This section applies if—
a company ("company B") issues shares or debentures to a person in exchange for shares in or debentures of another company ("company A"),
the exchange falls within one of the cases specified in section 135(2), and
either company B or company A or both is a transparent entity.
Where this section applies—
"company" in section 135 shall be treated as meaning an entity listed in Part A of Annex I to the Mergers Directive, and
section 135(3) does not apply.
If, as a result of an exchange in relation to which this section applies, a gain accruing to a person holding shares in or debentures of company A on the exchange would, but for the Mergers Directive, have been chargeable to tax under the law of a member State ..., Part 2 of TIOPA 2010 (double taxation relief), including any double taxation relief arrangements, shall apply as if that tax, calculated in accordance with subsection (4), had been chargeable.
Tax is calculated in accordance with this subsection if—
so far as permitted under the law of the relevant member State, losses arising on the exchange are set against gains arising on the exchange, and
any relief available to company A under that law has been claimed.