On March 12, 2025 the European Commission published the key decisions of the March 2025 infringements package. One of the decisions published is the decision of the European Commission to to send a reasoned opinion to Spain (INFR(2021)4042), for failure to align its rules on withholding taxes charged on royalty payments received by non-resident taxpayers with the freedom to provide services (Article 56 TFEU).
The Spanish tax legislation provides that, for non-resident taxpayers, the withholding tax on royalty payments is levied on the gross amount of the income without the possibility to deduct directly related expenses. While case law of the Court of Justice of the European Union (Case C-290/04, FKP Scorpio Konzertproduktionen) 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. Therefore, the Commission has decided to issue a reasoned opinion to Spain, which now has two months to respond and take the necessary measures. Otherwise, the Commission may decide to refer the case to the Court of Justice of the European Union.
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