Tax preferred mergers
This diagram shows the basic concept underlying a Japanese merger: The issue of shares and/or other assets by a surviving company to the shareholders of a ceasing company in consideration for the transfer of the business of the ceasing company to the surviving company.
See the articles in the corporate reorganisation section for more details.
Japanese triangular merger
In a Japanese triangular merger the shares of the parent, including those of a foreign parent subject to certain conditions, may be used as consideration for the merger through issue to the shareholders of the ceasing company.
Tax classification of Japanese mergers
This diagram illustrates the different types of merger recognised under the Japanese tax law: Mergers within a wholly owned group, mergers within an affiliated group and mergers in an unaffiliated group.
Where the entities involved in the merger share less common ownership the criteria for the merger to be tax preferred become more stringent. See the corporate reorganisation section for more details.
Flowchart: Tax preferred mergers
This flowchart illustrates the criteria that must be met for different types of Japanese merger (see the diagrams above) in order for the merger to be treated as tax preferred.