EU Gets Court Boost in Crackdown on Spanish M&A Tax Breaks

(Bloomberg) -- The European Union got a boost in its crackdown on multimillion-euro tax breaks for Spanish companies that acquired stakes in foreign firms, after an adviser to the bloc’s top court rejected as inadmissible a challenge to the EU’s order for handouts to be paid back.

Advocate General Gerard Hogan of the EU Court of Justice said in a non-binding opinion on Tuesday that a request for guidance from the Central Tax Tribunal in Spain on the dispute should be ruled invalid. The Luxembourg-based court follows such advice in a majority of cases when it rules a few months later.

The case stems from a European Commission decision in 2014 ordering Spain to recoup tax breaks from companies that benefited from the regime, saying it amounted to illegal state aid. It follows previous judgments by the EU courts in 2016 and 2018 that backed a similar commission crackdown on the Spanish benefits doled out to companies including Banco Santander SA.

The EU decision in the latest case targeted a 2012 amendment to the Spanish measure expanding the scope of the tax-break to acquisitions in foreign holding companies.

Any guidance from the bloc’s courts could also weigh into separate appeals by Apple Inc. and Inc. as they seek to overturn EU tax orders, amid a five-year crackdown by EU Antitrust Commissioner Margrethe Vestager on controversial fiscal deals for multinationals.

While the EU courts have so far backed the commission’s right to attack national fiscal deals or tax regimes, Vestager has suffered a number of defeats in the past few months, mainly on procedural grounds.

The bloc’s judges in February annulled her order for Belgium to recoup some 800 million euros ($871 million) in unfair tax breaks from 35 companies, including Anheuser-Busch InBev NV, and last week the same panel of judges backed Starbucks Corp.’s bid to topple a 30 million-euro payback order.

The case is: C-274/14, Banco de Santander, S.A.

©2019 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.