On Thursday 15 November, the EU Court confirmed two European Commission decisions from 2009 and 2011 (see EUROPE 10008, 10292) according to which the Spanish tax regime for the amortisation of ‘financial’ goodwill constitutes State aid incompatible with the internal market (Cases T-207, 219 and 227/10; T-239, 399, 405 and 406/11).
Since 2002, Spanish law has allowed resident companies that hold shares (at least 5% for at least one year) in companies established abroad to deduct goodwill resulting from this acquisition from their taxes. Such a measure is not possible in the case of stake acquisition in a company established in Spain.
In 2016, the EU Court of Justice annulled two previous Court of First Instance judgments which annulled the Commission's decisions, the Court held that the Commission had not proved the selective nature of the tax regime in question (see EUROPE 11694).
Applying the so-called 'three-step' method, the Court concluded that the Spanish measure is selective, even though the advantage it provides is available to all companies required to pay corporate tax in Spain.
It notes that companies that are taxable in Spain taking stakes in companies domiciled in Spain for tax purposes cannot obtain the advantage provided by the deduction scheme in question, unlike those taking stakes abroad.
The Court concludes that the Spanish scheme, which grants a tax advantage, whose grant is conditional on the completion of an economic transaction, may be selective where any undertaking may freely choose to carry out that transaction, and not only on the basis of the distinction of companies based on their own characteristics.
It should be noted that, in Case T-207/10, the Court of First Instance authorises the continued application of the Spanish tax regime over the entire depreciation period for acquisitions of holdings prior to 21 December 2007 (date of publication of the decision to initiation the formal investigation procedure in the Official Journal of the EU) or whose implementation was irrevocably initiated before that date (see EUROPE 9520). (Original version in French by Mathieu Bion)