EU Tax Alert 199

Highlights in this edition

CJ judgment on the compatibility of UK group transfer rules with the freedom of establishment (Gallaher, Case C-707/20)

On 16 February 2023, the CJ delivered its judgment in the case Gallaher (C-707/20). The case addresses the question of whether the United Kingdom (UK) group transfer rules which impose an immediate tax charge on the disposal of assets to a group company established in a third country, are restrictive of the freedom of establishment in circumstances where such a disposal would be made on a tax-neutral basis if the group company receiving the assets were resident or had a PE in an EU Member State. The case also addresses the issue of whether these rules are proportional in light of the impossibility of the company to defer the payment of this tax when it has obtained, by way of consideration for the disposal of the assets, an amount equal to their full market value.