Spain has been asked by the Commission to amend its rules on the taxation of foreign non-profit entities and of certain contributions to such entities.

According to the Commission, tax relief available to Spanish non-profit entities is not available to foreign non-profit entities that derive comparable income from Spain, but which are established in another EU/European Economic Area state operating without a branch in Spain. Financial contributors from Spain are also denied access to similar tax incentives which would be available if they donated to a Spanish entity.

The Commission view this as a restriction of the free movement of capital as interpreted by the Court of Justice (cases “Centro di Musicologia Walter Stauffer” C-386/04 and Persche – C-318/07) as per its press release. The Commission has, therefore, asked Spain to amend its rules to bring them into line with EU law. The request takes the form of a reasoned opinion. In the absence of a satisfactory response within two months, the Commission may refer Spain to the Court of Justice of the EU.