On November 19, 2015 the European Commission published the key decisions of its November infringement package. One of the key decision mentioned is the Commission’s decision to request Spain to end discriminatory tax treatment of foreign non-profit entities and of their contributors.
According to a press release issued in this respect, the European Commission requested Spain to amend its rules on the taxation of certain income obtained by foreign non-profit entities and of certain contributions to such entities.
According to the Commission currently Spanish non-profit entities can benefit from certain tax exemptions. Taxpayers, who contribute financially to those entities, also have access to several tax incentives in respect of their contributions. The Commission continues by stating that the same rules do not apply to foreign non-profit entities that derive comparable income from Spain, but which are established in another EU/European Economic Area state without a branch in Spain. According to the Commission these entities cannot benefit from such tax exemptions and their financial contributors from Spain are also denied access to similar tax incentives.
The European Commission considers this to be discriminatory and a restriction of the free movement of capital as interpreted by the Court of Justice (cases "Centro di Musicologia Walter Stauffer" C-386/04 and Persche C-318/07). The European Commission continues by stating that a Spanish individual making a financial gift to a comparable foundation established in another Member State should be allowed to deduct the same amount from his tax base as if the same gift had been made to a Spanish foundation. According to the Commission a foreign foundation deriving income, e.g. rent, from Spain should be exempt from taxation on that income, in the same way that a Spanish foundation would be.
According to the press release the Commission has, therefore, requested Spain to amend its rules to bring them into line with EU law. The request takes the form of a reasoned opinion. In the absence of a satisfactory response within two months, the Commission may refer Spain to the Court of Justice of the EU.
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