The UK’s CFC rules are not contrary to EU law on freedom of establishment,
the advocate general of the European Court of justice has stated.
In a preliminary opinion on the Cadbury Schweppes case, the first to test the
anti-avoidance rules that prevent companies shipping profits to low tax
jurisdictions, the AG said that ‘Articles 43 EC and 48 EC do not preclude
national tax legislation which provides for inclusion in the tax base of a
resident parent company profits of a controlled foreign company established in
another Member State.’
The opinion also seems to incorporate a purposive test in establishing
whether such rules would be appropriate.
‘Such legislation must therefore enable the taxpayer to be exempted by
providing proof that the controlled subsidiary is genuinely established in the
State of establishment and that the transactions which have resulted in a
reduction in the taxation of the parent company reflect services which were
actually carried out in that State and were not devoid of economic purpose with
regard to that company’s activities,’ the conclusion to the opinion says.
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states