The Treasury has been urged to review anti-avoidance rules by the European Commission.

In a crackdown on tax avoidance legislation, László Kovács urged member states to review what structures they have in place to ensure they are not restricting the single market.

Kovács, the commissioner responsible for taxation and customs union, said: 'The recent rulings by the European Court of Justice in this field clearly show that Member States need to urgently carry out a critical review of their existing anti-abuse rules. I understand that member states need to ensure that their tax bases are not unduly eroded because of abusive and overtly aggressive tax planning schemes but we cannot tolerate disproportionate obstacles to cross-border activity within the EU. I invite member states, in order to strike the proper balance, together to explore the potential and scope for possible coordinated solutions'

Many UK corporate tax rules have been challenged by companies, who say they restrict freedom of establishment and the free movement of capital.

Challenges have been brought over the 'thin cap' rules, as well as on controlled foreign companies legislation.

The rules are designed to stop companies situating profits in countries with low tax rates, but companies contend that such structures run contrary to the aims of the European single market.

Further Reading:

Read the EC's announcement

European influence: the EU fire fight