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European Commission

Press release

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.


October 2007

Commission opened in-depth investigation into a Spanish corporate tax law provision (Article 12(5) TRLIS) over concerns that it provided an advantage for Spanish companies acquiring foreign entities. The law provided that a Spanish company could deduct the 'financial goodwill' resulting from the acquisition of a shareholding of more than 5% in a foreign company during the 20 years following the acquisition.


October 2009

Commission decided in relation to acquisitions in EU countries that the scheme amounted to incompatible state aid: It treated more favourably Spanish intra-EU acquisitions as compared to Spanish-Spanish transactions without any objective reason.

The Commission kept the investigation open with regard to acquisitions in non-EU countries in order to examine evidence that Spain had committed to provide.


January 2011

The Commission concluded that the provision amounted to incompatible state aid also as regards (most) extra-EU acquisitions. Spain had argued that the measure was needed to offset obstacles faced in non-EU countries. Legal obstacles would make it impossible to carry out a cross-border business combination. As a consequence of these barriers, Spanish companies investing abroad would be placed in a different situation than the ones investing domestically. However, in its in-depth investigation the Commission could not identify any explicit obstacles in the vast majority of the more relevant non-EU countries whose legislation it examined.

Spain was asked to repeal the provision for acquisitions outside the EU and to recover any aid granted except for those cases where legitimate expectations exist


March 2012

Spanish authorities adopted a new binding administrative interpretation which allowed the deduction of financial goodwill deriving from indirect shareholding acquisitions through the acquisition of shareholdings of foreign holding companies.

April 2012

Spanish authorities informed the Commission of new binding administrative interpretation.

July 2013

Commission opens in-depth investigation into new interpretation allowing tax deductions in connection with the acquisition of indirect shareholdings in foreign companies.

The Commission ordered Spain to stop applying the new administrative interpretation until the Commission has taken a final decision on its compatibility (suspension injunction).


October 2014

Commission orders Spain to recover aid granted through amended application of tax scheme for acquisition of indirect shareholdings in foreign companies


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.


Antoine Colombani (+32 2 297 45 13 - Twitter: @ECspokesAntoine )

Yizhou Ren (+32 2 299 48 89)

For the public: Europe Direct by phone 00 800 6 7 8 9 10 11 or by e­mail

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