UK loses court case against EU for company tax avoidance scheme

The UK’s court case against the EU, follows the London Stock Exchange, ITV and other multinationals allegedly benefitting from tax exemption.

On Wednesday, June, 8, it was announced that the UK lost its court case against the EU after allegedly creating a tax avoidance scheme for various firms.

The European Commission’s decision, made in 2019, was backed by the Luxembourg-based General Court, who rejected the UK’s arguments.

The court case was one of various cases seen by the EU, after they began cracking down on tax deals that had been offered to multinationals by EU countries. The biggest of these cases was Ireland’s tax arrangement with Apple.

The EU Commission, stated that  Britain’s Controlled Foreign Company (CFC) rules aimed at attracting companies to set up headquarters in Britain and discourage UK companies moving offshore, gave these companies an illegal tax advantage.

The UK, as well as firms such as ITV and the London Stock Exchange,  appealed against the EU decision.

“The Commission did not err in finding that the exemptions at issue conferred a selective advantage on the beneficiaries thereof and, consequently, all the pleas relating thereto must be rejected,” the General Court stated.

Appeals can be made by the parties, who will have to appeal to the EU Court of Justice (CJEU).

The EU Commission did not make public, the full list of companies that allegedly took advantage of the tax scheme, but companies that mentioned the EU investigation in their account include,BBA Aviation, Chemring ,Daily Mail & General, Diageo, Euromoney, Inchcape, Meggitt, Smith & Nephew and WPP, as reported by Reuters.

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