only objecting shareholders may claim cash compensation.

If the exchange ratio is not proportionate, shareholders may have the right to a claim cash supplementary compensation.Legal protection: Legal proceedings according to sec. 246, 249 AktG (Anfechtungs- bzw. Nichtigkeitsklage) result in a registration ban for the term of the proceedings.

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law

Protection of creditors (Art. 12 Division Directive)In case of a merger, the provisions concerning the company foundation report as well as specific foundation rules (sec. 58 (1), 75 (1), 67 UmwG) are applicable.

Creditor may demand a security deposit from debtor, if the circumstances suggest the endangerment of repayment (sec. 22, 209 UmwG).Members of management of the transferring company may be hold jointly and severally liable (sec. 25, 205 UmwG).Members of management of the acquiring company are as well obligated to indemnification payments in case of damages (sec. 27 UmwG).Contribution in kind is subject to audit.Division: jointly and severally liability of the involved companies.

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law

Employee rightsWorking conditionsBusiness transfer, sec. 613a BGB (legal background: Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, OJ L 82 of 22.3.2001 p. 16):

Transfer of employment contracts or objection to it respectively

Collective agreement applicable prior to the transfer remains applicable until the date of expiration or termination

Liability of the former employee for wages and salaries

Information and participation rights of the works council

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level1. Civil Law Treatment b) Legal provisions applying … bb) Domestic Civil Law

Workers’ participationGerman system of worker’s participation consists of two elements: The worker’s participation at the level of the company and at the level of the (domestic) branches of a company (“betrieblicheMitbestimmung”). Under Germany’s “One-Third Workers’ Participation Act” and the “Participation Act 1976” German stock corporations (Aktiengesellschaften), limited liability companies (GesellschaftenmitbeschränkterHaftung) and limited partnerships with share capital (Kommanditgesellschaften auf Aktien) must grant to their employees various participation rights, notably on their supervisory board (Aufsichtsrat), if the size of the individual company or group of company in terms of the number of employees is greater than laid down in the relevant act. According to Sec. 21a German Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) the works council continues to exists in case of the division of an undertaking (see also Art. 6 of the Directive 2001/23/EC of 12 March 2001).Sec. 325 UmwG: In case of a split-off or a hive-down the provisions governing the co-determination at the company’s level basically remain applicable for a period of 5 years for the transferring entity unless the relevant number of workers at the level of the transferring company falls below a minimum number of ¼ of the minimum number required by the Co-Determination Act or the One-Third Workers’ Participation Act.

Sec. 97-99 AktG: The composition of the supervisory board has to be

adapted to the new workers participation regime.

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment a) Tax issues to be resolved

a) Tax Issues to be resolved

Taxation of so-called “hidden reserves” (built-in gains)Hidden reserves: Deferred taxation of capital gains that are not yet realizedRealization principle leads to deferral of gainsAlienation of assets is one form of realization of gainsReorganizations include the transfer of assets to another entityReorganization Tax Act aims at a further deferral of taxation by continuing/maintaining book values of the transferred assetsOnly certain cases of a transfer of assets shall enjoy such preferential tax treatment as the realization principle shall not impede from an economic viewpoint reasonable company restructurings. A mere alienation of assets or shares shall not benefit. Therefore the transfer of assets that form an undertaking or a branch of activity is required.

For 2002 and 2003 the alienation of shares is tax exempt according to sec. 8b para 2 KStG; as from 2004 the exemption amounts to 95%.

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment a) Tax issues to be resolved

Tax loss utilization (loss carry-forward) / interest-carry forward (I)Carry forward of tax losses are generally directly linked to the entity that has incurred the losses.

A mere transfer of assets may therefore not result in a transfer of losses of the transferring entity to the receiving entity.

A restructuring resulting in universal succession in all rights of the transferring company (i.e. merger and division) does not result in a transfer of losses.

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment a) Tax issues to be resolved

Tax loss utilization (loss carry-forward) / interest-carry forward (II)Transfer of shareholding in loss-making companies may trigger forfeiture of loss carry forwards of that entity according to sec. 8c KStG.

A direct or indirect acquisition of more than 25% up to 50% of shares in a companies triggers a pro-rata forfeiture of loss carry forwards. A transfer of more than 50% results in a forfeiture of the entire loss-carry forwards.

Exception for ailing companies has recently been qualified as illegal state aid by the Commission. Germany announced to litigate against the Commission’s decisions.

