Budget 2013: Deloitte comments on the deferral of the corporation exit tax
21 March 2013
Alison Lobb, Director in Deloitte’s tax policy group, said:
“It is disappointing that the new options on the deferral of corporation exit tax do not seem to bring the UK law fully in line with European Court of Justice’s decision, in particular because tax is not deferred in all cases until the ultimate disposal of the assets. Instead, the UK is offering payment by instalments.
“The question for businesses going forward will be whether the sums involved are sufficiently large to warrant expensive further European litigation. There is also the possibility that the European Commission may want to take the UK to the European Court, if the new legislation is enacted in its current form.
“The Government has made limited amendments to the UK law on exit tax for companies following the decision of the European Court of Justice in National Grid Indus. The European Court ruled that a company transferring its tax residence within the European Economic Area (EEA) should be allowed to defer tax due on the deemed sale of its assets until the assets are sold.
“There are two new proposals (both optional) for instalment payments of exit charges over periods up to ten years where companies move tax residence within the EEA. Both options carry interest charges on the postponed tax.”
Notes to editors
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