EU delivers UK tax bill as Brexit deal eludes parliament

Bloomberg

The European Union ordered the UK to claw back illegal tax breaks designed to lure multinationals to the nation — in a timely reminder that the EU still calls the shots on competition rules until Britain leaves the bloc.
The European Commission targets the UK’s group financing exemption, which allows companies active in the country to pay little or no tax on financing income received from a foreign unit via an offshore subsidiary.
The EU regulator said in an emailed statement that it considers the exemption unjustified when financing income from a foreign group company — channeled through an offshore subsidiary — derives from UK activities. The commission doesn’t specify which firms unduly benefited from the exemption.
“The UK gave certain multinationals a selective advantage by granting them an unjustified exemption from UK anti–tax avoidance rules,” Margrethe Vestager, the EU’s antitrust chief said.
“This is illegal under EU state aid rules. The UK must now recover the undue tax benefits.”
At least 52 companies have come forward since the EU started its probe in October 2017 to their tax liabilities amounting to 1.19 billion pounds ($1.55 billion), according to data compiled by Bloomberg Tax.
The ruling from the EU comes as British Prime Minister Theresa May is expected to confront her most senior ministers with the potentially explosive option of delaying Brexit by months, as the UK and its Parliament struggles to find a plan for leaving the 28-nation bloc.