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment a) Tax issues to be resolved

Tax loss utilization (loss carry-forward) / interest-carry forward (III)Further exception exists for intra-group transactions (as of 1 January 2010).

To the extent built-in-gains in the assets of the loss-making company exist, loss carry forwards will not forfeited upon a change of ownership that would otherwise be deemed harmful (as of 1 January 2010).

Change-in-ownership-rule also affects interest carry-forward.

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment a) Tax issues to be resolved

Real estate transfer taxA transfer of assets in the course of a restructuring may include real estate.

Real estate transfer tax is generally levied on the transfer of real estate to another person or entity.

Basically a merger, division and the transfer of assets fulfill these criteria.

As from 1 Jan. 2010, an exception for certain intra-group transfers applies (Sec. 6a RETTC).

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment b) Regulations in EStG / KStG

Tax Law Provisions applying to Company Restructurings

Regulations in EStG / KStG

Exchange of shares:

  • Leads to realization of hidden reserves and is subject to tax
  • sec. 6 para. 6 EStGin conjunction with sec. 17 para. 1 EStG half income method, if >1% share is transferred
  • sec. 8b para. 2, 3 KStG: 95 % tax free for corporations
c types of reorganizations covered by the umwstg
c) Types of reorganizations covered by the UmwStG

Reorganisationsregulated in UmwStG

with

Transfer ofassets

without

Transfer ofassets

Single sucession

Universal sucession

Conversion

Hive-down

Merger

Split-up /

Split-off

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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG

aa) Merger

  • From a corporation to a partnership: sec. 3 – 10, 18 UmwStG
  • From a corporation to a corporation: sec. 11 – 13, 19 UmwStG
  • From a partnership to a corporation: sec. 20 – 23 UmwStG
  • From a partnership to a partnership: sec. 24 UmwStG
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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG (II)

  • Merger from a corporation to a partnership

Transferring Company:

      • Closing tax balance sheet: Fair market value (Sec. 3 Para 1 UmwStG) or - under the conditions of Sec. 3 Para 2 UmwStG - lower value down to book value.
      • Duty to take up fair market value if:
        • not assured that hidden reserves are subsequently subject to corporation tax in the hand of the acquiring company
        • Germany looses its right to tax the hidden reserves
        • consideration in cash is granted.
      • Possible gain is subject to trade tax and corporate income tax.
      • Deemed distribution of reserves to shareholders (§ 7 UmwStG).
      • Carry forward of tax losses may be offset with income from (discretionary) step-up. Remaining tax losses cannot be transferred to acquiring partnership (sec. 4 para. 2 UmwStG).
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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG (III)

Acquiring Partnership

  • Must take up the transferred assets at the values shown in the closing tax balance sheet of the transferring company.
  • Transfer gain / loss: amount of the difference between the value at which the assets transferred are to be taken up and the book value of the shares in the transferring company.
  • Taxation of transfer gain:
    • If interest in receiving partnership is held by a corporation: 95% tax free (sec. 4 para. 7 sentence 1 UmwStG)
    • If interest in receiving partnership is held as business asset of individual person: half income method (sec. 4 para. 7 sentence 2 UmwStG).
  • Taxation of transfer loss: treatment depending on origin of transfer loss; generally not taken into account for corporations and 50% deductible for individuals.
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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG (IV)

Merger of a corporation with another corporation:

  • regulations comparable to merger of a corporation with a partnership
  • Transferring Company:
    • Book values may be carried over under certain conditions. Duty to take up higher values if:
      • not assured that hidden reserves are subsequently subject to corporation tax in the hand of the acquiring company
      • Germany looses its right to tax the hidden reserves
      • consideration in cash is granted
    • Remaining tax losses carried forward cannot be transferred to acquiring company (sec. 12 para. 3 UmwStG)
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I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG (V)

bb) Division: Split-up and Split-off

  • from a corporation to a partnership: sec. 16, 18 UmwStG
  • from a corporation to a corporation: sec. 15, 19 UmwStG
  • from a partnership to corporation: sec. 20 - 23 UmwStG
  • from a partnership to a partnership: sec. 24 UmwStG
slide155
I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG (VI)

