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3.4.3 Tax Treatment EC and ECS


The tax treatment of EC and ECS are not fully harmonized. The ECS concerns itself with company law provisions for SEs, not tax
issues. In the absence of specific tax provisions, an SE is treated for tax
purposes as a company subject to the tax law of the State in which it is
based. See, for example,  Kellas and Juusela 2003 pp. 385– 404 and Conci 2004 pp. 15–21 about the tax treatment of a EC. On all issues not regulated by the SCE statute national law will apply. For tax purposes, for example, an SCE is treated like any other multinational company according to national fiscal legislation.

In most EU States, a tax-neutral conversion of an existing public company limited by shares to an SE or from an existing cooperative society to an SCE is possible, based on national laws, which also regulate their tax consequences.

There are, however, aditionally some possibilities for a tax-neutral establishment of a EC applying the principles of the Merger Directive.

A tax-neutral formation of an SE or an SCE is possible by a merger provided, in the case of SE, both companies are covered by the Merger Directive.