In February 2011, the Commission has sent reasoned opinions to the UK concerning legislation on the transfer of assets abroad as well as attribution of gains to members of non-UK resident companies.
According to the Commission both laws are discriminatory “as investments outside the UK are taxed more heavily than domestic investments.”
Moreover, the Commission stressed “The difference in tax treatment between domestic and cross-border transactions restricts two fundamental principles of the EU's Single Market, namely of the freedom of establishment and the free movement of capital…”
The Commission has requested the UK to amend its anti-abuse tax regime. However, according to the European Commission the UK has failed to amend national legislation, Income Tax Act 2007 and Taxation Chargeable Gains Act 1992 section 13, concerning taxation of transfers of assets abroad and attribution of gains to members of non-resident companies respectively.
Consequently, on 24 October, the European Commission decided to refer the UK to the ECJ for its regime concerning the taxation of transfers of assets abroad and its tax regime concerning the attribution of gains to members of non-resident companies. The ECJ may fine the UK if it fails to bring national legislation into line with EU legislation.
