Santander, AXA Appeal EU Challenge To Spanish Tax Break

By Jack Schickler Law360 (January 31, 2019, 1:45 PM EST) — Santander Bank and insurance company AXA are appealing a November European Union court ruling that deemed a Spanish corporate tax break to be a breach of the bloc’s competition laws, according to documents published by the court.

The cases, filed Jan. 25 and appearing on the court’s website Wednesday, were the latest stage in a decadelong saga that has led the bloc to redefine the circumstances in which tax advantages are deemed to unfairly favor a particular sector and constitute unlawful state aid. The EU’s general court last year ruled against the financial institutions, as well as Deutsche Telekom and the multinational retailer World Duty Free Group, when it held that a Spanish “goodwill” corporate tax reduction for the takeover of foreign companies breached EU law.

The November judgment applied a 2016 doctrine from the more senior European Court of Justice, which said a tax break could be “selective,” hence illegal, even though any company couldin principle, have benefited by making different commercial decisions.

In 2009 and 2011, the European Commission ruled against Spain after EU lawmakers in 2005 had asked whether the tax break, intended to reflect the intangible value of a company’s reputation, effectively subsidized takeovers of mobile phone business O2, energy company Scottish Power and the semiprivatized French freeway network.

James McSwiggan – CIC’s Specialist in Mergers & Transactions

The cases are Sigma Alimentos Exterior v. Commission, World Duty Free Group v. Commission, Banco Santander v. Commission, Banco Santander and Santusa v. Commission, AXA Mediterranean v. Commission and Prosegur Compañía de Seguridad v. Commission, case numbers C-50/19, C-51/19, C-53/19, C-54/19 and C-55/19, in the Court of Justice of the European Union.

–Editing by Neil Cohen.

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