The European Union ordered the U.K. to claw back illegal tax breaks designed to lure multinationals in a timely reminder that the EU still calls the shots on competition rules until Britain leaves the bloc.
The European Commission said the British gave certain multinationals a selective advantage by granting them an unjustified exemption from U.K. anti–tax avoidance rules.
“This is illegal under EU state aid rules,” Margrethe Vestager, the EU’s antitrust chief, said in an emailed statement. “The U.K. must now recover the undue tax benefits.”
While the commission said the exemption was partly justified and didn’t specify which firms...