Controlled Foreign Company (CFC) rules meaning

State aid AG issues opinion recommending Court of Justice should set aside the General Court’s judgment and annul the Commission’s decision regarding tax breaks granted by the UK to certain multinational groups between 2013 and 2018 Advocate General Medina has delivered his opinion in the appeals in the following Joined Cases, arising from the Commission’s 2019 decision and the General Court’s judgment. C-555/22 P United Kingdom v Commission C-556/22 P ITV v Commission and Others C-564/22 P LSEGH (Luxembourg) and London Stock Exchange Group Holdings (Italy) v Commission and Others The appeals contest the General Court’s judgment in Joined Cases T-363/19 and T-456/19, which dismissed an action for annulment against the Commission’s decision of 2 April 2019 (SA.44896). In that decision, the Commission found that, during 2013–2018, the UK had provided unlawful State aid to certain multinational groups via tax advantages. Advocate General Medina proposes that the Court of Justice overturn the General Court’s judgment and annul the Commission’s 2019...

This Practice Note considers what is meant by company and by accounting period for the purposes of the controlled foreign company (CFC) regime. The definition of company identifies which entities may constitute CFCs, while the definition of an accounting period fixes the timeframe in which a CFC charge may arise and against which other conditions are assessed. These are therefore key concepts to grasp. Meaning of company in the CFC context Apart from the position of cell companies, noted below, ‘company’ in the CFC sphere adopts the broad Corporation Tax Acts sense of any body corporate or unincorporated association (explored further in Practice Note: What is the basis of corporation tax?—Who is liable to pay corporation tax?). The expression ‘body corporate’ is not defined in UK tax legislation and bears its ordinary meaning...

This Practice Note sets out the low profit margin exemption from a charge under the controlled foreign company (CFC) rules. Even where a company is a CFC for an accounting period, a CFC tax charge will arise only if both: the CFC has chargeable profits that pass through the gateway; and none of the exemptions from the CFC rules apply. There are two types of exemption: entity level exemptions — these remove the CFC from the CFC rules entirely for that accounting period and are: the low profit margin exemption, which is explained further in this Practice Note the exempt period exemption the excluded territories exemption the low profits exemption the tax exemption finance profit exemptions — these exclude some or all of the profits of certain financing activities from the CFC rules The low profit margin exemption HMRC indicates that...

ARCHIVED: This Practice Note has been archived and is no longer maintained. It considers the relationship between EU law and the direct tax rules of EU Member States, and, in particular, what occurs where a domestic direct tax provision appears to be incompatible with an EU fundamental freedom. The Note also describes the effect that EU law had on the UK’s direct tax regime while the UK was bound by EU obligations, ie up to the end of the Brexit implementation period on 31 December 2020 (IP completion day). Unless expressly stated otherwise, references here to judgments of the EU Court of Justice are to judgments handed down before IP completion day. For guidance on the extent to which EU law continued to influence UK direct tax rules after IP completion day and until 31 December 2023, see Practice Note: Retained EU law and tax. For an explanation of the position from 1 January 2024, see Practice Note: Assimilated law and tax. Note that the freedom of establishment, though...