Finance company exemption contravened state aid rules

The European Commission has found that that the finance company exemption from the UK’s controlled foreign company (CFC) rules partly contravened EU state aid rules. The UK must now recover the illegal state aid from the multinational companies that benefited from it.

Peter Morley a corporate tax expert at Pinsent Masons said: ‘The EU commission’s decision would have created significant uncertainty for businesses at any time but in light of the current uncertainty regarding Brexit there is even less clarity for affected businesses.’

He said that the UK’s departure from the EU may not be relevant. ‘The enforcement details will depend on the final Brexit arrangements. As it currently stands state aid law will be incorporated into UK domestic law and come under the remit of the Competition and Markets Authority (CMA) which will take over enforcement from the commission....