CJEU should annul decision against ‘illegal’ tax benefits granted by London, says Medina

by Foo Yun Chee

BRUSSELS (Reuters) – The Court of Justice of the European Union must overturn the European Commission’s 2019 ruling that several multinational groups benefited from illegal tax rulings by the United Kingdom between 2013 and 2018, ruled on Wednesday the General Advocate of the CJEU, Laila Medina.

“The General Court and the Commission erred in law in considering that the rules applicable to controlled foreign companies constituted the correct reference framework for examining whether a selective advantage had been conferred. The correct reference framework should instead have been the general corporate tax regime in the United Kingdom”, explains the lawyer.

The decision taken in 2019 noted that the United Kingdom had granted, between 2013 and 2018, illegal state aid to certain multinational groups by exempting them from the application of a tax regime to combat tax evasion.

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In detail, the UK tax authorities could reallocate any profits diverted to an offshore subsidiary, a common practice of tax avoidance, to the parent company in the UK and tax them accordingly.

However, certain financial benefits were exempted from this practice, with the Commission ruling that this was an illegal tax advantage. The lawyer argues that the specific code for the companies concerned was taken into account in the Commission’s decision, which should instead have been based on the general tax regime.

The decision was issued before the UK left the EU and was attacked by the British government and ITV. In 2022, the EU court rejected these appeals.

The United Kingdom, ITV and two London Stock Exchange companies then appealed to the CJEU.

(Editor Foo Yun Chee, French version Corentin Chappron, edited by)