Spain: EU orders end to tax breaks for foreign mergers

The European Commission has reportedly ordered Spain to end its policy allowing tax breaks for major Spanish companies to encourage foreign mergers.

Reports say tens of millions of dollars, and in some cases several billions of dollars, in tax breaks were offered to major corporations including bank Santander and telco Telefonica. Reports say the tax policies encouraged these companies’ mergers about a decade ago.

The Commission’s order follows its announcement that it would be probing member states’ tax relationships with foreign companies as they continue to ink merger deals abroad to enjoy lower taxes in the EU. The Commission is probing whether these agreements constitute illegal state aid.

Now, the Commission says Spain’s tax breaks for domestic companies constitutes illegal state aid at the expense of rivals competing in the bidding to acquire the same companies bought by the Spanish firms.

According to reports, the Commission’s order comes in the form of a rejection of Spain’s new tax laws, unveiled in 2012. The Commission also ordered that the companies repay Spain the benefits they obtained, though authorities declined to name the companies involved or the monetary value of those benefits.

Full content: Yahoo News

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