Malke Taxation of European Companies at the Time of Establishment and Restructuring

Issues and Options for Reform with regard to the Status Quo and the Proposals at the Level of the European Union
2010
ISBN: 978-3-8349-8655-9
Verlag: Betriebswirtschaftlicher Verlag Gabler
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 266 Seiten, eBook

Christiane Malke analyzes the current issues resulting from the entry into a Societas Europaea (SE), the transfer of seat of an SE from one EU member state to another and the exit out of an SE in the 27 member states of the EU taking into consideration the Merger Directive. Based on existing deficiencies the author provides reform approaches that consider changes to the national law of the member states, to EU law as well as to the proposals provided by the European Commission regarding the introduction of a Common (Consolidated) Corporate Tax Base.

Dr. Christiane Malke completed her doctoral studies at the Department of Business Administration and Taxation II at the University of Mannheim under supervision of Prof. Dr. Christoph Spengel.

Zielgruppe

Research

Autoren/Hrsg.

Malke, Christiane

Inhaltsverzeichnis

1;Foreword;6
2;Preface;7
3;Summary of Contents;8
4;Table of Contents;8
5;List of Abbreviations;12
6;List of Figures;15
7;List of Tables;17
8;1 Introduction;18
8.1;1.1 Motivation of the thesis;18
8.2;1.2 Aim of the thesis and object of examination;23
8.3;1.3 Organization of the thesis;24
9;2 Relevance of the European Company in practice;26
9.1;2.1 Basic features of the European Company;26
9.2;2.2 Examination of statistical data regarding the use of the European Company;27
9.3;2.3 Interim conclusions;32
10;3 Taxation of European Companies during the time of restructuring in an ideal environment;33
10.1;3.1 Guiding tax principles;33
10.1.1;3.1.1 Neutrality and efficiency;33
10.1.2;3.1.2 Equity and fairness;34
10.2;3.2 Issues at reorganizations;37
10.2.1;3.2.1 General features of reorganizations;37
10.2.2;3.2.2 Treatment of hidden reserves;38
10.2.3;3.2.3 Retention of unused losses;41
10.2.4;3.2.4 Treatment of tax incentives;42
10.2.5;3.2.5 Additional transaction taxes;42
10.2.6;3.2.6 Scope of rules;43
10.3;3.3 Application to purely national contexts;43
10.4;3.4 Application to the ideal internal market;44
10.5;3.5 Interim conclusions;46
11;4 Taxation of European Companies during the time of restructuring in the current environment;47
11.1;4.1 Guiding tax principles;47
11.1.1;4.1.1 Neutrality and equity in an international context;47
11.1.1.1;4.1.1.1 International neutrality and efficiency;48
11.1.1.2;4.1.1.2 International equity and fairness;49
11.1.1.3;4.1.1.3 Taxing right and time of taxation at international restructurings;52
11.1.1.4;4.1.1.4 Valuation at international restructurings;56
11.1.1.5;4.1.1.5 Interim conclusions;57
11.1.2;4.1.2 EU law;58
11.1.2.1;4.1.2.1 Primary EU law;59
11.1.2.1.1;4.1.2.1.1 Decisive fundamental freedoms;59
11.1.2.1.2;4.1.2.1.2 Discriminations and restrictions of the fundamental freedoms;61
11.1.2.1.3;4.1.2.1.3 Justifications of discriminations and/or restrictions;63
11.1.2.2;4.1.2.2 Secondary EU law;66
11.1.2.3;4.1.2.3 Decisive judgments of the European Court of Justice in the context of reorganizations;66
11.1.2.4;4.1.2.4 Interim conclusions;69
11.1.3;4.1.3 Side condition: Feasibility;69
11.1.4;4.1.4 Interim conclusions;70
11.2;4.2 Comparative analysis of the treatment in the EU member states;72
11.2.1;4.2.1 Approach for the comparative analysis;72
11.2.2;4.2.2 Merger Directive;73
11.2.3;4.2.3 Entry;75
11.2.3.1;4.2.3.1 Merger;75
11.2.3.1.1;4.2.3.1.1 Basics with regard to company law;75
11.2.3.1.1.1;4.2.3.1.2 Tax consequences;76
11.2.3.1.1.1.1;4.2.3.1.2.1 Entity level;78
11.2.3.1.1.1.1.1;4.2.3.1.2.1.1 Transferring company/companies;78
