Transcript IFA Presentation EU Law update Roopa Aitken Grant Thornton UK

IFA Presentation
EU law update
Roopa Aitken
Grant Thornton UK LLP
May 2011
© 2011 Grant Thornton UK LLP. All rights reserved.
Agenda
• Philips Electronics: referral to Court of Justice
(Jan 2011)
• Application of EU law to BVIs
• Capital gains / exit taxes
© 2011 Grant Thornton UK LLP. All rights reserved.
Philips Electronics:
Referral to Court of Justice: January 2011
Philips
Netherlands
100%
Philips UK
3rd Party
50%
JV Co.
Netherlands
UK
Profits
Losses
Losses ?
© 2011 Grant Thornton UK LLP. All rights reserved.
50%
Philips Case: 4 Questions referred
1.
2.
3.
4.
Restriction?
Justified?
Proportionate?
Philips UK entitled to make claim?
© 2011 Grant Thornton UK LLP. All rights reserved.
Combinations of justifications
M&S (C-446/03)
December 2005
•
•
•
balanced allocation;
double use of losses; and
preventing tax avoidance
Oy AA (C-231/05)
July 2007
•
•
balanced allocation; and
preventing tax avoidance
Lidi Belgium (C-414/06)
May 2008
•
•
balanced allocation; and
preventing double use of losses
X Holding BV (C-337/08) •
February 2010
© 2011 Grant Thornton UK LLP. All rights reserved.
balanced allocation
Is Philips UK entitled to benefit?
Philips
Netherlands
100%
Philips UK
3rd Party
50%
JV Co.
Netherlands
UK
Profits
Losses
Losses ?
© 2011 Grant Thornton UK LLP. All rights reserved.
50%
Application of EU law to BVIs
• Prunus case (C-384/09): BVIs
5 May 2011
• Question: treat BVIs as a Member State or as a third
country?
• Decision also applies to other OCTs listed in Annex II to the
Treaty e.g. Falkland Islands, Netherlands Antilles, Cayman
Islands etc
© 2011 Grant Thornton UK LLP. All rights reserved.
Exit taxes and capital gains
• Nov 2010 Commission referral to C of J: Denmark,
Netherlands, Spain
• 2 cases pending at ECJ on company exit taxes
– National Grid Indus BV (C-371/10); and
– Commission v Portugal (C-38/10)
• Jan 2011: Irish exit taxes: Commission request
• Commission action against UK: Feb 2011 s 13 TCGA 1992
• UK - impact on intra-group transfers (s171 TCGA 1992)?
© 2011 Grant Thornton UK LLP. All rights reserved.
UK Intra-group transfers
UK
UK
EU
EU
EU
Assets
Tax neutral
transfer?
© 2011 Grant Thornton UK LLP. All rights reserved.
UK
EU
Assets
3rd
Country
UK
Assets