Split-up and Split-off from a corporation into a corporation

  • Prerequisites for preferential tax treatment:
    • Transfer of a branch of activity
    • Remaining business unit must also be branch of activity
  • Transferring entity and acquiring company
    • Reference to sec. 11 – 13 UmwStG
    • Tax consequences corresponding to merger case
    • Anti-abuse rule in sec. 15 para. 2 UmwStG
slide156
I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG (VII)
  • Split-up and Split-off from a partnership to corporation(s)
    • Tax neutral transfer possible under the conditions of sec. 20 Para 1, 2 UmwStG
  • Hive-down
    • from a corporation to a partnership: sec. 24 UmwStG
    • from a corporation to a corporation: sec. 20 - 23 UmwStG
    • from a partnership to a corporation: sec. 20 – 23 UmwStG
    • from a partnership to a partnership: sec. 24 UmwStG
slide158
I. Civil Law and Tax Law Issues of Company Restructurings at a Domestic Level2. Tax Law Treatment c) UmwStG (VIII)

cc) Conversion

  • from a corporation to a partnership: sec. 3 - 8, 10, 18 UmwStG
  • from a corporation to a corporation: no tax relevance
  • from a partnership to a corporation: sec. 20 - 23, 25 UmwStG
  • from a partnership to a partnership: no tax relevance
slide160

Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies

  • Civil Law Treatment
    • Special Issues of Cross-Border Reorganizations
      • aa) Protection of the shareholders
      • bb) Protection of the creditors
      • cc) Employee rights
    • b) The European legal framework for cross-border mergers and divisions
      • aa) Community Law framework
      • bb) Domestic Civil Law
  • 2. Tax Law Treatment
    • Tax Issues to be resolved
    • Tax Law Provisions applying to Company Restructurings
      • aa) Regulations in EStG / KStG
      • bb) Types of reorganizations covered by the UmwStG
slide162

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment a) Special issues of cross-border-reorganizations

a) Special issues of cross-border-reorganizations:

Transferring and receiving companies belong to different jurisdictions

Cross-Border Merger Directive of 26 October 2005 (2005/56/EC)

aa) Minority Shareholders

Will be faced by a different legal entity from a foreign jurisdiction

Enforcement of shareholders’ rights requires legal action before a foreign court

Language can be a problem

Lack of familiarity with a foreign legal system

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment a) Special issues of cross-border-reorganizations

bb) Creditors

Domestic debtor will be replaced by a foreign debtor

Enforcement of claims requires legal action before a foreign court

Different capitalization requirements in the various countries

cc) Employees

Different levels of protection of employees

Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European Company with regard to the involvement of employees provide for a solution for conflicting provisions on employee rights in cross-border situations

The Cross-Border Merger Directive contains similar provisions

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment b) The European legal framework

  • aa) Goldman-Report

b) The European legal framework for cross-border mergers and divisions

aa) Goldman-Report

  • “Draft Convention on the international merger of sociétésanonymes and Report on the Draft”
  • submitted to the Council by the Commission on 29 June 1973, Bulletin of the European Communities Supplement 13/73
slide166

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment b) The European legal framework

  • bb) Draft 10th Company Law Directive

bb) Draft 10th Company Law Directive

  • Proposal of a 10th Company Law Directive on cross-border merger of companies of 14 December 1984, OJ C 23 of 25.1.1985, p. 11
  • Scope: Only public limited companies
  • Status: Withdrawn in 2001 due to disagreement on the question of worker’s participation
slide167

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment b) The European legal framework

  • cc) The Cross-Border Merger Directive

cc) The Cross-Border Merger Directive of 26 October 2005

  • Economic need: There is an increasing need today in the Community of twenty-seven for cooperation between companies from different Member States, as there will be in a future enlarged Union, not forgetting the EFTA countries.
  • Purpose: to fill a significant gap in company law left by the need to facilitate cross‑border mergers of commercial companies without the national laws governing them – as a rule the laws of the countries where their head offices are situated – forming an obstacle.
  • The aim: is to approximate the cross‑border merger procedure with the domestic merger procedures with which operators are already familiar through use.
slide168

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment b) The European legal framework

  • cc) The Cross-Border Merger Directive
  • Implementation: “All companies, whether they be public limited liability companies or any other type of company with share capital, must have at their disposal a suitable legal instrument enabling them to carry out cross‑border mergers under the most favourable conditions. The costs of such an operation must therefore be reduced, while guaranteeing the requisite legal certainty and enabling as many companies as possible to benefit. The scope of the Directive is therefore drawn in such a way as to cover above all small and medium‑sized enterprises, which stand to benefit because of their smaller size and lower capitalization compared with large enterprises and for which, for the same reasons, the European company Statute does not provide a satisfactory solution.”
  • Scope: All companies with share capital (aimed primarily at companies which are not interested in forming a SE).
slide169

