The European Commission has been busy requesting the UK to change its tax legislation as it presently conflicts with the EU rulings on freedom of establishment. I mentioned this in February in connection with the EC’s formal request in respect of the Transfers of Assets Abroad legislation and the rules for the taxation of capital gains of non-resident companies.
The EC has made a further formal request in respect of the Controlled Foreign Companies legislation. HMRC have recently changed the rules – but not enough to satisfy the Commission. Further relaxations have now been announced to provide a temporary exemption from the rules (a sort of “grace period”) where a UK multinational acquires a foreign subsidiary. In addition, shareholdings of less than 10% of a CFC will be ignored. I think we will be hearing more about all this soon.