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What motive?
Cadbury Schweppes had two subsidiaries resident in the Republic of Ireland, which were subject to a 10% rate of tax. HMRC said that the controlled foreign companies legislation applied under TA 1988, ss 747 to 756. The company appealed, saying that this breached Articles 43EC, 49EC and 56EC of the EC Treaty (freedom of establishment).
What motive?
Cadbury Schweppes had two subsidiaries resident in the Republic of Ireland which were subject to a 10% rate of tax. HMRC said that the controlled foreign companies legislation applied under TA 1988 ss 747 to 756. The company appealed saying that this breached Articles 43EC 49EC and 56EC of the EC Treaty (freedom of establishment).
The Special Commissioners referred the case to the European Court of Justice. Following the Advocate General's opinion see Update Taxation 11 May page 153 the European Court said that while CFC legislation did restrict freedom of establishment within the meaning of EU law such restriction could be justified where artificial arrangements aimed at avoiding tax were in place. However the UK courts had to take into account before applying the CFC legislation objective factors ascertainable by third parties...
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