EU High Court Rules UK Tax Scheme for Multinational Companies Did Not Breach State Aid Law

The European Union’s high court ruled on Sept. 19 that a British scheme that allegedly granted tax breaks to certain multinational companies between 2013 and 2018 did not breach European Union state aid law.
They also allowed the UK tax authorities to reallocate all profits artificially diverted to an offshore subsidiary back to the UK parent company, where it can be taxed accordingly.
Additionally, under the rules, tax exemptions were granted to multinational corporations based in the UK on some of the profits from their CFCs.
In its ruling, the CJEU sided with the UK, finding the scheme did not illegally benefit multinational corporations based in the country.
The lower court “erred in law” when it confirmed that, as the Commission had found in its decision, “the reference framework for the purposes of examining the selectivity of the exemptions at issue … consisted solely of the rules applicable to CFCs, set out in Part 9A of the TIOPA,” the high court said in its ruling.
The Commission may only depart from the Member State’s interpretation of the relevant provisions of its national law if it is able to establish, on the basis of reliable and consistent evidence, that “another interpretation prevails in the case-law or the administrative practice of that Member State,” the court wrote.
The ruling is final and cannot be appealed.