The European Commission has taken the second step in its infringement procedure by issuing a Reasoned Opinion requesting that the UK amend two tax anti abuse regimes which it considers to be discriminatory.

The first discriminatory measure targeted by the Commission is the UK's "transfer of assets abroad" legislation under which a UK investor who invests in a company incorporated and managed in another Member State is subject to tax on the income generated by that company (but had the investment been made in a UK company, only the company itself would be liable for tax). The second discriminatory measure targeted by the Commission is the UK's rules on the attribution of capital gains. This legislation has the effect that where a UK resident company acquires more than a 10% share of a company in another Member State, and the non resident company makes a capital gain from the sale of an asset, that gain is attributed to the UK company and is taxed as a capital gain by the UK. Had both companies been UK companies, there would be no attribution of the gain.  

The Commission considers that the freedom of establishment and free movement of capital are restricted by these measures because outside investments are taxed more heavily than domestic investments and that the measure is disproportionate. The UK now has two months to respond to the Reasoned Opinion.