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment b) The European legal framework

  • cc) The Cross-Border Merger Directive

Article 2:

For the purposes of this Directive:

1) “limited liability company”, hereinafter referred to as “company”, means:

(a) a company as referred to in Article 1 of Directive 68/151/EEC, or

(b) a company with share capital and having legal personality, possessing separate assets which alone serve to cover its debts and subject under the national law governing it to conditions concerning guarantees such as are provided for by Directive 68/151/EEC for the protection of the interests of members and others;

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies1. Civil Law Treatment b) The European legal framework cc) The Cross-Border Merger Directivedd) Cross-Border Divisions

2) "merger" means an operation whereby:

 (a) one or more companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to another existing company ‑ the acquiring company ‑ in exchange for the issue to their shareholders of securities or shares representing the capital of that other company and, if applicable, a cash payment not exceeding 10% of the nominal value, or, in the absence of a nominal value, of the accounting par value of those securities or shares; or

(b) two or more companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to a company that they form ‑ the new company ‑ in exchange for the issue to their shareholders of securities or shares representing the capital of that new company and, if applicable, a cash payment not exceeding 10% of the nominal value, or in the absence of a nominal value, of the accounting par value of those securities or shares; or

(c) a company, on being dissolved without going into liquidation, transfers all its assets and liabilities to the company holding all the securities or shares representing its capital;

dd) No EU Directive exists for cross-border divisions

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment a) Tax issues arising for cross-border restructurings

a) Tax issues arising for cross-border restructurings

Transferring and receiving company belong to different tax jurisdictions

State of transferring company may loose its subject of taxation

Termination of unlimited tax liability

Potentially loss of taxing right in case of a transfer of assets to abroad

Solution provided by Directive 2009/133/EC (formerly: Directive 90/434/EEC): Deferral of taxation of built-in-gains based on taxation of Permanent Establishment (PE)

slide173

Pre-mergersituation

SH Y

SH X

B

ORDER

Corporation B

Corporation A

Post-mergersituation

SH X

SH Y

B

ORDER

Corporation B

Formerly: Corp. A

Now: PE

slide175

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (I)

  • b) The European tax framework for cross-border mergers
  • The Tax Directive 2009/133/EG regarding cross-border reorganizations
  • Economic need: mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States may be necessary in order to create within the Community conditions analogous to those of an internal market and in order thus to ensure the establishment and effective functioning of the common market.
  • Purpose: such operations ought not to be hampered by restrictions, disadvantages or distortions arising in particular from the tax provisions of the Member States; whereas to that end it is necessary to introduce with respect to such operations tax rules which are neutral from the point of view of competition, in order to allow enterprises to adapt to the requirements of the common market, to increase their productivity and to improve their competitive strength at the international level.
  • The aim: an extension at the Community level of the systems presently in force in the Member States, since differences between these systems tend to produce distortions; whereas only a common tax system is able to provide a satisfactory solution in this respect.
slide176

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (II)

Objective scope

  • Mergers
  • Divisions
  • Partial Divisions,
  • Transfer of Assets
  • Exchanges of Shares

 Concerning companies of different Member States

  • Transfer of the registered office of an SE or SCE
slide177

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (III)

Article 1:

“Each Member State shall apply this Directive to the following:

(a) mergers, divisions, partial divisions, transfers of assets and exchanges of shares in which companies from two or more Member States are involved,

(b) transfers of the registered office from one Member State to another Member State of European companies (SocietasEuropaea or SE), as established in Council Regulation (EC) No 2157/2001 of 8 October 2001, on the statute for a European Company (SE) (1), and European Cooperative Societies (SCE), as established in Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE)”

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (IV)

Article 2:

For the purposes of this Directive:

(a) ‘merger’ shall mean an operation whereby: — one or more companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to another existing company in exchange for the issue to their shareholders of securities representing the capital of that other company, and, if applicable, a cash payment not exceeding 10 % of the nominal value, or, in the absence of a nominal value, of the accounting par value of those securities, — two or more companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to a company that they form, in exchange for the issue to their shareholders of securities representing the capital of that new company, and, if applicable, a cash payment not exceeding 10 % of the nominal value, or in the absence of a nominal value, of the accounting par value of those securities, — a company, on being dissolved without going into liquidation, transfers all its assets and liabilities to the company holding all the securities representing its capital;

