(Further) Implementation of the EU Merger Directive in Belgian Domestic Tax Legislation Opens New Opportunities for Tax Neutral Cross-Border Corporate Reorganizations

Abstract: The European Merger Directive aims to take away the tax problems that are related to absorption or division of companies established in the Member States and provides for a common system of deferral for taxation of capital gains and tax-free reserves. Although Belgium adopted parts of the Merger Directive in its domestic tax legislation in 1991, some provisions were notably absent. However, new legislation to complete the implementation of the Merger Directive has been published in the Belgian Official Gazette on 12 January 2009, which opens new opportunities for cross-border reorganizations involving a Belgian company. The new legislation covers all the transactions included in the Merger Directive, that is, legal merger, legal division, partial division, transfer of assets (e.g., contribution of a branch of activities or a universality of goods) in a cross-border context as well as an exchange of shares and transfer of the registered office of an SE and an SCE. Additionally, the new legislation also aims to, for example, implement full tax neutrality for purely domestic parent-subsidiary mergers by taking away or amending certain elements that prohibited a complete tax neutral transaction.