Spain: EC decision of unlawful State aid annulled to protect legitimate expectations (CJEU General Court judgment)

Spanish tax regime allowing deductions for indirect acquisitions of shareholdings in foreign companies is unlawful State aid

EC decision of unlawful State aid annulled to protect legitimate expectations

The General Court of the Court of Justice of the European Union (CJEU) on 27 September 2023 annulled a 2014 decision of the European Commission (EC) declaring the Spanish tax regime allowing deductions for indirect acquisitions of shareholdings in foreign companies to be unlawful State aid.

The cases are: Spain v. Commission (T-826/14), Banco Santander and Santusa v. Commission (T-12/15), Abertis Infraestructuras and Abertis Telecom Satélites v. Commission (T-158/15), Ferrovial and Others v. Commission (T-252/15), Sociedad General de Aguas de Barcelona v. Commission (T-253/15), Telefónica v. Commission (T-256/15), Arcelormittal Spain Holding v. Commission (T-257/15), Axa Mediterranean v. Commission (T-258/15) and Iberdrola v. Commission (T-260/15) 


As explained in a release [PDF 143 KB] from the CJEU:

  • In 2002, Spain introduced a new corporate tax regime that allowed companies that had acquired shareholdings in a foreign company to deduct from the tax base, in the form of amortization, the goodwill resulting from the acquisition of that shareholding.
  • In response to questions from members of the European Parliament, the EC stated at the beginning of 2006 that the regime did not fall within the scope of the EU State aid rules.
  • Nevertheless, following a complaint from a private operator, the EC more closely examined the tax regime and in a decision dated 28 October 2009 (concerning acquisitions of shareholdings made within the EU) and a decision dated 12 January 2011 (concerning acquisitions of shareholdings in companies established outside the EU), declared the tax regime to be unlawful State aid.
  • However, the EC allowed the tax regime to continue to apply, subject to conditions, in certain cases (i.e., to protect legitimate expectations).
  • Actions brought against those initial decisions by various companies were unsuccessful.
  • In July 2013, Spain sent the EC for examination a new version of the tax regime that extended the initial regime to financial goodwill resulting from indirect acquisitions of shareholdings in nonresident undertakings through the direct acquisition of shareholdings in nonresident companies. By a decision dated 15 October 2014, the EC concluded that that new tax regime also was unlawful State aid and required Spain to put an end to the tax regime.
  • Spain and several companies requested the CJEU to annul the EC decision of 15 October 2014. 

General Court judgment

The General Court upheld the actions brought by Spain and those companies and annulled the EC decision of 15 October 2014.

  • The court found that the EC’s initial decisions already covered the acquisition of shareholdings, both direct and indirect, and its decision of 15 October 2014 effectively withdrew those initial decisions since it did not afford the taxpayers, subject to certain conditions, the benefit of the protection of legitimate expectations.
  • The court held that the EC could not revoke or withdraw its initial decisions because it had not been demonstrated that those decisions were based on inaccurate information and the withdrawal of those decisions would infringe the principles of legal certainty and the protection of legitimate expectations. 

Read an October 2023 report prepared by the KPMG EU Tax Centre



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