(b) ‘division’ shall mean an operation whereby a company, on being dissolved without going into liquidation, transfers all its assets and liabilities to two or more existing or new companies, in exchange for the pro rata issue to its shareholders of securities representing the capital of the companies receiving the assets and liabilities, and, if applicable, a cash payment not exceeding 10 % of the nominal value or, in the absence of a nominal value, of the accounting par value of those securities;

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (V)

Article 2:

(b)(a) ‘partial division’ shall mean an operation whereby a company transfers, without being dissolved, one or more branches of activity, to one or more existing or new companies, leaving at least one branch of activity in the transferring company, in exchange for the pro-rata issue to its shareholders of securities representing the capital of the companies receiving the assets and liabilities, and, if applicable, a cash payment not exceeding 10 % of the nominal value or, in the absence of a nominal value, of the accounting par value of those securities;

(c) ‘transfer of assets’ shall mean an operation whereby a company transfers without being dissolved all or one or more branches of its activity to another company in exchange for the transfer of securities representing the capital of the company receiving the transfer;

(d) ‘exchange of shares’ shall mean an operation whereby a company acquires a holding in the capital of another company such that it obtains a majority of the voting rights in that company in exchange for the issue to the shareholders of the latter company, in exchange for their securities, of securities representing the capital of the former company, and, if applicable, a cash payment not exceeding 10 % of the nominal value or, in the absence of a nominal value, of the accounting par value of the securities issued in exchange.

(j) ‘transfer of the registered office’ shall mean an operation whereby an SE or an SCE, without winding up or creating a new legal person, transfers its registered office from one Member State to another Member State.

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (VI)

Personal scope:

Only forms of companies

  • that are mentioned in the Annex of the Directive,
  • that are, according to the tax law of a Member State or a Double Tax Treaty, resident in a Member State and
  • that are subject to a corporate tax as mentioned in the Directive.
slide181

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (VII)

Article 2:

(e) ‘transferring company’ shall mean the company transferring its assets and liabilities or transferring all or one or more branches of its activity;

(f) ‘receiving company’ shall mean the company receiving the assets and liabilities or all or one or more branches of the activity of the transferring company;

(g) ‘acquired company’ shall mean the company in which a holding is acquired by another company by means of an exchange of securities;

(h) ‘acquiring company’ shall mean the company which acquires a holding by means of an exchange of securities;

(i) ‘branch of activity’ shall mean all the assets and liabilities of a division of a company which from an organizational point of view constitute an independent business, that is to say an entity capable of functioning by its own means.

slide182

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework -The Tax Merger Directive 2009/133/EC (VIII)

  • Technique:
    • Mergers, divisions, partial divisions or transfers of assets normally result either in the transformation of the transferring company into a permanent establishment of the company receiving the assets or in the assets becoming connected with a permanent establishment of the latter company. The same is true for companies relocating its statutory seat to abroad
    • Deferral of the taxation of the capital gains relating to the assets transferred until their actual disposal, applied to such of those assets as are transferred to a permanent establishment, permits exemption from taxation of the corresponding capital gains, while at the same time ensuring their ultimate taxation by the State of the transferring company at the date of their disposal.
slide183

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (IX)

Art. 4 para. 1:

1. A merger, division or partial division shall not give rise to any taxation of capital gains calculated by reference to the difference between the real values of the assets and liabilities transferred and their values for tax purposes.

For the purpose of this Article the following definitions shall apply:

(a) ‘value for tax purposes’: the value on the basis of which any gain or loss would have been computed for the purposes of tax upon the income, profits or capital gains of the transferring company if such assets or liabilities had been sold at the time of the merger, division or partial division but independently of it;

(b) ‘transferred assets and liabilities’: those assets and liabilities of the transferring company which, in consequence of the merger, division or partial division, are effectively connected with a permanent establishment of the receiving company in the Member State of the transferring company and play a part in generating the profits or losses taken into account for tax purposes.

2. [… (transparent entities)]

slide184

II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment b) The European tax framework - The Tax Merger Directive 2009/133/EC (X)

Art. 4 para. 1:

3. Paragraphs 1 and 2 shall apply only if the receiving company computes any new depreciation and any gains or losses in respect of the assets and liabilities transferred according to the rules that would have applied to the transferring company or companies if the merger, division or partial division had not taken place.

