Brussels, 12/01/2011 (Agence Europe) - On Wednesday 12 January, the European Commission called on Spain to abolish a 2002 provision in its corporate tax system which allows Spanish companies to amortise the “financial goodwill” resulting from the acquisition of a shareholding of more than 5% in a foreign company over a set period of time (currently the 20 years following the acquisition). It consists in the write off, over a period of time, of the “excess” price paid for the acquisition of a business compared with the market value of the assets composing it, and is generally allowed in full mergers and cannot discriminate between national and foreign firms. The Spanish provision, however, allows for the amortisation of the financial goodwill only in the acquisition of shareholdings in foreign companies and it allows the amortisation of goodwill even where the acquiring and the acquired companies are not combined into a single business entity, a clear exception from the general Spanish tax system. With this decision, the Commission takes the view that this provision constitutes illegal state aid, in that it provides an advantage for Spanish companies acquiring foreign ones. The decision covers not only acquisitions within the EU (as established by the Commission's 2009 decision) but also in non-EU countries. As a consequence, the Commission asks Spain to recover any aid granted under this provision since 21 December 2007 for acquisitions in third countries where no precise legal obstacles (such as those in place in India and China, for example, on the acquisition of national companies by foreign firms) have been or can be demonstrated. (F.G./transl.rt)