On 26 October 2017, the European Commission (the Commission) opened an in-depth investigation into UK statutory rules that exempt certain financing income earned by foreign subsidiaries of UK corporate taxpayers from UK tax. The Commission’s investigation will focus on whether the UK Controlled Foreign Company (CFC) rules allow multinational groups a more beneficial tax treatment than others in breach of the European Union rules on state subsidies. UK CFC Rules The UK CFC rules are primarily an anti-avoidance measure aimed at ensuring that the UK corporate tax base is not inappropriately eroded or diminished by or through transactions undertaken by non-UK subsidiaries of UK corporate taxpayers. CFC rules in general are an important element of many EU national tax systems to address
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The EU Commission opens an in-depth investigation into UK statutory rules exempting some financing incomes earned by foreign subsidiaries
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