Full European Commission state aid decision on UK CFC rules published
At the end of April, the European Commission (EC) published its full decision on the UK’s controlled foreign company (CFC) finance company regime.
As set out in its earlier Press Release, the EC’s conclusion is that the exemption is only acceptable in cases where there are UK connected capital contributions but is not acceptable where there are UK activities (i.e. UK significant people functions) in respect of the loan.
The EC does not consider there to be a legitimate expectations defence in respect of recovery of the state aid by the UK Government, and has put forward arguments as to why this is in the full decision.