Inheritance Tax. Spain Referred to the Court of Justice by the EU Commission

The European Commission has decided to refer Spain to the Court of Justice of the European Union.

It appears that the Spanish legislation on taxation of investments in non-resident companies does not comply with EU law. The law is alleged to be discriminatory. Under Spanish provisions, the tax treatment for foreign-sourced dividends (dividends distributed by a nonresident company to a Spanish company) is more burdensome than that applied to a domestic sourced dividends (i.e.,dividends distributed by companies resident in Spain)

As a result, a Spanish company which invests in a non-resident company must fulfil more conditions (e.g., volume of income, level of shareholder participation) than for a domestic investment if it wants to benefit from the tax advantage. In other cases, the tax advantage foreseen for domestic-sourced dividends is not available for foreign-sourced dividends.

Although the Commission sent a reasonable request Spain in June 2013 where Spain was requested to amend its tax rules on investments in non-resident companies, the European Commission considered that they infringed the right of establishment, the freedom to provide services, the cross-border supply of goods and the free movement of capital as set out in the EU Treaties.

There has been no response or amendment to the present legislation from Spain, for this reason, in November of 2013 the Commission had decided to bring the matter before the Courts of Justice.

 
Anyone who may have been affected or wishes to have more information on how to claim the excess taxes paid, just click on the email: myra@citizensadvice.org.es

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.