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(2) (a) Subject to this section, where—

(i) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company’s business to another company,

(ii) (I) the company acquiring the assets is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time, and

(II) the company from which the assets are acquired is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately ^[4]>before that time,^<[4][4]>before that time,^<[4]

(iii) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities ^[3]>of the business),^<[3][3]>of the business), and^<[3]

then, in so far as relates to corporation tax on chargeable gains, both companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by means of the transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 556 the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company’s acquisition of the assets.

(b) For the purposes of paragraph (a)—

(i) an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain, and

(ii) a reference to a company shall apply only to a company which, by virtue of the law of a ^[2]>Member State of the European Communities^<[2][2]>relevant Member State^<[2], is resident for the purposes of tax in such a Member State, and for this purpose “tax”, in relation to a ^[2]>Member State of the European Communities^<[2][2]>relevant Member State^<[2] other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.

^<[1]

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(2A) (a) In this subsection “division”, “merger”, “successor company” and “transferor company” have the same meaning as in section 638A.

(b) This section shall apply as if the transfer from a transferor company of all its assets to a successor company as a result of a merger or a division were the transfer of the whole of the company’s business and all the liabilities of the transferor company were the liabilities of the business of that transferor company where, immediately before the merger or division, the transferor company carried on a business.

^<[10]

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(4) (a) This section shall not apply in relation to the transfer of a specified intangible asset within the meaning of section 291A where the company acquiring the asset and the company from which the asset is acquired jointly so elect by giving notice, not later than 12 months from the end of the accounting period in which the company acquired the asset, to the Collector-General in such manner as the Revenue Commissioners may require.

(b) Where—

(i) an election is made under paragraph (a) in relation to the transfer of a specified intangible asset, and

(ii) that transfer is not a transfer to which section 400(6) applies,

then, for the purposes of computing any chargeable gain, the transfer of that asset shall be treated, as respects—

(I) the disposal by the company from which the asset was acquired, and

(II) the acquisition by the company acquiring the asset,

as having been made for a consideration equal to the market value of the asset on the date of that transfer.

^<[6]

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(4A) (a) In this subsection—

“arrangement” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

“tax” means income tax, corporation tax or capital gains tax.

(b) This section shall not apply to a scheme of reconstruction or amalgamation involving the transfer of the whole or part of a company’s business to another company unless it is shown that the reconstruction or amalgamation is effected for bona fide commercial reasons and does not form part of an arrangement the main purpose, or one of the main purposes, of which is the avoidance of liability to tax.

^<[8]