Finance Act 1996

[F1 12I (1) This paragraph applies in relation to a merger if— U.K.

(a) the merger is of a kind [F2 mentioned in paragraph 12B(1)],

(b) the conditions in paragraph 12B(2) are satisfied in relation to the merger, and

(c) one or more of the merging companies is a transparent entity.

(2) Where this paragraph applies—

(a) if the assets and liabilities of a transparent entity are transferred to another company by reason of the merger, paragraphs [F3 12B and 12G shall not apply in relation to the transfer];

(b) if the assets and liabilities of one or more other companies are transferred to a transparent entity by reason of the merger, paragraph [F4 12G] shall not apply in relation to shares or debentures issued by the transparent entity.

(3) If, as a result of a merger in relation to which this paragraph applies, a merger profit would, but for the Mergers Directive, have been chargeable to tax under the law of a member State other than the United Kingdom, Part 18 of the Taxes Act 1988 (double taxation relief), including any arrangements having effect by virtue of section 788 of that Act (bilateral relief), shall apply as if that tax, calculated in accordance with sub-paragraph (5), had been chargeable.

(4) In sub-paragraph (3) “merger profit” means a profit in respect of a loan relationship accruing to a transparent entity (or which would be treated as accruing to that entity were it not transparent) by reason of the transfer of assets [F5 or liabilities representing a loan relationship] by the transparent entity to another company on the merger.

(5) Tax is calculated in accordance with this sub-paragraph if—

(a) so far as is permitted under the law of the relevant member State, losses arising on the transfer [F6 of those assets or liabilities] are set against profits arising on the transfer [F6 of those assets or liabilities], and

(b) any relief available under that law has been claimed.]

Textual Amendments

F1 Sch. 9 paras. 12H-12J and cross-heading inserted (with effect in accordance with reg. 3(3) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 3 para. 2 (as modified (retrospectively) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), regs. 1(2), 4(2))

F2 Words in Sch. 9 para. 12I(1)(a) substituted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 10(2)

F3 Words in Sch. 9 para. 12I(2)(a) substituted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 10(3)(a)

F4 Word in Sch. 9 para. 12I(2)(b) substituted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 10(3)(b)

F5 Words in Sch. 9 para. 12I(4) inserted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 10(4)

F6 Words in Sch. 9 para. 12I(5)(a) inserted (with effect in accordance with reg. 3 of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2008 (S.I. 2008/1579), reg. 1(2), Sch. 2 para. 10(5)