EU Hits Britain over Illegal Tax Break to Multinationals

The EU's powerful anti-trust authority on Tuesday said a tax break from Britain for unnamed multinationals was illegal under state aid rules, firing a shot at London amid Brexit chaos.

The European Commission gave no indication of the amount of money to be recovered nor the companies involved, but said the tax break "unduly exempted certain multinational groups" from UK rules aimed at combating tax avoidance.

"This is illegal under EU State aid rules. The UK must now recover the undue tax benefits," European Competition Commissioner Margrethe Vestager said in a statement.

The decision was a partial one, the EU said, with other aspects of the investigation finding no fault in Britain's tax decisions.

But it lands just days after March 29 -- Britain's originally slated date to leave the EU -- and serves as a reminder that the UK will be expected to meet its EU membership obligations before and after Brexit.

Britain joins Luxembourg, the Netherlands and Ireland as EU countries needing to recoup money from multinationals illegally handed tax breaks.

"We are clear that all multinationals operating in the UK must pay their fair share of tax," a British treasury spokesman said in a statement.

"We will carefully consider the Commission's decision," the spokesman added.

The crackdown on London is part of a five-year campaign against member states bending rules to give big international firms unfair tax breaks, with U.S. tech giants such as Apple, Amazon and Starbucks already ordered to pay back taxes.

The EU pressed on with the campaign in January and launched an in-depth probe into Nike's tax affairs in the Netherlands.

The decision against Britain involves something called controlled foreign company rules that help prevent firms from using an offshore subsidiary to avoid British tax.

The commission said an exemption to these rules in some cases unfairly awarded companies the tax break.