The detailed decision in this case was published on 25 April 2019.
On 2 April 2019, the European Commission (EC) issued a press release announcing its conclusion that the UK Finance Company Partial Exemption Rules (the FCPE rules) is partly justified for the period from 2013 to 2018 (for more detail read our news report).
The UK government is now required to initiate recovery of the alleged State aid irrespective of any appeal against the decision. It seems most likely, at this stage, that recovery will be based on the extent to which the UK has significant people functions. This means that the taxpayers who benefitted from the FCPE rules will need to assess the profit allocable to UK significant people functions (SPFs) in order to determine whether, in light of the Commission decision, they have benefited from State aid which must be recovered for the historic periods.
In this video, Jonathan Hare and Juliet Trent from PwC's EU Direct Tax Group discuss what businesses should be thinking about following the European Commission's press release that an aspect of the UK's CFC regime constitutes State aid. The detailed final decision is expected to be released in the next couple of weeks.
On 2 April 2019 the European Commission (EC) issued a press release that they have concluded that UK Finance Company Partial Exemption Rules (the FCPE rules) constitute partial state aid for the period from 2013 to 2018.
On 2 April 2019, the European Commission (EC) announced in a press release that it has found that the Group Financing Exemption (GFE) within the UK Controlled Foreign Company (CFC) rules is “partly justified”.
The UK CFC rules are provisions which broadly allow the UK to tax the income of overseas subsidiaries, controlled by a UK corporate parent where that income is regarded as artificially diverted from the UK.
On 26 October, the EU Commission launched a formal state aid investigation into the financing income exemption within the UK's CFC regime.