Spain told to end relief for companies investing abroad
Tax relief to aid Spanish investment in other countries must be stopped, European Commission orders
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.