The U.K. lost a fight seeking to topple a pre-Brexit European Union order by the bloc’s antitrust chief Margrethe Vestager to claw back allegedly illegal tax breaks from multinational companies the EU said had received an unfair advantage.
The European Commission’s decision in April 2019 said some businesses were given an unjustified exemption from British anti-tax avoidance rules, violating state-aid rules that ban special treatment for individual firms. The U.K. and several of the companies appealed to the Luxembourg-based EU courts.
The EU General Court, the bloc’s second-highest tribunal, in a ruling on Wednesday dismissed the U.K.’s challenge “in its entirety,” saying the commission didn’t make any errors of assessment.
While the commission said the exemption was partly justified and didn’t identify which firms unduly benefited from it, scores of companies came forward since the probe started in 2017. Some two dozen U.K. companies are facing a combined tax bill of £639.4 million ($801 million) from the EU illegal state aid ruling.
The companies, which include cigarette maker Imperial Brands Plc. and book publisher Pearson Plc., have now paid the tax after Her Majesty’s Revenue and Customs issued charge notices early last year, according to annual reports and earnings calls.
Britain’s group financing exemption, in force from 2013 to 2018, allowed companies active in the country to pay little or no tax on financing income received from a foreign unit via an offshore subsidiary. The EU regulator said that it considered the derogation illegal when such financing income stemmed from U.K. activities.
