Europese Commissie sommeert Spanje belastingvoordeel bij fusies af te schaffen (en)
EUOBSERVER / BRUSSELS - The European Commission told Spain to abolish a corporate tax scheme on Wednesday (28 October), on the basis that it gives Spanish firms an unfair advantage in European takeover deals.
But many firms appear to have escaped scot-free, as the obligation to pay back the illegal tax relief to the Spanish government will only apply to takeovers carried out after December 2007, the date when the commission announced its investigation.
As a result, no money will be paid back on the vast majority of lucrative deals netted by a number of Spanish firms since the government tax scheme came into place in 2002.
Compounding the issue, the lucky let-off for the firms was caused by unclear statements made by one commissioner in particular to the European parliament, leading lawyers to advise against demands for pre-December 2007 paybacks.
Under the Spanish tax scheme, national firms taking over non-Spanish European firms were allowed to write off, over a period of 20 years, the excess price paid for the acquisition of a business over the market value of the assets composing it.
When looking to takeover competing firms, company boards will typically make an offer exceeding the market value of the target firm.
"This tax provision gives a discriminatory advantage to Spanish companies when acquiring shares in other European companies," said the EU's competition watchdog, Neelie Kroes i, in a statement.
Legal basis undermined
But despite the commission decision, Spanish firms who concluded deals before December 2007 will not have to pay back the funds and can even continue to write off the excess value paid for a takeover.
Privately commission officials admit that their legal argument to take a stronger line was severely weakened by mixed messages coming out of the executive itself during the period in question.
One exasperated official specifically pointed to comments made by the EU's internal market commissioner to the European Parliament, indicating Spanish firms could argue they were ambiguous regarding the legality of the Spanish scheme.
As a result, major takeover deals such as O2's acquisition by Telefonica or Scottish Power's aquisition by Iberdrola will be unaffected by the commission's announcement.
Despite the apparent let-off, doubts existed as to whether the Spanish administration would force companies who made deals after December 2007 to pay back illegal tax relief.
After an unannounced meeting with Ms Kroes in Brussels a few weeks ago, Spanish finance minister Elena Salgado declared no firms would have to pay back the money.
But Spanish diplomats in Brussels on Wednesday signaled that Spain would comply with the new decision.