Tax relief for donations to Charities in the UK, and Companies Capital Duty in Spain have attracted the attention of the Commission.

Per a statement issued this week, the European Commission has sent the United Kingdom a formal request to end discrimination of foreign charities. The United Kingdom allows tax relief for gifts to charities, but only if they are established in the UK. Charities in other Member States are excluded from the relief and the Commission considers that this discrimination is contrary to the EC Treaty. The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If the United Kingdom does not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the European Court of Justice.

Having disregarded a formal request last year to change its legislation, Spain is to be referred to the European Court of Justice because the EU Commission considers its implementation of the Companies Capital Duty Directive to be deficient.

Particular aspects of the Spanish regime which the Commission considers repugnant to the directive include the levying of 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.