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The General Court’s flawed decision on CFC state aid

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On 8 June 2022 the General Court of the CJEU dismissed the UK and ITV’s applications to annul the European Commission’s decision on the UK controlled foreign companies (CFC) group financing exemption. The applicants’ pleas were entirely rejected by the General Court so the UK must for now retain the tax and interest it was ordered to recover from affected UK groups. Running through the judgment is a flawed and over-simplified analysis of the way the relevant bits of the CFC rules were put together and in particular of the significance of the concept of UK significant people functions (SPFs). The General Court’s account of the design of the CFC rules is at odds with the UK and ITV’s explanations (and the consensus view among practitioners) of the risk-based approach of the CFC rules generally and the ‘group financing exemption’ in particular. The judgment...

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