The UK Government has made an annulment application against the EC’s decision that the CFC Financing Company Exemption gave rise to State Aid.
HM Treasury has confirmed that on 12 June 2019 the UK Government made an annulment application to the EU General Court against the European Commission’s (EC’s) decision that the Financing Company Exemption (FCE) within the UK’s Controlled Foreign Company (CFC) regime gave rise to State Aid. The Government has not yet published its application to the General Court but it has made available a summary of the technical arguments against the decision which were put forward in the annulment application.
The UK’s arguments against the decision include:
It should be noted that businesses who are potentially affected by the EC’s ruling are likely to have their own grounds for bringing an annulment application, over and above those raised by the UK Government and should consider separately applying to challenge the EC’s decision as there is a risk that affected groups may be unable to rely on EU defences at the domestic enforcement stage in the UK unless those grounds have been directly raised at the EU level.
Notwithstanding the application for annulment, the UK Government is obliged to push ahead with recovery of the State Aid and it is understood that initial recovery action will be assessed directly by HMRC and not recovered via the self-assessment system.
For further information please contact:
© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.