November 29
2021
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Anjum Shabbir
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13th January 2020
Competition & State Aid

Further challenges to the Commission’s CFC State Aid Decision published today

This week, the Official Journal has published another round of actions of annulment in the General Court against the Commission’s decision that the UK’s rules targeting tax avoidance, which exempted certain multinational groups from tax in the UK, constituted illegal State aid.

The UK’s Controlled Foreign Company rules (CFC) are subject to an exception under the Group Financing Exemption. It partially (75%) or fully exempted financing income from taxation in the UK if it was received by an offshore subsidiary from another foreign group company, even if this income is derived from ‘UK activities’    or the capital being used is ‘UK connected’.

A multinational active in the UK and exercising this exemption was able to provide financing to a foreign group company via an offshore subsidiary paying little or no tax on the profits from these transactions. The European Commission found that the scheme unduly exempted certain multinational groups from these UK rules targeting tax avoidance. This is illegal under EU State aid rules.

Further information on this file is available here

The Official Journal publishes today the actions in this case lodged by Micro Focus International and Others v Commission (T-706/19); Bujar v Commission (T-708/19); Sthree and Sthree Overseas Holdings v Commission (T-710/19); SSP Group and SSP Financing v Commission (T-711/19); Hikma Pharmaceuticals and Hikma Pharmaceuticals International v Commission (T-712/19); Cobham and Lockman Investments v Commission (T-713/19); Smiths Group and Siti 1 v Commission (T-714/19)Associated British Foods and Others v Commission (T-717/19); The Weir Group and Others v Commission (T-718/19).

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