L_2011135EN.01000101.xml
| 21.5.2011 | EN | Official Journal of the European Union | L 135/1 |
COMMISSION DECISION
of 12 January 2011
on the tax amortisation of financial goodwill for foreign shareholding acquisitions No C 45/07 (ex NN 51/07, ex CP 9/07) implemented by Spain
(notified under document C(2010) 9566)
(Only the Spanish text is authentic)
(Text with EEA relevance)
(2011/282/EU)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,
Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,
Having called on interested parties to submit their comments pursuant to the provisions cited above (1) and having regard to their comments,
Whereas:
I. PROCEDURE
| (1) | By written questions addressed to the Commission (No E-4431/05, E-4772/05 and E-5800/06) several MEPs indicated that Spain had enacted a special scheme allegedly providing an unfair tax incentive for Spanish companies that acquired significant shareholdings in foreign companies, pursuant to Article 12(5) of the Spanish Corporate Tax Law (‘Real Decreto Legislativo 4/2004, de 5 de marzo, por el que se aprueba el texto refundido de la Ley del Impuesto sobre Sociedades’ (2), hereinafter ‘TRLIS’). |
| (2) | By written question No P-5509/06, Mr David Martin MEP complained to the Commission about the hostile takeover bid by the Spanish energy producer Iberdrola involving purchasing shares of the UK energy generator and distributor Scottish Power Ltd According to Mr Martin, Iberdrola had unfairly benefited from State aid in the form of a tax incentive for the acquisition. Mr Martin asked the Commission to examine all the competition issues arising from the acquisition, which had been notified on 12 January 2007 for review by the Commission pursuant to Article 4 of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (3) (hereinafter ‘the Merger Regulation’). By Decision dated 26 March 2007 (Case No COMP/M.4517 — Iberdrola/Scottishpower, SG-Greffe(2007) D/201696) (4), the Commission decided not to oppose the notified operation and to declare it compatible with the internal market under Article 6(1)(b) of the Merger Regulation. |
| (3) | By letters dated 15 January and 26 March 2007, the Commission asked the Spanish authorities to provide information in order to assess the scope and the effects of Article 12(5) TRLIS with respect to its possible classification as State aid and its compatibility with the internal market. |
| (4) | By letters dated 16 February and 4 June 2007, the Spanish authorities replied to these requests. |
| (5) | By fax dated 28 August 2007, the Commission received a complaint by a private operator alleging that the scheme set up by Article 12(5) TRLIS constituted State aid and was incompatible with the internal market. The complainant asked for his identity not to be divulged. |
| (6) | By decision of 10 October 2007 (hereinafter ‘the opening Decision’), the Commission initiated the formal investigation procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (hereinafter ‘TFEU’) (former Article 88(2) of the EC Treaty) in respect of the tax amortisation of financial goodwill provided for by Article 12(5) TRLIS, because it appeared to fulfil all the conditions for being considered State aid within the meaning of Article 107(1) TFEU. The Commission informed Spain that it had decided to initiate the procedure laid down in Article 108(2) TFEU. The Opening Decision was published in the Official Journal of the European Union (5), inviting interested parties to submit their comments. |
| (7) | By letter dated 5 December 2007, the Commission received comments from Spain on the opening Decision. |
| (8) | Between 18 January and 16 June 2008, the Commission received comments on the opening Decision from 32 third parties. The third parties that did not ask to remain anonymous are listed in Annex I to this Decision. |
| (9) | By letters of 9 April, 15 May and 22 May 2008 and 27 March 2009, the Commission forwarded the above-mentioned comments to the Spanish authorities, in order to give them the opportunity to react. By letters of 30 June 2008 and 22 April 2009, the Spanish authorities gave their reactions to the third parties’ comments. |
| (10) | On 18 February 2008, 12 May 2009 and 8 June 2009, technical meetings took place between the Spanish authorities and the Commission representatives to clarify, among others matters, certain aspects of the application of the scheme in question and the interpretation of the Spanish legislation relevant for the analysis of the case. |
| (11) | On 7 April 2008, a meeting took place between the Commission’s representatives and Banco de Santander S.A.; on 16 April 2008 a meeting took place between the Commission’s representatives and the law firm J&A Garrigues S.L. representing various interested third parties; on 2 July 2008 a meeting took place between the Commission’s representatives and Altadis S.A.; on 12 February 2009 a meeting took place between the Commission’s representatives and Telefónica S.A. |
