Commission opens in-depth investigation into UK tax scheme for multinationals

Further information:

The investigation aims to check whether the Group Financing Exemption scheme allows those multinationals to pay less tax in the United Kingdom, in breach of EU State aid rules.

Background information:

The general purpose of the UK's Controlled Foreign Company (CFC) rules is to prevent UK companies from using a subsidiary, based in a low or no tax jurisdiction, to avoid taxation in the United Kingdom. Since 2013, the UK's CFC rules include an exception for certain financing income of multinational groups active in the UK – the Group Financing Exemption. It exempts from reallocation to the UK, and hence UK taxation, financing income received by the offshore subsidiary from another foreign group company.

The European Commission opened on 26 October 2017 an in-depth investigation into a scheme implemented by the United Kingdom that exempts certain transactions by multinational groups from the application of rule targeting tax avoidance.

• Primary Source

EUObserver, 26.10.17: EU takes aim at UK tax perks https://euobserver.com/economic/139661

The Independent, 26.10.17: EU launches investigation into Britain for letting multinational corporations avoid tax http://www.independent.co.uk/news/uk/politics/tax-avoidance-brexit-eu-britain-evasion-state-aid-rules-a8021176.html

Reuters, 26.10.17: EU opens state aid probe into UK tax scheme for multinationals https://uk.reuters.com/article/idUKKBN1CV195

The Guardian, 25.10.17: EU to investigate UK tax loophole for multinationals https://www.theguardian.com/business/2017/oct/25/eu-to-probe-uks-anti-tax-avoidance-schemes-for-multinationals

Bloomberg, 25.10.17: U.K. Tax Rules for Big Firms Face EU Probe https://www.bloomberg.com/news/articles/2017-10-25/u-k-tax-rules-for-big-firms-face-eu-probe-as-brexit-talks-stall

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