Global Daily Tax News, ECJ Rules For Spain's Goodwill Amortization Scheme, (Jul 3, 2025)

The European Court of Justice has issued a ruling confirming annulment of the European Commission's decision declaring unlawful the Spanish tax scheme on the deduction for indirect acquisitions of shareholdings in foreign companies.

The decision concerns a new corporate tax scheme that was introduced in Spain in 2002. The scheme allowed companies that had acquired shareholdings in a foreign company to deduct from their tax base, by way of amortization, the goodwill resulting from that acquisition.

In response to questions from Members of the European Parliament, the European Commission stated, at the beginning of 2006, that the scheme did not fall within the scope of the EU State aid rules. Nevertheless, in 2007, the Commission decided to examine the tax scheme in question more closely.

In decisions released in 2009 and 2011, the Commission declared that the measures in question constituted State aid which was incompatible with the internal market. It therefore ordered the Spanish authorities to recover that aid. However, the Commission allowed the scheme to continue to apply, subject to conditions, in certain situations, under the principle of the protection of legitimate expectations.

Actions were brought by various companies against the initial decisions. However, these were unsuccessful.

In July 2013, the Commission examined a new interpretation of the tax scheme at issue, formalized in a binding interpretation sent to Spanish authorities. In the Commission's view, that interpretation extended the initial scheme to include the financial goodwill resulting from indirect acquisitions of shareholdings in foreign companies by means of direct acquisitions of shareholdings in foreign holding companies.

By decision of October 15, 2014, the Commission concluded that that new tax measure was new aid which was incompatible with the internal market. As a result, it required Spain to put an end to that scheme and to recover the aid granted under it.

Spain and a number of companies concerned successfully applied to the General Court of the European Union for annulment of the Commission's decision of October 15, 2014.

The Commission challenged before the Court of Justice the judgments by which the General Court annulled its decision. However, in its new ruling, the Court of Justice dismissed the Commission's appeals.

The Court noted that it is expressly stated in the Commission's initial decisions that the exceptions to the cessation and recovery obligations relate to both direct and indirect acquisitions of shareholdings.

The ECJ said, since it had been finally established that those initial decisions were lawful, the General Court was required to infer from them, as it did, that those exceptions related to both types of shareholding acquisition. Both those types of shareholding are therefore protected by the legitimate expectations recognized by the Commission in the initial decisions, the Court said.

In addition, the principle of legal certainty precludes the Commission from classifying the tax deduction of the financial goodwill resulting from indirect acquisitions of shareholdings as a new State aid scheme which has been implemented unlawfully, it concluded.