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The Commission’s State aid decision on the UK’s CFC rules is a split one. In the Danish conduit cases, the CJEU makes it clear that an entity cannot rely on the Parent Subsidiary Directive or the Interest and Royalties Directive where the principal objective or one of its principal objectives is to obtain a tax advantage running counter to the aim or purpose of the applicable tax law. In Gallaher Limited, the FTT disapplies the exclusion from TCGA 1992 s171 for intra-group disposals to transferees outside the UK tax net with the result that the gain of around £1.5m escapes the UK tax net altogether. The Supreme Court confirms in the Lehman Brothers case that statutory interest is “yearly interest” for withholding tax purposes.
This article was first published in the 12 April 2019 edition of Tax Journal.