4. Where, under the laws of the Member State of the transferring company, the receiving company is entitled to have any new depreciation or any gains or losses in respect of the assets and liabilities transferred computed on a basis different from that set out in paragraph 3, paragraph 1 shall not apply to the assets and liabilities in respect of which that option is exercised.

Art. 6:

Losses: If Member State would apply provisions in domestic cases allowing the receiving company to take over the losses of the transferring company which had not yet been exhausted for tax purposes, it shall extend those provisions to cover the take-over of such losses by the receiving company's permanent establishments situated within its territory.

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment c) Implementation of the EC Tax Merger Directive

c) Implementation of the EC Tax Directive into Domestic Law

aa) Implementation of a Directive Any EU Directive requires implementation: Art. 288 (2) TFEU: A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.Art. 288 (3) TFEU: A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment c) Implementation of the EC Tax Merger Directive

bb) Time requirements

1.1.1992: Implementation of Directive 90/434/EEC, i.e. the merger, division, transfer of assets and exchanges of shares.1.1.2006: Implementation of Directive 2005/19/EC of 17 January 2005 amending Directive 90/434/EEC on the common system of taxation applicable to mergers, Divisions, transfers of assets and exchanges of shares concerning companies of different Member States, OJ L 58 of 4.3.2005, p. 19, as far as the Directive contains SE and SCE related amendments.

That are:

  • Transfer of registered office of an SE or SCE
  • Inclusion of the SE and SCE in the scope of the Merger Directive

1.1.2007: Implementation of the following features:

  • The “split-off” as a new operation covered by the Directive
  • Inclusion of further forms of companies in the scope of the Directive
  • Clarification, that the Directive also covers the transformation of a PE to a subsidiary
  • Forms of companies that are subject to corporation tax in the state of incorporation but considered as fiscally transparent entities by other MS will also be covered by the Directive.
  • Further acquisition of shares exceeding a 50% shareholding in a subsidiary by way of a share-for-share deal.
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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment c) Implementation of the EC Tax Merger Directive

cc) Consequences of an untimely or incorrect or incomplete implementationi) Interpretation of national law in conformity to a directiveA national court has the obligation to interpret and to apply the legislation adopted for the implementation of a directive in conformity with the directive (“v. Colson and Kamann”)No interpretation contra legem (see “Pfeiffer”)An individual may not rely on a directive in order to claim rights against another individual (see “FacciniDori”)leading cases: - v. Colson and Kamann (ECJ of 10.4.1984, C-14/83, ECR 1984, p. 1891)- FacciniDori (ECJ of 14 July 1994, C-91/92, ECR 1994, p. I-3325)- Pfeiffer (ECJ of 5.10.2004, joined cases C-397-403/01, ECR 2004, p. I-8835)

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment c) Implementation of the EC Tax Merger Directive

ii) Direct applicability of a directive

Wording of Art. 288 TFEU: “A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.”

A directive is addressed only to the Member States and therefore not directly applicable to individuals

Direct applicability only in exceptional cases:

Requirements:- untimely or incorrect transposition of the directive into national law- provision favorable for an individual - provision provides for rights that which can be asserted against the member state- “self-executing” character of the directive (no margin for discretion of the member state how to transpose the directive)

leading cases: - Becker (ECJ of 19.1.1982, 8/81, ECR 1982, p. 53)- Harz ./. Deutsche Tradax (ECJ of 10.4.1984, 79/83, ECR 1984, p. 1921)

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II. Civil Law and Tax Law Issues of Cross-Border Restructurings of Companies2. Tax Law Treatment c) Implementation of the EC Tax Merger Directive

iii) State Liability – Compensation claims against Member States for damage caused to tax payers

Conditionsgoverning State liability:- theruleoflawinfringed must beintendedtoconferrights on individuals; - thebreach must besufficientlyseriousand- there must be a directcausal link betweenthebreachoftheobligationincumbent on the State andthelossordamagesustainedbytheinjuredparties

In case of an untimely or incorrect transposition of a directive into national law, if the provisions are not directly applicable according to the requirement described above (“Francovich”)

In case of conflict of national law with primary EC law (“Brasserie du Pêcheur”)

Incorrect interpretation of EC law by a national court adjudicating at last instance that does not meets its obligation to seek for a preliminary ruling (Art. 267 TFEU), “Köbler”

