New rules for SEs announced in the UK
On 8 October 2004 the European Company (known by the Latin term "Societas Europaea" or SE) became available for use. The SE is a legal entity form based on harmonised company law (i.e. an EU Regulation and a Directive on worker involvement).
The most elementary feature of the European Company is that it can operate as a legal entity in all EU member states with just one statute and set of rules and that it can change its residence without loosing its legal identity. It is a quasi-freedom, however, because such change of residence can trigger prohibitive taxation. When it comes to taxation a SE is nothing different than any other corporate entity. The tax rules are far from harmonised in the EU.
The SE can be of value for enterprises that want to make a political statement and stress that they are based in the EU rather than in one specific member state.
In January the UK announced plans to change its tax rules in order to facilitate mergers whereby a SE is created or involved. It is anticipated that the new rules will come into effect as from 1 April 2005. The current plans of the UK government do not address, however, the tax treatment of a change of residence of a European Company outside the UK.
