European Commission warns Britain over dividend tax avoidance

[Denzil_DC]

Brussels has accused Britain of enabling tax avoidance by big business in a move that may foreshadow a post-Brexit battleground.

In its annual report on the UK, the European Commission drew particular attention to dividend tax arrangements, which it claimed made Britain attractive for “treaty shopping” and “aggressive tax planning”.

The UK has incurred the EU’s ire on tax avoidance before but Brussels has never used the annual report to voice its concern. The accusation puts Britain in a small group of countries to be named and shamed that includes Luxembourg, Cyprus, Ireland and the Netherlands.

https://www.thetimes.co.uk/article/european-commission-warns-britain-over-dividend-tax-avoidance-xck2dt5hq (paywalled, but reading the rest of the article only requires registration)

One of the deep suspicions among Remainers (me included) has been that May's rush to trigger Article 50 was at least partly an attempt to avoid having to comply with the EU's new anti-tax avoidance and money laundering directives, likewise the enthusiasm for a no-deal brexit among the more monied of the Tories.

The government did state last July that it would comply with the new legislation at least during the originally projected transition period up to December 2020. The UK's archipelago of affiliated tax havens won't be bound by the new rules unless they decide to apply them (which they probably will if they want to continue to have access to EU financial markets).

Unless there's a no-deal Brexit and complete breakdown in UK-EU relations, which some are evidently angling for, these issues are likely to be a continuing source of friction during the transition period and beyond.