Britain won on Thursday its fight against an EU order to recover millions of euros from the London Stock Exchange, broadcaster ITV and other multinationals, in a setback to EU regulators’ crackdown on certain tax schemes.
The European Commission’s decision, which targeted what it said was an illegal exemption in a British tax scheme, was issued in 2019 prior to Britain’s withdrawal from the 27-country bloc a year later.
The European Union competition enforcer said the UK’s Controlled Foreign Company (CFC) rules aimed at attracting companies to set up headquarters in the country and discourage British companies from moving offshore, gave these firms an illegal advantage.
The Luxembourg-based Court of Justice of the European Union (CJEU) sided with Britain.
“The Commission and the General Court erred in law in finding that the rules applicable to CFCs constituted the appropriate reference framework for examining whether a selected advantage had been conferred,” the court said in a statement.
“The Court recalls that the Commission … is in principle required to accept the Member State’s interpretation of the relevant provisions of its national law, unless it is able to establish that another interpretation prevails in the case-law or the administrative practice of that Member State”, it added.
The ruling is final and cannot be appealed.
EU antitrust chief Margrethe Vestager has made the tax crackdown a key plank of her job.
The Commission did not identify the companies which benefited from the scheme. However, BBA Aviation, Chemring, Daily Mail & General, Diageo, Euromoney, Inchcape, Meggitt, Smith & Nephew and WPP have mentioned the EU investigation in their accounts.
The CJEU last week upheld the Commission’s record 13 billion euro tax order to Apple, marking its biggest victory.
The joined cases are C-555/22 P United Kingdom v Commission and Others, C-556/22 P ITV v Commission and Others and C-564/22 P LSEGH (Luxembourg) and London Stock Exchange Group Holdings (Italy) v Commission and Others.
(Reporting by Yun Chee Foo)