Only in cases where a national court has manifestly infringed the applicable lawleading cases: - Francovich (ECJ of 19.11.1991, C-6 and 9/90, ECR 1991, p. I-5357)- Brasserie du Pêcheur/Factortame (ECJ of 5.3.1996, C-46 and 48/93, ECR 1996, p. I-1029)- Köbler (ECJ of 30.9.2003, C-224/01, ECR 2003, p. I-10239)- Test Claimants in the Thin Cap Group Litigation (ECJ of 13.3.2007, C-524/04, ECR 2007, p. I-2107)

iii the european company statute se statute 1 applicable law company law
III. The European Company Statute (SE-Statute)1. Applicable Law – company law

a) Regulation

Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), OJ L 294, of 10.11.2001, p.1

b) Directive

  Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees OJ L 294, of 10.11.2001, p.22

c) National Implementation Law

Gesetz zur Ausführung der Europäischen Gesellschaft (SEAG) of 22.12.2004, German Law Gazette of 28.12.2004, p. 3675

d) Company Statutes

iii the european company statute se statute 2 applicable law tax law
III. The European Company Statute (SE-Statute)2. Applicable Law – tax law

2. Applicable law – tax law

a) Tax Directive in its amended version

Council Directive 90/434/EEC on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States of 23 July 1990, OJ L 225, 20.8.1990, p. 1

amended by:

Council Directive 2005/19/EC of 17 February 2005 amending Directive 90/434/EEC 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States, OJ L 58, of 4.3.2005, p. 19

As of 15. Dec. 2009: Consolidated version of the Directive enters info force (Directive 2009/133/EG); no material changes to the Directive

iii the european company statute se statute 2 applicable law tax law1
III. The European Company Statute (SE-Statute)2. Applicable Law – tax law

b) Parent Subsidiary Directive recast

Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, OJ L 225, 22.9.1990, p. 6

recast:

Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, OJ L 345, of 29.12.2011, p. 8

c) Interest and Royalties Directive

Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States, OJ L 157, of 26.6.2003, p. 49

Proposalfor a recast Council Directiveof 11.11.2011, COM(2011) 714 final

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III. The European Company Statute (SE-Statute)3. The various forms of formation of a European Company

a) Formation by cross-border merger, sec. 2 para 1 SE-Statute

Pre-Formation situation Germany France

B

ORDER

SH A

SH B

X-AG

Y-S.A.

Post-Formation situation

SH A

B

ORDER

SH B

Requirements:

- Only public limited companies may be merged to an SE

- These public limited companies must be incorporated in differentMember States

French-SE

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III. The European Company Statute (SE-Statute)3. The various forms of formation of a European Company

b) Formation of a Holding-SE, sec. 2 para 2 SE-Statute (I)

Pre-mergersituation Germany France

B

ORDER

SH A

SH B

X-AG

Y-S.A.

Post-mergersituation

SH A

SH B

B

ORDER

French

Holding-SE

X-AG

Y-S.A.

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III. The European Company Statute (SE-Statute)3. The various forms of formation of a European Company

b) Formation of a Holding-SE, sec. 2 para 2 SE-Statute (II)

From a company law point of view the formation of a Holding-SE is executed by the contribution of shares of the shareholders in the companies taking part in the operation to the newly formed SE. The SE issues new shares to the shareholders in consideration.

Requirements:

  • Both public and private limited companies may take part in the operation.
  • The companies must either be incorporated under the laws of different Member States or each of the companies must have had a subsidiary or a branch in another Member State for a minimum period of 2 years prior to the operation.
  • The SE must obtain a majority in the voting rights in the subsidiaries.
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III. The European Company Statute (SE-Statute)3. The various forms of formation of a European Company

c) Formation of a Subsidiary-SE, Alternative a of sec. 2 para 3 SE-Statute (I)

Pre-Formation Situation Germany France

B

ORDER

X-AG

Y-S.A.

Post-Formation Situation

X-AG

Y-S.A.

B

ORDER

Subsidiary-SE

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III. The European Company Statute (SE-Statute)3. The various forms of formation of a European Company

c) Formation of a Subsidiary-SE, Alternative a of sec. 2 para 3 SE-Statute (II)

From a company law point of view the foundation of a subsidiary-SE does not differ from the formation of a joint subsidiary of two companies.

Requirements

All forms of companies mentioned in Art. 54 TFEU may take part in the formation of a Subsidiary-SE.

The companies must either be incorporated under the laws of different Member States or each of the companies must have had a subsidiary or a branch in another Member State for a minimum period of 2 years prior to the operation.

