The discrepancies between the European Commission and the Government over the transposition of the new merger directive will finally be resolved in court. The community executive has announced today that it will take Spain before the Court of Justice of the EU (CJEU) for “not guaranteeing” the application of a “common tax regime” to European companies. The directive, which particularly affects cross-border mergers, aims to eliminate tax obstacles to this type of operations when they affect companies based in two or more states of the Union and, in Brussels’ opinion, this objective would not yet be guaranteed in Spain.

The European Commission maintains that Spanish law applies “restrictive conditions” to complete divisions of companies that have no place within the merger directive. Specifically, the fact that after the complete spin-off of a company, the shareholders of the spun-off company must maintain the same proportion of shares that they previously had in the company affected by the operation in each and every one of the companies that have received the assets of the spun-off company. If this condition is not met, Spanish regulations require that the assets and liabilities transferred be branches of activity and, therefore, do not benefit from the tax regime, explains the European Commission in the press release published today, in which it reiterates that In his opinion, these provisions constitute a violation of the directive.

In January 2019, the Commission sent Spain a letter of formal notice warning it of the situation (it also detected problems in the transposition of the directive in 14 other member states) and, subsequently, a reasoned opinion in November 2019 in which it asked the Government to correct the problems detected. “In its official responses and in subsequent dialogues with national authorities, Spain has maintained that its tax legislation complies with the Merger Directive,” explains the European Commission in the press release published today. The institution disagrees with the arguments presented by Spain. In his opinion, “to date, the efforts of the Spanish authorities have been insufficient,” hence his decision to take Spain to the CJEU.