11.2.3.1.1.1.1.1.1;4.2.3.1.2.1.1.1 Assets and liabilities in country of transferring company;78
11.2.3.1.1.1.1.1.2;4.2.3.1.2.1.1.2 Permanent establishments in country other than that of transferring company;89
11.2.3.1.1.1.1.2;4.2.3.1.2.1.2 Receiving company (SE);94
11.2.3.1.1.1.1.2.1;4.2.3.1.2.1.2.1 Tax-exempt provisions and reserves;94
11.2.3.1.1.1.1.2.2;4.2.3.1.2.1.2.2 Losses;96
11.2.3.1.1.1.1.2.3;4.2.3.1.2.1.2.3 Prior holdings;99
11.2.3.1.1.1.1.2.4;4.2.3.1.2.1.2.4 Additional transaction taxes;101
11.2.3.1.1.1.2;4.2.3.1.2.2 Shareholder level;103
11.2.3.1.1.2;4.2.3.1.3 Interim conclusions;110
11.2.3.2;4.2.3.2 Holding SE;111
11.2.3.2.1;4.2.3.2.1 Basics with regard to company law;111
11.2.3.2.2;4.2.3.2.2 Tax consequences;112
11.2.3.3;4.2.3.3 Subsidiary SE;126
11.2.3.3.1;4.2.3.3.1 Basics with regard to company law;126
11.2.3.3.2;4.2.3.3.2 Tax consequences;126
11.2.3.3.2.1;4.2.3.3.2.1 Contributions of cash or shares;127
11.2.3.3.2.2;4.2.3.3.2.2 Contributions of branches of activity or single assets;128
11.2.3.4;4.2.3.4 Conversion;145
11.2.4;4.2.4 Transfer;147
11.2.4.1;4.2.4.1 Basics with regard to company law;147
11.2.4.2;4.2.4.2 Tax consequences;148
11.2.5;4.2.5 Exit;161
11.2.6;4.2.6 Interim conclusions;162
11.3;4.3 Issues and options for reform;164
11.3.1;4.3.1 Company law;164
11.3.2;4.3.2 Tax law;167
11.3.2.1;4.3.2.1 Missing or incorrect transformation of Merger Directive;167
11.3.2.2;4.3.2.2 Treatment of accrued hidden reserves;169
11.3.2.2.1;4.3.2.2.1 Transfer of assets and companies from one member state to another;170
11.3.2.2.1.1;4.3.2.2.1.1 Issues;170
11.3.2.2.1.1.1;4.3.2.2.1.1.1 Taxing right and time of taxation;170
11.3.2.2.1.1.1.1;4.3.2.2.1.1.1.1 Assessment against the background of international neutrality and equity;171
11.3.2.2.1.1.1.2;4.3.2.2.1.1.1.2 Assessment against the background of primary and secondary EU law;173
11.3.2.2.1.1.2;4.3.2.2.1.1.2 Valuation;179
11.3.2.2.1.1.3;4.3.2.2.1.1.3 Interim conclusions;181
11.3.2.2.1.2;4.3.2.2.1.2 Options for reform;181
11.3.2.2.1.2.1;4.3.2.2.1.2.1 Assets remaining in the former jurisdiction to tax;181
11.3.2.2.1.2.2;4.3.2.2.1.2.2 Assets leaving the former jurisdiction to tax;182
11.3.2.2.1.2.2.1;4.3.2.2.1.2.2.1 Requirements with regard to the tax base, the tax rate and the taxable event;182
11.3.2.2.1.2.2.2;4.3.2.2.1.2.2.2 Personal, objective and territorial scope;185
11.3.2.2.1.2.2.3;4.3.2.2.1.2.2.3 Required coordination between countries involved;185
11.3.2.2.1.2.2.4;4.3.2.2.1.2.2.4 Uncoordinated approaches;189
11.3.2.2.1.2.2.5;4.3.2.2.1.2.2.5 Other options: taxation of unrealized gains or abolishment of taxing rights upon exit;192
11.3.2.2.1.2.3;4.3.2.2.1.2.3 Interim conclusions;194
11.3.2.2.2;4.3.2.2.2 Transfers of foreign permanent establishments;194
11.3.2.2.3;4.3.2.2.3 Transfer of shares from one member state to another;195
11.3.2.2.4;4.3.2.2.4 Doubling of hidden reserves;196
11.3.2.3;4.3.2.3 Retention of unused losses;199
11.3.2.4;4.3.2.4 Filing obligations and avoidance of abuse;202
11.3.2.5;4.3.2.5 Additional transaction taxes;204
11.3.3;4.3.3 Interim conclusions;205
12;5 Taxation of European Companies during the time of restructuring in the proposed environment;208
12.1;5.1 Guiding tax principles;208
12.2;5.2 Common Corporate Tax Base;209
12.3;5.3 Common Consolidated Corporate Tax Base;212
12.3.1;5.3.1 Proposed rules;212
12.3.1.1;5.3.1.1 Ongoing system;212
12.3.1.2;5.3.1.2 Transitional aspects;217
12.3.2;5.3.2 Issues and options for reform;220
12.3.2.1;5.3.2.1 Transactions taking place within a consolidated CCCTB group;220
12.3.2.2;5.3.2.2 Transactions not taking place within a consolidated CCCTB group;225
12.4;5.4 Interim conclusions;231
13;6 Conclusions;233
14;Appendix;240
15;List of References;245

