Vodafone loses its tax claim in the Court of Appeal…
...but says it will now appeal to the House of Lords.
Essentially Vodafone is arguing that UK rules on the taxation of profits of foreign subsidiaries (Controlled Foreign Company rules) are incompatible with European Union law. However, the Court of Appeal ruled that CFC rules apply to companies operating outside the European Economic Area and also to EEA companies without genuine economic activities.
The UK tax legislation is designed to stop UK companies avoiding tax by diverting income to subsidiaries in low-tax countries.
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Cathy Corns is a Tax partner at Mercer & Hole.
Date: 11th June, 2009
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