On 12 September 2006, the European Court of Justice (ECJ) gave its decision in the case of Cadbury Schweppes plc and Cadbury Schweppes Overseas Ltd v. Commissioners of Inland Revenue (C-196/04) regarding the compatibility of the UK controlled foreign company (CFC) rules with the EC fundamental freedoms. Applicable freedom The ECJ first decided that the legislation in question must be examined in the light of the freedom of establishment (Arts. 43 and 48 of the EC Treaty), as the UK CFC rules apply to resident companies that have a controlling holding in their subsidiary established outside the United Kingdom, which...