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III. The European Company Statute (SE-Statute)3. The various forms of formation of a European Company

c) Formation of a Subsidiary-SE, Alternative b of sec. 2 para 3 SE-Statute

Pre-Formation Situation

X-AG

Y-AG

Germany

France

Branch

Z-BV

Post-Formation Situation

X-AG

Y-AG

Germany

France

Branch

Z-BV

Subsidiary-SE

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III. The European Company Statute (SE-Statute)3. The various forms of formation of a European Company

d) Formation by conversion of an existing company

Pre-Formation Situation Germany France

X-AG

Z-S.A.

Post-Formation Situation

X-SE

Z-S.A.

Requirements:

Only public limited companies may be converted to an SE.

The company must either be incorporated under the laws of different Member States or must have had a subsidiary or a branch in another Member State for a minimum period of 2 years prior to the operation. 

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III. The European Company Statute (SE-Statute)4. Tax treatment of the formation of a European Company

a) Formation by Merger

Pre-mergersituation Germany France

B

ORDER

SH A

SH B

X-AG

Y-S.A.

Post-mergersituation

SH A

SH B

B

ORDER

French-SE

PE

Tax neutral cross-border merger possible under German tax law?

A merger is possible at book value under the conditions mentioned in sec. 11 Para 2 UmwStG.

Loss of right to tax gains resulting from an alienation of assets results in taxation of built-in-gains.

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III. The European Company Statute (SE-Statute)4. Tax treatment of the formation of a European Company

b) Formation of a Holding SE

Pre-Formation situation Germany France

B

ORDER

SH A

SH B

X-AG

Y-S.A.

Post-Formation situation

SH A

SH B

B

ORDER

French

Holding-SE

X-AG

Y-S.A.

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III. The European Company Statute (SE-Statute)4. Tax treatment of the formation of a European Company

b) Formation of a Holding SE

Issues:

The formation of a Holding-SE qualifies in principle as an exchange of shares operation according to Art. 1, 2d) Merger Directive, if SE and the corporation, which is subject of the share transfer, are located in different Member States.

According to German tax law sec. 21 UmwStG is applicable.

Sec. 21 UmwStG applies to companies covered by the Merger Directive. The SE was included in the scope of the Merger Directive explicitly from 1 January 2006 onwards.

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III. The European Company Statute (SE-Statute)4. Tax treatment of the formation of a European Company

c) Formation of a Subsidiary-SE, Alternative b of sec. 2 para 3 SE-Statute

Pre-Formation Situation

X-AG

Y-AG

Germany

France

Branch

Z-BV

Post-Formation Situation

X-AG

Y-AG

Germany

France

Branch

Z-BV

Subsidiary-SE

slide206

III. The European Company Statute (SE-Statute)4. Tax treatment of the formation of a European Company

c) Formation of a Subsidiary-SE, Alternative b of sec. 2 para 3 SE-Statute

Issues:

Raising the capital of the Subsidiary-SE by way of a cash contribution, the formation does not give rise to any tax implications.

Raising the capital of the Subsidiary-SE by way of a contribution in kind, the operation may trigger capital gains taxation. A tax neutral contribution requires the application of a provision granting tax deferral relief.

SE to be formed within the EU:

Contributions in kind (Sacheinlage) to a Subsidiary-SE may be executed under sec. 20 UmwStG.

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III. The European Company Statute (SE-Statute)4. Tax treatment of the formation of a European Company

d) Formation by way of Conversion

Pre-Formation Situation Germany France

X-AG

Z-S.A.

Post-Formation Situation

A conversion does not give rise to capital gains taxation as no transfer of assets to a new entity takes place.

X-SE

Z-S.A.

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III. The European Company Statute (SE-Statute)5. Current taxation of the European Company in its different forms

SE is subject to corporate income tax in Germany.

Tax treaties apply to Ses.

SE falls withinthescopeof EC Tax Directivesand Arbitration Convention.

Exception: The Interest and Royalties Directive currently does not apply to the SE. An Amendment Directive has not been adopted yet.

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Contact

Deloitte& Touche GmbH

Wirtschaftsprüfungsgesellschaft

Rosenheimer Platz 4

81669 Munich

Germany

Tel: +49 89-29036 8314

othoemmes@deloitte.de

www.deloitte.com/de

Prof. Dr. Otmar Thömmes

Rechtsanwalt

Geschäftsführer