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ARTICLE · 30 SEPTEMBER 2024

CJEU Judgment On UK CFC Rules Contrasts With Apple Judgment

Arthur Cox
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The European Commission Decision concerned an exemption within the UK CFC rules known as the ‘group financing exemption'. Under the UK CFC rules, a CFC charge applies...

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Fintan Clancy
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On 19 September the Court of Justice of the European Union (CJEU) issued a judgment annulling the European Commission Decision concluding that an exemption in the UK Controlled Foreign Company ("CFC") legislation, relieving multinational groups from the full CFC charge in certain circumstances, constituted partially illegal State aid.

The Judgment

The European Commission Decision concerned an exemption within the UK CFC rules known as the 'group financing exemption'. Under the UK CFC rules, a CFC charge applies to non-trade finance profits of a CFC where they derive from UK activities (where the significant people and functions are based in the UK) or UK connected capital. A partial (and in some cases full) exemption applies when the non-trade finance profits arise from CFC loans made to other non-UK resident group subsidiaries.

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This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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