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Billions paid by UK as EU Corporations use EU to Dodge Dividend Tax

A European Court of Justice ruling, backed by the UK Supreme Court means that the UK Government and UK Taxpayer will have to refund billions of pounds of tax to Corporations.

When corporations in the UK receive dividends from abroad they are taxed on them whereas when they receive dividends from the UK the tax is considered to have already been paid by the company that has paid the dividends.  The tax is considered to have already been paid because the source company pays corporation tax to the UK government on the dividends.

As a result of the court judgements corporations can now return money tax free, in the form of dividends,  from overseas associated companies, reducing their tax liabilities.  The total bill for back tax may amount to over £40 billion and the annual loss to the UK Government may be £ billions per year.

Investors in Corporations also favoured

There is yet another type of loss of tax receipts that results from being a member of the EU.  According to Reuters the UK is treating foreign dividends paid to individuals as if they are already tax paid even though no corporation tax was paid by the source companies in the UK. 


"Britain is the only country, which 10 tax experts Reuters interviewed could name, that gives its taxpayers credits on dividends they receive from foreign firms.

That's the result of rulings in the European Court of Justice in the mid 2000s. Under European Union law, the court found, if you give a tax break on dividends from UK companies, you must do the same for investments in foreign firms [ie: EU firms]. The finance ministry declined to provide figures for how much the extension cost."

5/7/16

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