Brussels, 15 October 2014
State aid: Commission orders Spain to recover additional aid granted through tax benefits for acquisitions of indirect shareholdings in foreign companies
After an in-depth investigation, the European Commission has concluded that a new interpretation of a Spanish tax scheme benefitting companies acquiring foreign shareholdings is incompatible with EU state aid rules. The scheme allows companies to deduct the "financial goodwill" arising from the acquisition of indirect shareholdings in foreign companies from their corporate tax base. The Commission has found that the measure provided the beneficiaries with a selective economic advantage which cannot be justified under EU state aid rules, and which they must now repay to the Spanish state. Spain did not notify this new interpretation, which extended the scope of an existing scheme, to the Commission for prior state aid scrutiny, as required.
The Commission had previously found the initial Spanish scheme that allowed companies to deduct the financial goodwill arising from foreign acquisitions of shareholdings from their tax base incompatible with the state aid rules because it gave the beneficiaries a selective economic advantage over their competitors that carry out domestic acquisitions. In October 2009 and in January 2011, the Commission therefore ordered Spain to abolish the provision. Furthermore, the Commission ordered the recovery of aid granted with the exception of certain cases, taking into account the existence of legitimate expectations for some beneficiaries (see IP/09/1601 and IP/11/26). Spain committed not to grant the exemption to any new beneficiaries but did not abolish the provision, arguing that the financial goodwill can still be deducted in certain cases where the Commission recognised legitimate expectations or authorised a transitory period.
Consistent administrative practice shows that from 2002 until 2012 this initial scheme, which was the subject of the Commission's 2009 and 2011 decisions, only applied to direct shareholding acquisitions (first level acquisitions) in non-resident operating companies. However, in March 2012 the Spanish authorities adopted a new administrative interpretation which allowed the deduction of financial goodwill deriving from indirect shareholding acquisitions through the acquisition of foreign holding companies, thus extending the initial scope of application of the measure. An indirect shareholding acquisition is the purchase by a company of shareholdings in the equity of a company at second or lower levels through the means of a direct acquisition of shareholdings in a company at first level.
The Spanish authorities did not notify the Commission of this new interpretation in advance of application but only informed the Commission in April 2012. In July 2013, the Commission opened an in-depth investigation to verify whether this new interpretation, allowing tax deductions in connection with the acquisition of indirect shareholdings in foreign companies, was in line with EU state aid rules (see IP/13/701). The Commission's investigation showed that the amended application constitutes new state aid since Spain is unduly enlarging the scope of an aid scheme, and that the new interpretation is incompatible with EU state aid rules. The Commission concluded that beneficiaries of this new interpretation have no legitimate expectations as regards their situation; the receipt of tax benefits derived from the indirect acquisition of shareholdings was not covered by the scope of the original measure at the time of adoption of the Commission's 2009 and 2011 decisions.
The non-confidential version of today's decision will be published in the EU Official Journal and made available under the case number SA.35550 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.