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EU: Court ruling on Spanish tax breaks may affect Starbucks, Apple appeals

 |  December 18, 2016

Europe’s top court will decide next week on Spanish tax breaks for foreign takeovers in a ruling that may give clues as to how judges will deal with more complex tax cases involving Starbucks and Apple .

The European Commission, in two rulings in 2009 and 2011, said the scheme, which applied to Spanish companies holding a stake of at least 5 percent in a foreign company for at least a year, broke EU state aid rules, and ordered Spain to recover the money.

Banco Santander, Autogrill Espana, which is now known as World Duty Free Group, and Santusa Holding challenged the decisions at the Luxembourg-based General Court, Europe’s second-highest, which ruled in the companies’ favour.

The EU competition enforcer then appealed to the Court of Justice of the European Union (ECJ), arguing that the lower court was wrong to demand that it specify the type of companies that benefited unfairly from the tax breaks.

The court’s verdict in the Spanish case on Wednesday could give insight into the ECJ’s stance on high-profile rulings by the European Commission against tax breaks for multinationals such as Starbucks and Apple, which have already been appealed to the General Court by the Dutch and Irish governments.

The Commission ordered Apple in August to pay Ireland a record 13 billion euros ($13.6 billion) in unpaid taxes, ruling the firm had received illegal state aid

The Commission has also ruled that Starbucks, Fiat Chrysler and 35 other companies benefited from illegal sweetheart deals with several EU countries.

The Spanish corporate tax scheme allowed companies that were tax resident in Spain to write down goodwill resulting from the acquisition of stakes in companies that were tax resident abroad.

While the Spanish case is different in substance and facts from those involving Starbucks and Apple, the verdict could show whether the ECJ is taking a conservative approach to state aid which could constrain the Commission’s investigations.

A Commission official made light of the implications of the court’s ruling.

“If it is the general mood that we have over-reached, then that is bad but you cannot really deduce it from the question at hand in this particular case because it is such a specific question,” the Commission official said.

“We would not see it as good news, that is obvious, but I think it is difficult to infer too much from it.”

Full Content: CNBC

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