The Spanish Supreme Court has approved the application of a tax credit to elude double taxation to capital gains derived by EU (European Union) resident entities from the transfer of shares in Spanish entities.
The decision has been taken after the dismissal of a case which was filed in 2002. In 2002, a French entity transferred the shares of its Spanish subsidiary at a gain. According to the treaty between Spain and France the transfer of shares of a Spanish subsidiary by a French resident can be taxed in Spain if the French resident has held, at any time during the 12-month period prior to the transfer of the shares, at least 25% of the equity of the Spanish subsidiary. The relevant Spanish tax paid by the French entity on the gain and thereafter filed a refund claim with the Spanish Tax authorities. The tax authorities denied the refund claim; after the dismissal of the appeals filed by the taxpayer with the different Spanish tax courts and courts of justice, the case was brought to the Supreme Court, which has ruled in favor of the taxpayer.
