December 21, 2016 / 9:14 AM / in 10 months

EU court says Spanish tax breaks may infringe EU state aid laws

BRUSSELS, Dec 21 (Reuters) - Europe’s top court ruled on Wednesday that the European Commission may have been correct in finding Spanish tax breaks on foreign holdings were illegal.

In a case that may give clues as to how judges will deal with more complex tax cases involving Starbucks and Apple, the European Court of Justice said that the lower General Court had erred in annulling the Commission’s decision.

The Court of Justice on Wednesday therefore referred the two cases in question back to the General Court.

The European Commission, in two rulings in 2009 and 2011, said the scheme, which applied to Spanish companies holding a stake of at least 5 percent in a foreign company for at least a year, broke EU state aid rules, and ordered Spain to recover the money.

The Spanish scheme allowed a company that is resident in taxation terms in Spain to write down goodwill of a foreign shareholding and deduct this from the corporation tax for the company is liable. This did not apply to domestic shareholdings. (Reporting By Philip Blenkinsop; editing by Robin Emmott)

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