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HMRC internal manual

Capital Allowances Manual

General: successions: Societas Europaea


The European Company Statute that came into effect on 8th October 2004 created a new European company called a Societas Europaea (SE). The tax law of the Member State in which the SE is based applies to the SE.

Section 561A stops any allowances or charges arising where an asset is transferred as part of the formation of an SE by merger.


Section 561A applies to transfers of assets made on or after 1 April 2005.

It applies where:

  • an SE is formed by the merger of two or more companies where not all the merging companies are resident in the same member State,
  • an asset qualifying for capital allowances is transferred as part of the formation of the SE by merger, and
  • the asset is within the scope of UK tax after the formation of the SE.

This will happen if the SE is resident in the UK or the asset is an asset of a permanent establishment in the UK of an SE.

Where these conditions are satisfied:

  • Section 561A stops any allowances arising or charges being made as a result of the formation of the SE,
  • anything done by the transferor to the assets transferred is treated after the transfer as having been done by the transferee, and
  • the company reconstructions without change of ownership provisions of Chapter 1 part 22 CTA2010 (formerly ICTA88/S343 - CA15400) do not apply.

This means that the transferee gets the same allowances and suffers the same charges as the transferor would have got if it had continued to carry on the qualifying activity.


Company Z Plc, which is resident in the UK, and Company Z AG, which is resident in Germany, merge to form Company Z SE. All of Z Plc’s assets are transferred to Z SE as part of its formation. Those assets are treated as if they had been acquired by Z SE when Z Plc acquired them and as if everything done to them by Z Plc had been done by Z SE.