Harmonization of corporate taxation rates in the European Union took a small step forward with a ruling by the European Court of Justice in favor of Cadbury Schweppes, where the ECJ found against the British government's policy of applying its own higher national tax rates to a company's subsidiaries in another, lower-taxed, EU member nation.However, despite the positive implications of the ruling for the British confectionery and soft drinks company, observers said that any move towards a serious union of corporate tax policy in Europe still faces a long road.
The court battle stems from taxation levied on profits generated by the Ireland subsidiary of Cadbury Schweppes Overseas Ltd. in 1996. The position of the British Inland Revenue was that a British company was subject to corporation tax on its worldwide profits.
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