1. © 2011 Grant Thornton UK LLP. All rights reserved. IFA Presentation EU law update Roopa Aitken Grant Thornton UK LLP May 2011

2. © 2011 Grant Thornton UK LLP. All rights reserved. Agenda Philips Electronics: referral to Court of Justice (Jan 2011) Application of EU law to BVIs Capital gains / exit taxes

3. © 2011 Grant Thornton UK LLP. All rights reserved. Philips Electronics: Referral to Court of Justice: January 2011 Philips Netherlands Philips UK JV Co. Netherlands 3rd Party UK 50% 100% Profits Losses Losses ?

4. © 2011 Grant Thornton UK LLP. All rights reserved. Philips Case: 4 Questions referred 1.Restriction? 2.Justified? 3.Proportionate? 4.Philips UK entitled to make claim?

5. © 2011 Grant Thornton UK LLP. All rights reserved. Combinations of justifications M&S (C-446/03) December 2005 balanced allocation; double use of losses; and preventing tax avoidance Oy AA (C-231/05) July 2007 balanced allocation; and preventing tax avoidance Lidi Belgium (C-414/06) May 2008 balanced allocation; and preventing double use of losses X Holding BV (C-337/08) February 2010 balanced allocation

6. © 2011 Grant Thornton UK LLP. All rights reserved. Is Philips UK entitled to benefit? Philips Netherlands Philips UK JV Co. Netherlands 3rd Party UK 50% 100% Profits Losses Losses ?

7. © 2011 Grant Thornton UK LLP. All rights reserved. Application of EU law to BVIs Prunus case (C-384/09): BVIs 5 May 2011 Question: treat BVIs as a Member State or as a third country? Decision also applies to other OCTs listed in Annex II to the Treaty e.g. Falkland Islands, Netherlands Antilles, Cayman Islands etc

8. © 2011 Grant Thornton UK LLP. All rights reserved. Exit taxes and capital gains Nov 2010 Commission referral to C of J: Denmark, Netherlands, Spain 2 cases pending at ECJ on company exit taxes –National Grid Indus BV (C-371/10); and –Commission v Portugal (C-38/10) Jan 2011: Irish exit taxes: Commission request Commission action against UK: Feb 2011 s 13 TCGA 1992 UK - impact on intra-group transfers (s171 TCGA 1992)?

9. © 2011 Grant Thornton UK LLP. All rights reserved. UK Intra-group transfers EU UK EUUK 3rd Country Assets Tax neutral transfer?