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Seventh Directive: consolidated accounts of companies with limited liability

Seventh Directive: consolidated accounts of companies with limited liability

Outline of the Community (European Union) legislation about Seventh Directive: consolidated accounts of companies with limited liability

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for capital

Seventh Directive: consolidated accounts of companies with limited liability

Document or Iniciative

Seventh Council Directive 83/349/EEC of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated accounts [See amending acts].

Summary

The following text concerns a consolidation of existing Directives on consolidated accounts of companies with limited liability.

A parent company and all its subsidiaries are companies to be consolidated where either the parent company or one or more subsidiaries is established as a company with limited liability if the parent company exercises a dominant influence over the subsidiary.

These Directives define the circumstances in which consolidated accounts are to be drawn up. Any company (parent company) which legally controls another company (subsidiary company) is under a duty to prepare consolidated accounts. In most cases, legal control takes the form of the holding of a majority of voting rights. Member States may also require consolidated accounts to be prepared in other cases where a parent company has only a minority shareholding but exercises de facto control. They may provide for exemption from this obligation. The figures given in euro in Directive 78/660/EEC serve as thresholds for defining the groups which can be exempted completely from the consolidated accounts requirement.

The Directive sets out the methods of drawing up consolidated accounts:

  • Consolidated accounts comprise the consolidated balance sheet, the consolidated profit and loss account and the notes to the accounts. Consolidated accounts must give a true and fair view of the assets, liabilities, financial position and profit or loss of the companies included therein taken as a whole.
  • The book values of shares in the capital of companies included in a consolidation must be set off against the proportion which they represent of the capital and reserves of those companies. Such set-off must be effected on the basis of book values as at the date on which the companies are included in the consolidation for the first time.
  • The consolidated accounts must be drawn up on the same date and by the same methods as the annual accounts of the parent company.

The Annex states that certain information must be provided in the notes, on such things as valuation methods, the names and the registered offices of the undertakings included in the consolidation, total of certain types of debts, etc.

The Directives also regulate the contents of the consolidated annual report. This must include at least a fair review of the development of business and the position of the undertakings included in the consolidation taken as a whole, and certain indications for each of those undertakings (number and nominal value of shares, etc.).

The Directives establish a system of auditing under which a company which prepares consolidated accounts must have them audited by one or more persons authorised to audit accounts under the laws of the Member State which govern that company. The person or persons responsible for auditing the consolidated accounts must also verify that the consolidated annual report is consistent with the consolidated accounts for the same financial year.

Context

The Directives lay down rules on disclosure. The consolidated accounts, the consolidated annual report and the auditor’s report must be published in accordance with the provisions of the first Directive.

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Directive 83/349/EEC [adoption: consultation CNS/1976/1011]

29.6.1983

31.12.1987

OJ L 193, 18.7.1983


Amending act(s)
Entry into force Deadline for transposition in the Member States Official Journal
Directive 89/666/EEC

3.1.1990

1.1.1992

OJ L 395, 30.12.1989

Directive 90/604/EEC

19.11.1990

1.1.1993

OJ L 317, 16.11.1990

Directive 90/605/EEC

20.11.1990

31.12.1992

OJ L 317, 16.11.1990

Directive 2001/65/EC

16.11.2001

31.12.2003

OJ L 283, 27.10.2001

Directive 2003/51/EC

17.7.2003

1.1.2005

OJ L 178, 17.7.2003

Directive 2006/43/EC

29.6.2006

29.6.2008

OJ L 157, 9.6.2006

Directive 2006/46/EC

5.9.2006

5.9.2008

OJ L 224, 16.8.2006

Directive 2006/99/EC

1.1.2007

1.1.2007

OJ L 363, 2012.2006

Directive 2009/49/EC

16.7.2009

1.1.2011

OJ L 164 of 26.6.2009

The successive amendments and corrigenda to Directive 83/349/ECC  been incorporated into the original text. This consolidated versionis of mere documentary value.

Common system of taxation: mergers, divisions, transfers of assets, exchanges of shares and transfer of the registered office of an SE or SCE

Common system of taxation: mergers, divisions, transfers of assets, exchanges of shares and transfer of the registered office of an SE or SCE

Outline of the Community (European Union) legislation about Common system of taxation: mergers, divisions, transfers of assets, exchanges of shares and transfer of the registered office of an SE or SCE

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Businesses in the internal market > Company law

Common system of taxation: mergers, divisions, transfers of assets, exchanges of shares and transfer of the registered office of an SE or SCE

Document or Iniciative

Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States.

Summary

This Directive applies to:

  • mergers, divisions, transfers of assets and exchanges of shares in which companies from two or more Member States are involved;
  • the transfer of the registered office between Member States of a Societas Europaea (European Company) (SE) or a European Cooperative Society (SCE).

Rules applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares

A merger, division or partial division does not give rise to any taxation of capital gains -calculated by reference to the difference between the real values of the assets and liabilities transferred and their values for tax purposes – at the time of the operation in question but only when such gains are actually realized.

Member States are required to take the necessary measures to ensure that provisions or reserves partly or wholly exempt from tax may be carried over by the permanent establishments of the receiving company which are situated in the Member State of the transferring company.

The allotment of securities representing the capital of the receiving or acquiring company to a shareholder of the transferring or acquired company must not give rise to any taxation of the income, profits or capital gains of that shareholder.

Special case of the transfer of a stable establishment

Where the assets transferred in a merger, a division or a transfer of assets include a permanent establishment of the transferring company which is situated in a Member State other than that of the transferring company, the Member State of the transferring company must renounce any right to tax that permanent establishment.

Special case of transparent entities

Where a Member State considers a non-resident transferring or acquired company to be fiscally transparent, it is not required to apply the provisions of this Directive when taxing a direct or indirect shareholder of that company in respect of the income, profits or capital gains of that company.

Rules applicable to the transfer of the registered office of an SE or SCE

Where an SE or an SCE transfers its registered office from one Member State to another or becomes resident in another Member State, that transfer shall not give rise to any taxation of the income, profits or capital gains of the shareholders. However, Member States may tax the gain arising out of the subsequent transfer of the securities representing the capital of the SE or of the SCE that transfers its registered office.

In the same case, Member States shall take the necessary measures to ensure that, where provisions or reserves properly constituted by the SE or the SCE before the transfer of the registered office are partly or wholly exempt from tax and are not derived from permanent establishments abroad, such provisions or reserves may be carried over, with the same tax exemption, by a permanent establishment of the SE or the SCE which is situated within the territory of the Member State from which the registered office was transferred.

This Directive repeals Directive 90/434/EC.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2009/133/EC

15.12.2099

OJ L 310, 25.11.2009