I am delighted that the EU have decided to look at this now it is in operation to see if it violates an old friend of this blog, the EU Code of Conduct on Business Taxation, which dates from 1997. That code may be ‘soft law’ i.e. it amounts to pressure on states rather than firm legal requirement, but it has always worked to date.
I suspect the EU is right on this issue: this is an abusive tax measure intended to relocate business without consideration for the economic substance of what is actually happening in the underlying activity and if so then it is abusive.
It would be good if they considered Osborne’s controlled foreign company rules in the same light, but it may be hardeeftar.
Puzzling really. EU law is what made Vodafone’s Luxembourg profits untaxable in the UK under the CFC rules. Makes it illegal (yes, explicitly illegal) to tax interest payments (Boots) or royalties (Starbucks) to other EU or EEA/EFTA companies.
Ritchie spits his dummy out over those and blames them all on domestic law, never acknowledging the EU influence. But, you know, what’s reality or the law got to do with anything when you’re writing polemic, eh?