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Special rules apply where the whole or part of a business which a UK company carries on through a permanent establishment in an EU member state is transferred to a company resident in a member state. In such situations, the transferor company can claim double taxation relief for the tax which would have arisen had the transfer not been covered by the Mergers Directive¹. These provisions give effect to the European Union Mergers Directive (No 2009/133/EC; formerly No 90/434/EEC) dealing with cross-border business reorganisations.

This treatment cannot be claimed where a claim is made under the non-EU provisions (D6.523)².

Prior to IP completion day, a UK company was able to benefit from the application of the Mergers Directive across all EU member states. From IP completion day, the UK is regarded as a third country, so that the benefit of the Mergers Directive in the EU member state may be denied for transactions involving the UK. The exact tax position