Spain: EC decision that law allowing companies to deduct goodwill resulting from indirect stock acquisitions annulled (CJEU judgment)
Earlier decision of General Court affirmed
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June 27, 2025
The Court of Justice of the European Union (CJEU) today affirmed a decision of the General Court, annulling the decision of the European Commission (EC) that a Spanish law allowing companies to deduct goodwill resulting from indirect acquisitions of shareholdings in foreign companies constitutes unlawful State aid.
The case identifying information is: Joined cases Commission v. Spain (C-776/23 P), Commission v. Banco Santander and Others (C-777/23 P), Commission v. Sociedad General de Aguas de Barcelona (C-778/23 P), Commission v. Telefónica and Iberdrola (C-779/23 P), and Commission v. Ferrovial and Others (Indirect shareholdings) (C-780/23 P)
Summary
As explained in a CJEU release:
- Under a Spanish law enacted in 2002, companies that acquired shareholdings in a foreign company were allowed to deduct from their tax base, by way of amortization, the goodwill resulting from the acquisition.
- The EC issued decisions on October 28, 2009, on acquisitions of shareholdings inside the EU, and on January 12, 2011, on acquisitions of shareholdings in companies established outside the EU, that the law constituted unlawful State aid. However, the EC allowed the law to continue to apply, subject to conditions, in certain situations necessary to protect legitimate expectations.
- In July 2013, the EC examined a new interpretation of the law, formalized in a binding interpretation by the Spanish authorities, that would have allowed deductions for goodwill resulting from indirect acquisitions of shareholdings in foreign companies. By decision of October 15, 2014, the EC determined that such an application of the law was unlawful State aid and did not allow for any exception to protect legitimate expectations.
- The General Court of the EU annulled the EC’s decision of October 15, 2014, and the CJEU today affirmed the decision of the General Court because both direct and indirect acquisitions of shareholdings are entitled to protection of legitimate expectations.