The UK’s New Diverted Profits Tax: Compliance with EU Law

Abstract:

In December 2014, a new UK tax was announced called Diverted Profits Tax (DPT). It is intended that this 25% tax will apply from 1 April 2015 to profits artificially diverted from the UK. In this article the author sets out how the tax will apply and considers whether the new tax is compliant with EU law and the UK's Treaty obligations. She also considers some key features of the administration of the tax which are likely to give rise to compliance burdens and legal challenges. The author also considers how the new tax fits with the Base Erosion and Profit-Shifting (BEPS) project.