6 - Reorganisations under EU Tax Law

Summary

Chapter 6 examined aspects of reorganisations, focusing first on the Merger Directive. It was shown that as a result of the limitations of the Merger Directive, freedom of establishment and the free movement of capital have been used to ensure that a wider range of reorganisation operations are protected. Chapter 6 examined situations where a company migrates to another jurisdiction by transferring its seat and the exit tax implications of these. The early case law on exit taxes levied on individuals was briefly reviewed and contrasted with later case law . In this later case law, the Court of Justice mandated that Member States must give taxpayers the option to choose between immediate payment of the exit tax, or deferred payment with all its administrative difficulties, including (possibly) the payment of interest and the provision of a bank guarantee when there was a risk of non-recovery. In more recent cases, the Court of Justice found the phased deferral of exit taxes to be permissible and the payment of 5 yearly instalments proportional. The exit tax provision of the Anti-Tax Avoidance Directive was also examined.