Spain told to end relief for companies investing abroad

The European Commission has formally told Spain to abolish 25% tax credits
offered to Spanish companies investing abroad, claiming these benefits break
European Union competition laws. Brussels has given Madrid one month to agree.

A formal inquiry would be opened: the first stage of legal infringement
proceedings that could lead to the European Court of Justice. Noting ‘these
long-standing incentives…seriously distort trade and competition in the single
(European) market, EU competition Commissioner Neelie Kroes said: ‘I would not
hesitate to act in case Spain does not fully comply with these recommendations’.

The scheme offers Spanish companies 25% tax breaks for investments
establishing foreign branches, acquiring substantial foreign shareholdings and
exploring or penetrating new overseas markets to benefit Spanish exports.

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