The EU Court of Justice has fully upheld two Commission decisions of October 2009 and January 2011, regarding the tax amortisation of financial goodwill for foreign shareholding acquisitions in Spain. The European Commission welcomes today's judgment by the EU Court of Justice fully upholding two Commission decisions of October 2009 and January 2011, regarding the tax amortisation of financial goodwill for foreign shareholding acquisitions in Spain (joined cases C-20/15 P and C-21/15 P). In doing so, the Court set aside an earlier ruling by the General Court from November 2014.
The Commission in its decisions had concluded that, by allowing companies to deduct the financial goodwill arising from shareholdings in foreign companies from their corporate tax base, the Spanish measure gave those companies a selective advantage over their competitors in breach of EU state aid rules. Today's judgment confirms this finding.
The judgment is important because it confirms that a measure may be selective, if it benefits only those companies that they carry out certain transactions. The Court of Justice confirmed that a tax measure is selective when it derogates from the reference tax regime and applies a different treatment to companies that are in a comparable situation, unless such a differentiation is justified by the nature of the tax regime. This is the case even if the measure is in principle open to all companies. The fact that the conditions that a company needed to fulfil were not strict, and the benefits were therefore available to many companies, does not call into question the selective nature of the measure but only its degree of selectivity.
The Court of Justice also sided with the Commission in that the General Court misapplied standing EU case law relating to aid for exports.
In terms of next steps, the Court of Justice has referred the cases back to the General Court for a re-assessment in light of today's judgment. As a result of the judgment, the Commission decisions of October 2009 and January 2011 are reinstated, including Spain's obligation to recover the aid granted under the measure. The Commission will now work with the Spanish authorities to implement them.
Moreover, Spain must now also carry out the recovery ordered in the Commission decision of October 2014, finding that Spain's new interpretation of the tax measure had extended its scope. In this case, the Commission had agreed not to pursue actively the recovery until the Court of Justice delivered its judgments in the present cases.