| (12) | On 14 July 2008, the Spanish authorities submitted additional information regarding the contested measure, in particular data extracted from 2006 tax returns, which provided a general overview of the taxpayers benefiting from the contested measure. |
| (13) | By e-mail dated 16 June 2009, the Spanish authorities provided additional information and argued that Spanish companies still faced a number of obstacles to cross-border mergers within the European Union. |
| (14) | On 28 October 2009, the Commission adopted a negative decision (6) with recovery concerning aid granted to beneficiaries on the basis of the contested legislation when making intra-EU acquisitions (hereinafter ‘the previous Decision’). As indicated in paragraph 119 of this Decision, the Commission maintained the procedure, as initiated by the opening Decision, open for extra-EU acquisitions since the Spanish authorities undertook to provide new details concerning the obstacles to cross-border mergers outside the EU. |
| (15) | On 12, 16 and 20 November 2009, the Spanish authorities submitted summary information concerning direct investment by Spanish companies in non-EU countries. |
| (16) | On 16 December 2009, the Commission sent a request for information to the Spanish authorities concerning transactions in non-EU countries which it deemed necessary in order to make the State aid assessment of the scheme along the lines suggested by the Spanish authorities. |
| (17) | By letter dated 3 January 2010 the Spanish authorities submitted detailed information on 15 non-EU countries in which the vast majority (approximately 70 %) of Spanish foreign direct investment was located. More precisely, the Spanish authorities presented two reports prepared by the law firm Garrigues and by KPMG, which include an analysis of the alleged fiscal and legal obstacles in these third countries. |
| (18) | By letter of 27 January 2010 the Commission received comments from Banesto, a member of the Santander Group. |
| (19) | By e-mail of 3 March 2010, the Spanish authorities answered a technical question addressed to them on 26 February 2010. |
| (20) | By letter of 9 July 2010 the Commission received comments from Banco Santander. |
| (21) | By letter of 25 November 2010 the Commission received comments from Telefónica. |
| (22) | On 27 November 2009, 16 June 2010 and 29 June 2010, technical meetings took place between the Commission and the Spanish authorities. |
II. DETAILED DESCRIPTION OF THE CONTESTED MEASURE
| (23) | The measure in question provides for tax amortisation of the financial goodwill arising from the acquisition of a significant shareholding in a foreign target company. |
| (24) | The measure is governed by Article 12(5) TRLIS (hereinafter ‘the contested measure’). More precisely, Article 2(5) of Law 24/2001 of 27 December 2001 amended the Spanish Corporate Tax Law 43/1995 of 27 December 1995, by adding Article 12(5). Royal Legislative Decree 4/2004 of 5 March 2005 provides a consolidated version of the Spanish Corporate Tax Law. |
| (25) | The Commission is aware that the Spanish legislation has evolved since the date of the opening Decision (7). Nonetheless, the Commission considers that the latest amendments cannot modify or alter the doubts expressed in the opening Decision. For the sake of consistency, the Commission will refer in the present Decision to the numbering of the Spanish legislation as given in the opening Decision, even though it may have been modified. Any new legal provision will be expressly identified as such. |
| (26) | Article 12(5) TRLIS, within Article 12 TRLIS ‘Value adjustments: loss of value of assets’, entered into force on 1 January 2002. It essentially provides that a company which is taxable in Spain may deduct from its taxable income the financial goodwill deriving from the acquisition of a shareholding of at least 5 % of a foreign company, in yearly instalments, over not less than the 20 years following the acquisition. |
| (27) | Goodwill is understood to represent the value of a well-respected business name, good customer relations, employee skills, and other such factors expected to translate into greater than apparent earnings in the future. Under Spanish accounting principles (8), the price paid for the acquisition of a business in excess of the market value of the assets constituting the business is termed ‘goodwill’ and should be booked as a separate intangible asset as soon as |
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