Merger control transactions and implementation of Merger Regulation and European Union Merger Directive into the Slovak legal and tax legislation

The definition of a merger transaction plays an important role in a well-functioning merger review regimes that seek to be effective, efficient, and transparent. In general, the purpose of the article is present the interpretation of European Union ("EU") legislation in respect of merger control transactions and merger regulations and its implementation into the Slovak legislation. The standards methodology methods, such as selection, analysis and comparison methods are used in order to meet the above mentioned, specifically, these are used for selection of literature sources, presentation current legal acts and EU legislation. The results and conclusions of the article are presented by deduction method. The article deals with the issue of merger control transactions of selected types of commercial companies. It analyzes the concept of merger transactions under the Competition law of EU and deals with its implementation into the Slovak legislation. The legal basis for EU merger control is Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings ("the EC Merger Regulation" or "regulation"). The regulation prohibits mergers and acquisitions which would significantly reduce competition in the single market. Merger control, as well as other areas of competition law, is in the Slovak Republic, substantially governed by the Act on Protection of Economic Competition. The relevant authority for merger control is the Antimonopoly Office of the Slovak Republic. Having compares the EC Merger Regulation and the Slovak law we came into conclusion that the Slovak legislation is to a great extent in line with the European law. Further, from the tax point of view the article deals with the merger transactions within the EU legislation. The article presents the main rule of EU Merger Directive in the EU legislation and presents implementation of EU Merger Directive into the Slovak tax law. The merger transactions are regulated by The 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 State and to the transfer of the registered office of an SE or SCE between Member States ("EU Merger Directive"). The main rule of the EU Merger Directive is that a merger, division, or partial division shall not give rise to any taxation of capital gains. The EU Merger Directive is transposed into the Slovak Income Tax Act ("Slovak ITA"). Following the Slovak implementation of EU Merger Directive, merger transactions are generally treated as not giving rise to a capital gain calculated by reference to the difference between the real values of the assets and liabilities transferred and their values for tax purposes. As a result, it can be summarized that the income received by the shareholders from acquiring new shares and income from exchange of the shares on merger transactions is not subject to income tax. The Slovak ITA essentially deals with mergers transactions. The Slovak ITA presents that the merger transactions are to be made (i) in original (historic), or (ii) in the real value. Thus, in addition, the article formulates the main tax implications of the merger transactions depending on the chosen alternatives, i.e. whether the fair value of the assets and liabilities or their original values are taken over by new successors upon the merger transaction.