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Spain Urged To Amend Tax Treatment On Non-Profit Entities

by Ulrika Lomas, Tax-News.com, Brussels

20 November 2015


The European Commission has requested that Spain amend its rules on the taxation of certain income obtained by foreign non-profit entities and of certain contributions to such entities.

The crux of the Commission's complaint is that foreign non-profit entities that derive income from Spain, but which are established in another EU/European Economic Area state without a branch in Spain, cannot claim the same tax exemptions as non-profit entities established in Spain itself and their contributors. The Commission considers this to be "discriminatory and a restriction of the free movement of capital as interpreted by the Court of Justice."

"A Spanish individual making a financial gift to a comparable foundation established in another member state should be allowed to deduct the same amount from his tax base as if the same gift had been made to a Spanish foundation." the Commission said in a statement published on November 19. "A foreign foundation deriving income, e.g. rent, from Spain should be exempt from taxation on that income, in the same way that a Spanish foundation would be. The Commission has, therefore, asked Spain to amend its rules to bring them into line with EU law."

The request takes the form of a reasoned opinion. In the absence of a satisfactory response within two months, the Commission may refer Spain to the European Court of Justice.

TAGS: tax | European Commission | law | Spain | charities | Europe

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