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Taxation transfer of company shares in spain is compatible with EU law

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The Spanish tax levied on the transfer of company shares for companies with real estate is compatible with EU Law


In a brief judgement dated 06-10-2010 (Inmogolf S.A. case, C-487/09), the EU Court declared that Art. 108 of Law 24/1988 regulating the Securities Market is compatible with Directive 69/335 relating to indirect taxation. Noteworthy is the fact that this article serves as an anti-fraud measure the purpose of which is to tax the purchase of companies whose assets mainly comprise real estate. The aim is to avoid the use of intermediary companies by the purchaser to thus avoid the Property Transfer Tax or Impuesto sobre Transmisiones Patrimoniales (usually levied at 7% of the value of the property), which is applicable to direct property purchases.

Art. 108 is an incredibly complex article which regularly causes many interpretation issues, in addition to being applied irrespective of the place of residence of the buyer (whether such buyer is resident in Spain or abroad). This judgement makes it obvious that it can no longer be claimed that the Property Transfer Tax is not applicable under the statement that Spanish regulations are not in line with EU regulations.

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