October infringements package: decision for Spain

In its regular package of infringement decisions, the European Commission pursues legal action against Member States for failing to comply with their obligations under EU law. These decisions, covering various sectors and EU policy areas, aim to ensure the proper application of EU law for the benefit of citizens and businesses.

The decision adopted by the Commission regarding Spain is presented below.

Taxation.

Commission requests SPAIN to allow the deduction of directly related expenses when calculating withholding tax on cross-border royalty payments

The Commission has decided to open infringement proceedings against Spain, requesting it to align its rules on withholding taxes charged on royalty payments received by non-resident taxpayers (Article 56 TFEU). The Spanish rules provide that the withholding tax is levied on the gross amount of income, without the possibility to deduct directly related expenses. While case law of the Court of Justice of the European Union allows a Member State to charge a withholding tax on cross-border royalty payments even if it does not levy withholding taxes on purely domestic payments, it must allow the deduction of directly related expenses when determining the tax due. Spain has two months to reply to the arguments raised by the Commission after which the Commission may decide to send a reasoned opinion.

More information

October infringements package: key decisions