EU court rules in UK's favour over alleged illegal tax breaks

The European Union has overturned a court ruling against the UK relating to alleged tax breaks for multinational companies, it was confirmed on Thursday.

The original ruling was made in April 2019, ahead of the UK formally leaving the EU. The European Commission decided that between 2013 and 2018, the UK had granted state aid by allowing selective tax advantages by way of exemptions from the controlled foreign companies (CFC) charge.

Under EU law, state aid is illegal and incompatible with the internal market.

However, the decision was challenged by both the British government and a number of UK companies, including FTSE 250 broadcaster ITV. While the lower General Court ruled against the challenge, on Friday the more senior Court of Justice found in their favour.

Annulling the Commission’s original decision, the Court said: "The Commission and the General Court erred in law in finding that the rules applicable to CFCs constituted the appropriate reference framework for examining whether a selected advantage had been conferred.

"By its judgement delivered today, the Court sets aside the judgement of the General Court confirming the Commission’s decision."

As at 1115 BST, shares in ITV had risen just over 1% at 81.9p.