Brussels, 10 July 2006
Capital duty: Commission decides to refer
Spain to the Court of Justice for infringements of the Capital Duty
The European Commission has decided to refer Spain to the Court of
Justice for a number of infringements to the Capital Duty Directive. Spain has
not changed its legislation despite a formal request by the Commission dated 13
July 2005 (IP/05/933).
"The Capital Duty Directive provides rules to make it easier to reorganise
companies and to transfer their seat: these rules must be respected in order to
facilitate the development of our EU companies" said László
Kovács, the European Commissioner for Taxation and Customs Union.
The Capital Duty Directive (69/335/EEC) gives Member States the right, but
not the obligation, to impose capital duty at a maximum rate of 1% on the
creation of a company in that Member State. According to the Commission, some
aspects of the Spanish legislation are not in line with this Directive.
- Given that the Directive allows only the Member State where the company is
created to levy capital duty, the Commission considers that Spain infringes the
Directive when levying capital duty
- On the transfer of the registered office or the effective centre of
management of a company from another Member State to Spain, if the creation of
the relevant company had not been subject to capital duty in the other Member
State (which under the Directive has an option not to apply a capital duty).
- On capital used for trading operations carried by Spanish branches and
permanent establishments of companies created in other Member States which do
not levy capital duty.
- Spain solely exempts certain reorganisation transactions whereas the
Directive does not give Member States the option to treat identical transactions
- Finally, Spain exempts the exchange of shares where a company receives at
least 75% of the issued share capital of another company. However, if that
company subsequently acquires further shares, this transaction is subject to
capital duty. The Commission considers that under the Directive Spain must also
exempt the further exchange of shares.
The Commission's case
reference number is 2003/4246.
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