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EU Commission Orders Spain to Recover Deductions of Goodwill Arising From the Acquisition of Shareholdings in Non-Resident Companies — Orbitax Tax News & Alerts

On 15 October 2014, the European Commission issued an order to Spain requiring the recovery of tax benefits related to allowing companies to take deductions for goodwill arising from the acquisition of indirect shareholdings in nonresident holding companies.

The Commission found that allowing such deductions constituted illegal state aid providing selective economic advantage which cannot be justified under EU rules, and that entities that received this benefit must now repay it to the Spanish government. The order follows similar orders in 2009 and 2001 involving direct non-resident acquisitions.