24 May, 2022 | TAX NEWS
The Spanish National High Court recently published its decision that a sovereign wealth fund has the right to obtain a refund of dividend withholding taxes imposed on dividend income derived from its investments in Spain. The claimant, a non-European sovereign fund invested in Spain through two different investment vehicles. While the Spanish rules provide for a subjective exemption from tax for both Spanish investment vehicles, there is no such exemption for comparable non-Spanish investment vehicles.
The National High Court confirmed that the applicable Spanish tax rules infringe the free movement of capital principle under article 63 of the Treaty on the Functioning of the European Union (TFEU).
As a result, the Spanish National High Court confirmed the non-Spanish sovereign fund’s right to the refund of excess taxes imposed as well as interest compensation.
This decision fits in a series of favorable developments in the interpretation of the Spanish tax legislation in light of the TFEU , especially with respect to the free movement of
capital, in the area of reclaims filed by non-Spanish funds.
The decision can be found by clicking here.