TaxCorporate TaxExit case to open tax floodgates

Exit case to open tax floodgates

UK companies considering launching ECJ challenge to exit charge rules

A group of UK companies are considering launching a European Court of Justice
challenge against tax charges imposed on UK businesses that relocate their
tax residence to another EU member state.

Under current rules, a UK company that shifts its headquarters or board to
another country, and in so doing ceases to be a UK tax resident, is deemed to
have disposed of all its assets at market value and is liable for tax on any
gains from this ‘sale’. Legal experts believe that, as the rules stand, they
contravene the EC Treaty, as they restrict a company’s right to freedom of
establishment in the EU.

A lawyer advising a number of large companies on EU law said: ‘People are
thinking about this and all it is going to take is one company to go through the
European Court of Justice.’

A successful challenge would drive a hole through the UK’s attempts to keep
huge multi-nationals in the UK. HSBC has said it might relocate, while Barclays
has suggested it might move if it is successful in buying ABN Amro.

The UK exit charge rules tax departing residents on their assets even though
they have not actually been sold. A Treasury spokesman said the government was
confident that exit charge rules were compatible with EU law.

But the government is believed to be in informal talks with the European
Commission
on exit charges and is consulting with other member states on how to co-ordinate
exit charge laws.

For more see
AccountancyAgeTV

Related Articles

Watch out when winding up

Corporate Tax Watch out when winding up

1m Emma Rawson, ATT Technical Officer
How might Brexit affect UK tax policy?

Brexit & Economy How might Brexit affect UK tax policy?

2m Santhie Goundar
Corporation tax losses – your newly flexible friends

Corporate Tax Corporation tax losses – your newly flexible friends

4m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

4m Emma Smith, Managing Editor
SMEs paying higher rate of corporation tax than big businesses

Corporate Tax SMEs paying higher rate of corporation tax than big businesses

5m Alia Shoaib, Reporter
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

8m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

8m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

8m Alia Shoaib, Reporter