International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Spain: Have you been taxed on a transfer of holdings in Spain? You may be entitled to a refund


Alvaro de la Cueva

Under Spanish tax law, corporate income taxpayers that realise a gain on the sale of a holding of more than 5% in a resident entity in Spain are entitled, provided the holding has been owned for more than one year, to take a corporate income tax credit equal to the portion of the gain that relates to the reserves of the investee that have already been taxed at the investee. However this mechanism, which aims to eliminate the double taxation that would arise if the income was first taxed at the investee and then on the occasion of the gain, is not reflected in the non-residents income tax.

Against this backdrop, the Spanish Supreme Court recently published its judgment of October 25 2013 on a French entity's claim that it was entitled to a refund from the Spanish tax authorities on the grounds that, as the Spanish tax legislation on non-residents did not establish a mechanism to avoid double taxation such as that noted above, the tax that the French entity had to pay on the gain that it realised on a transfer of a holding in a Spanish entity infringed the free movement of capital between member states, and was therefore in breach of EU law which prohibits discrimination on grounds of nationality and, by extension, on grounds of residence.

In addressing the claim, the Supreme Court, referring to the extensive case law of the European Court of Justice on the prevalence of Community Law and its direct applicability when it comes to preventing discriminatory situations, acknowledged the French entity's right to take the tax credit, thus reducing the tax due, and consequently its right to obtain a refund of the non-resident income tax that it had overpaid.

In light of the above, although the applicability of this judgment is restricted to certain cases (essentially because of the Spanish non-resident tax legislation, which establishes an exemption for gains realised on the sale of holdings in Spanish entities that are not real estate entities or of holdings that did not reach 25% in the preceding year, and by application of the tax treaties which, with certain significant exceptions such as France or Portugal, among others, reserve the taxation of these gains to the state of residence of the sellers), taxpayers would do well to analyse the transfers they have made in the past four years.

Alvaro de la Cueva (

Garrigues Taxand

Tel: +34 915 145 200

more across site & bottom lb ros

More from across our site

Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.
Sandy Markwick, head of the Tax Director Network (TDN) at Winmark, looks at the challenges of global mobility for tax management.
Taxpayers should look beyond the headline criteria of the simplification regime to ensure that their arrangements meet the arm’s-length standard, say Alejandro Ces and Mark Seddon of the EY New Zealand transfer pricing team.
In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
An intense period of lobbying and persuasion is under way as the UN secretary-general’s report on the future of international tax cooperation begins to take shape. Ralph Cunningham reports.
Fresh details of the European Commission’s state aid case against Amazon emerge, while a pension fund is suing Amgen over its tax dispute with the Internal Revenue Service.
The OECD’s rules may be impossible for businesses to manage, according to tax experts from companies including Shell.
Sanjay Sangvhi and Sahil Sheth of Khaitan & Co explore this legal concept and its implications for companies doing business in India.
The UK government is now committed to replacing the ‘super-deduction’ with a 100% capital allowances regime to offset the impact of the corporate tax rise to 25%.