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Another UK/EU spat: state aid or just a corporate affair?

The Court of First Instance held that the proceeds from funds originating in the United Kingdom, or from key functions carried out in that state, were obtained by the CFC and could therefore be considered to have been artificially transferred outside the United Kingdom. There is state aid.

The British ITV group includes two Dutch companies: ITV Enterprises BV and ITV (Finance) Europe BV. these controlled foreign companies have provided loans to other companies of the ITV group. ITV plc, the top holding company based in the United Kingdom, requests exemption from the interest gains attributed to it on some of these loans granted by the CFCs. However, according to the European Commission, this exemption scheme for group financing constitutes state aid. ITV plc and the UK disagree.

The Court of First Instance held that the proceeds from funds originating in the United Kingdom, or from key functions carried out in that state, were obtained by the CFC and could therefore be considered to have been artificially transferred outside the United Kingdom. The General Court therefore considers that the EC did not err in its assessment of the existence of a selective advantage. The exemptions are a departure from the UK’S rules for CFCs. They provide for differentiated treatment between taxable undertakings which, in the light of the objective of those rules, are in a similar situation. The Court of first instance dismissed ITV plc’s appeal.

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