The recently announced merger between Northern Foods Plc and Greencore Group Plc, if it goes ahead, is likely to be the first UK public transaction to be structured under the EU Directive governing cross-border mergers. Legislation has been introduced into the UK tax code to provide for the deferral of some taxes that would otherwise arise on such mergers. That said, cross-border mergers are not tax neutral per se, and pre-merger restructuring may need to be carried out to mitigate charges which would otherwise arise. In particular, the provisions enabling shareholders receiving shares on a cross-border merger to obtain chargeable gains rollover contain some traps for the unwary.
