The legal departments of a good number of large Spanish companies immersed in processes of return of aid to the EU that has been declared illegal have started the year on the wrong foot and all the alarms launched: one of the amendments that the PSOE has proposed for the Draft Law on Measures to Combat Tax Fraud raises the option of withdrawing the tax benefits of those companies that delay or that do not agree to the return of some millionaire remnants that they obtained a decade ago within the EU, and that after a judicial labyrinth, have to emerge now because considers that it was a practice contrary to the Community rules on a and d
The best known case is that of ‘tas lease’ that operated in Spain between 2007 and 2011, which allowed financing the construction of ships through Economic Interest Groups (AIE), with an advantage of 20% to 30% over the final price that allowed investors in these financings to obtain a good return. A sentence from General Court of the (TGUE) last September confirmed that this financial option to build ships is State aid, granted on a selective basis, violates European competition rules and harms other companies that build ships and their funders.
The amendment presented by the Socialist Group is not alien to the stagnant situation in which is the process of return of the alleged state aid from the ‘tax lease’, from which some 80 investors benefited, including some of the main companies in the country. The Government already announced to large companies at the end of 2019 its intention to start claiming through the Inspection Department of the Tax Agency the return of tax incentives applied under this mechanism.
In the Montoro era, the Ministry of Finance estimated the total amount of tax aid received through this channel by investors who participated in this type of financial structures at 126 million euros, but the European Commission doubts these figures and other sources assume that the bill for an eventual refund would be higher (up to 260 million) if one takes into account that during that period some 3,000 million euros were invested annually in the construction of boats under this tax scheme.
An “arbitrary” and unspecific amendment
The judgment of the TGUE has already been appealed in cassation to the Court of Justice of the EU, but while that is elucidated, in many companies of all kinds (food, textile, banks, infrastructures, etc …) that then entered that juicy business, now await the arrival of the “verifications” from the Tax Agency, so that they return the money, with an amendment to the tax fraud law on the table that pressures them with the withdrawal of any other tax benefit they have if they do not proceed with the payment. Sources consulted in the companies and their legal advisers do not question the validity of the sentence or avoid its compliance, but they see an unnecessary risk in “the threat” to the rest of the tax credits they currently have and that, for now, they will not be modified. “They are going to remove the exemption for double taxation of dividends, perfectly recognized throughout Europe, for an issue that has nothing to do with that,” complained a tax advisor familiar with this issue.
From a technical point of view, the need to implement such an “arbitrary” measure in the new regulation against fraud is not understood, when a system already exists in the General Tax Law for the State to collect the money that must be returned and do get to Brussels. In view of the problems and delays that have always occurred due to the return of this type of aid, in most cases many years after having obtained it based on legal and reliable regulations (principle of legitimate confidence), it is established the obligation of pay off debt first, claim later, so that Spain is not penalized for delays in returns.
The specialists in community commercial law also warn that the operational complication will not be less, since after a first “check” each of the Economic Interest Groups involved, a new and specific for each of the participants that made them up, more than a decade ago, many of which no longer exist. “Until now no one has paid – say the consulted sources involved in the process – and these second settlements can freeze the processes.”
The amendment that the PSOE itself raises to a government bill controlled by that same party – “something that draws attention”, the advisers recall -, goes in the European line of eliminating most of the tax benefits that the large companies, but from the private sphere they point out that you cannot generalize on any kind of deduction or advantage, because it can lead to very unfair situations for companies that are risking a lot to pull the economy in these tough times of crisis due to the pandemic.
Goodwill and ‘tax holidays’
It must also be borne in mind that not only is the issue of the ‘tax lease’ of shipyards more than a decade pending in the EU, but some of the state aid considered illegal remains to be returned to the EU in the case of financial goodwill, which made it possible to deduct from the Corporation Tax base the value of that fund in the acquisition of shares of more than 5% for no less than one year in foreign companies. There are also other isolated cases in the infrastructure, energy and telecommunications sectors that may also be adversely affected by a too lax application of the amendment prepared by the PSOE.
The European war against Spanish tax advantages sentenced as state aid began in the late 1990s, with the war against the so-called Basque ‘tax holidays’. According to the latest official data, some 155 procedures with Spanish interests remain to be resolved, with a grant of aid of this type that was estimated at more than 3,000 million euros in 2019. Other European partners are well above those amounts, but The issue may become more complicated in the future if we take into account that for the next three years 140,000 million will reach Spain for business projects, of which half are non-lossable items, always susceptible to being denounced and sentenced as State aid .
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