The European Commission will challenge Spanish laws governing the taxation of dividends distributed by a non-resident companies to Spanish companies in the European Court of Justice, the Commission announced November 26.
The Commission said that Spain imposes conditions to obtaining tax benefits for foreign-sourced dividends paid to Spanish companies, including volume of income and level of shareholder participation requirements, that are not imposed if the dividend is domestic-sourced. Moreover, the tax advantage is not available at all for some foreign-sourced dividends, the Commission said.
The Commission said the Spanish law infringes EU law on the right of establishment, the freedom to provide services, the cross-border supply of goods, and the free movement of capital. It requested Spain to modify its tax rules in June 2013, but no changes were made, prompting the decision to take Spain to court over the issue.
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