Exit tax may prompt exodus
The UK could be facing a corporate exodus after a European Court of Justice Advocate General's opinion deemed exit tax laws anti-competitive.
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The French case relates to the compatibility of residential exit tax, when an individual wanted to transfer his residence from France to Belgium. Under French – and UK – law he would have to pay 25% capital gains tax on shares, the law stretches to companies too.
The opinion could lead to UK companies, that only remained in the country because they did not want to pay the levy, fleeing the shores in search of more business friendly environments such as Ireland.
‘The de Lasteyrie du Saillant case will lay the ground for possible further significant taxation claims from EU businesses in relation to corporate emigration exit taxes,’ said Peter Cussons, international corporate tax partner, at PricewaterhouseCoopers.