CJEU - Recent Developments in Direct Taxation 2021

S. 1901. Introduction

The two sets of proceedings before the CJEU to be discussed here each concern certain aspects of direct taxation of corporate groups in the United Kingdom.

The first case is about a Reference for a Preliminary Ruling ordered by the UK Upper Tribunal (Tax and Chancery Chamber) (“UT”) on 30 December 2020 (Case C-707/20) relating to the impact of the EU Fundamental Freedoms on capital gains taxation within a corporate group in a cross-border context (Gallaher).

The second matter, encompassing the joined cases T 363/19, United Kingdom v. Commission and T 456/19, ITV v. Commission concerns the Commission’s stance that certain aspects of UK CFC taxation regime amount to illegal state aid under Art. 107 TFEU.

Both cases are pending, and so the following considerations focus on explaining the background of the proceedings in UK and EU law as well as on discussing selected aspects of the positions of the respective parties.

2. Capital gains taxation and EU fundamental freedoms (Gallaher)

The Gallaher case concerns the European sub-group of a Japanese-headed multinational group. A UK member of the group Gallaher Plc (“Gallaher”), in 2011 sold certain IP rights to a Swiss group comp...