Spanish High Court declares that Spanish Tax Authorities once more applied discriminatory taxation to EU citizens

21 Jun Spanish High Court declares that Spanish Tax Authorities once more applied discriminatory taxation to EU citizens

A conflict between the Spanish national tax legislation and the EU law could be very expensive to the Spanish public finances as can be deducted from several judgements by the National High Court in Madrid dated on 03-31-2010 declaring the discrimination caused by taxes withheld by the Spanish Treasury to several pension funds residing in Holland at the time of the receipt of dividends paid by a company resident in Spain. The Court of Justice of the European Union has stated that in case of conflict between EU law and national legislation, the primacy or prevalence of the EU must be acknowledged, even though integrating the system of each Member State with the EU rules has never been easy. In the commented case the Dutch entities proclaimed the EU principles of non-discrimination and free movement of capital of article 56 of the EU Treaty, which they understood was violated by the Spanish tax legislation into force until 1 January 2010 (a set of rules that was changed precisely as a result of infringement proceedings initiated against Spain). The Spanish National High Court resolves the disputes considering the implementation of article 24 of the Spanish law of the income tax for non-residents (IRNR) and article 12 of the EU Treaty to avoid double taxation between Spain and the Netherlands is contrary to basic freedoms recognized in EU law and confirming an existing discrimination between the pension funds residing in Spain and the non-resident pension funds from other EU member.

click to download court’s Judgement in Valencia