Relevance of the European Company in practice.- Taxation of European Companies during the time of restructuring in an ideal environment.- Taxation of European Companies during the time of restructuring in the current environment.- Taxation of European Companies during the time of restructuring in the proposed environment.- Conclusions.

Leseproben

3 Taxation of European Companies during the time of restructuring in an ideal environment (S. 16-17)

As has been pointed out above, a Societas Europaea may not be established by individuals via a contribution of cash or assets but solely by reorganization of entities already existing. Furthermore, a feature of the SE is the possibility to transfer the registered office from one country to another without losing the legal entity. Thus, in the following, the focus is on generally accepted principles which need to be observed in such transactions from a tax perspective.

In this chapter an ideal environment is considered. An ideal environment may be defined as an area with a uniform tax system in which the transaction takes place, thus an area without borders. Such an environment would be provided if the transaction occurs within one country. Taking the aim of the European Company Statute into consideration, it should also be provided within the internal market of the European Union.

3.1 Guiding tax principles

3.1.1 Neutrality and efficiency

Taxes are not explicitly mentioned in the European Company Statute. It is only stated that member states may not discriminate SEs against domestic corporations for unjustified reasons or disproportionately restrict SEs when they are formed or transfers their registered offices. This implies that such reorganizations may not be hindered, which also needs to be respected with regard to taxes.79 The generally accepted principle in this context is the principle of tax neutrality. Accordingly, taxes shall not influence decisions. Ideally, in a world with taxes decisions are made in the same manner as in a world without taxes. Thus decisions would be made only with regard to profitability or other corporate aspects.80 There are two ways to put tax neutrality into more precise terms. The microeconomic perspective looks at the effects of taxation on the decision makers of single businesses (decision neutrality).

Accordingly, on the one hand, one can analyze whether current tax systems are neutral and, on the other hand, how neutral tax systems should look like.82 Such an approach can be justified by the following reasons. One argument is that tax planning and information costs are avoided since decisions are not influenced by taxes.83 Another argument is that the risk of incorrect business decisions is minimized since the factor “taxes” does not need to be taken into account.

From a macroeconomic perspective, taxation shall provide allocation and production efficiency and thus avoid the misuse of resources from the point of view of the economy as a whole since this would cause a loss of welfare, i.e. an excess burden.85 Although decision neutrality and allocation and production efficiency are put into concrete terms differently, a neutral system is the basis for an efficient system. Only if decisions at the level of the entrepreneurs are not distorted by taxes, may an optimal allocation of resources within the whole economy take place.86 Neutrality and efficiency are also part of the requirements established by the European Commission in the context of company taxation within the internal market.

Über Autor(innen)

Dr. Christiane Malke completed her doctoral studies at the Department of Business Administration and Taxation II at the University of Mannheim under supervision of Prof. Dr. Christoph Spengel.