The European Commission has opened a state aid investigation into a new interpretation of a Spanish scheme allowing tax deductions on the acquisition of shareholdings in non-Spanish companies. The Commission found the original version of the scheme incompatible with the state aid rules because it gave beneficiaries a selective economic advantage over their competitors performing domestic acquisitions. At this stage, the Commission considers that the amended scheme may again involve state aid.

In 2009 and 2011, the Commission ordered Spain to abolish the corporate tax provision allowing companies to amortise over 20 years the “financial goodwill” deriving from acquisitions of shareholdings in foreign countries. Spain committed not to grant the exemption to any new beneficiaries but did not abolish the provision, as amortisation is still possible in certain cases where the Commission recognised legitimate expectations or authorised a transitory period. The Commission limited the recovery of the unlawful aid, due to the existence of legitimate expectations for some beneficiaries. In March 2012 Spain adopted a new administrative interpretation, which extends the scope the tax scheme to financial goodwill deriving from indirect acquisitions.

The Commission has taken a preliminary view that this new interpretation involves state aid, on the grounds that Spain is enlarging the application of an illegal and incompatible scheme. At this stage, the Commission also considers that beneficiaries of this new interpretation have no legitimate expectations since their situation (tax benefits derived from indirect acquisitions) was not covered by the scope of the original measure at the time of the adoption of the 2009 and 2011 Commission decisions.

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