The Conversion of a Branch into a Subsidiary under the EC Merger Directive: Still “Rarely Pure and Never Simple”

This article considers the consequences of a company from an EU Member State transferring the assets of its Italian PE into an Italian company. The author considers whether the participation resulting from the contribution of the branch assets should be attributed (1) to that same branch, whose subsequent collapse would trigger taxation on the participation, defeating the EC Merger Directive’s tax-neutral treatment, or (2) directly to the foreign head office, which is the preferred solution.