The EU Commission concludes that constituted an unlawful State aid the UK’s policy of allowing total or partial exemption for non-trading finance profits from the UK controlled foreign company rules

Following an investigation opened in October 2017, the European Commission ("EC") has concluded that the UK's policy (from 2013-2018) of allowing total or partial exemption for non-trading finance profits from the UK Controlled Foreign Company ("CFC") rules in part constituted unlawful State aid. As a result, the UK must now recover that "aid" from UK corporates with offshore group finance subsidiaries which benefited from the relevant exemption. This decision follows a general EC review of Member State tax rulings over the past few years. Tax avoidance is one of the EC's top regulatory priorities given its potential to threaten fair competition. The EC has left it to the UK to determine the amount and the companies involved on a case-by-case basis. However, there are reports that

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Authors

  • Baker Botts (London)
  • Baker Botts (London)
  • Baker Botts (Brussels)

Quotation

Graham Brough, Dina Jubrail, Matthew Levitt, The EU Commission concludes that constituted an unlawful State aid the UK’s policy of allowing total or partial exemption for non-trading finance profits from the UK controlled foreign company rules, 2 April 2019, e-Competitions April 2019, Art. N° 94941

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