This document is an excerpt from the EUR-Lex website
Indirect taxes on raising capital
WHAT IS THE AIM OF THE DIRECTIVE?
Tax and the companies concerned
The directive seeks to regulate the levying of indirect taxes on:
The directive applies to the following companies:
In this directive ‘capital company’ means any company, firm, association or legal person:
The directive clarifies what is meant by contributions of capital (including the formation of or conversion into a capital company or the increases in capital shareholding either by contributions of assets or by capitalisation of profits or reserves). It also defines restructuring operations such as mergers affected by the contribution of assets or by the exchange of shares.
Prohibition on levying indirect tax on the raising of capital
EU countries may not levy indirect tax on the raising of capital to capital companies.
These transactions affect the following in particular:
The directive also prohibits indirect taxes on the issue of certain securities and debentures. However, EU countries may charge certain transfer duties, fees, dues or value added tax.
Special rules apply to EU countries that charged a duty on contributions of capital to capital companies (capital duty) as at 1 January 2006. Those countries may continue to levy the duty, which must be charged at a single rate not exceeding 1% and may be charged solely on contributions of capital, i.e. capital duty may not be charged on other transactions such as restructuring operations.
Capital duty may only be levied by an EU country if the centre of effective management of the capital company is situated in that country at the time the contribution is made. In addition, capital duty can only be charged once in the EU.
Exemptions from capital duty may be applied to capital companies which supply a public service or have an exclusively cultural or social aim.
FROM WHEN DOES THE DIRECTIVE APPLY?
It has applied since 12 March 2008. It had to become law in the EU countries by 31 December 2008.
Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital (OJ L 46, 21.2.2008, pp. 11-22)
Successive amendments to Directive 2008/7/EC have been incorporated into the original document. This consolidated version is of documentary value only.
last update 07.11.2017