Spain vs SGL Carbon Holding, April 2019, Audiencia Nacional, Case No ES:AN:2019:1885

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A Spanish subsidiary – SGL Carbon Holding SL – had significant financial expenses derived from an intra-group loan granted by the parent company for the acquisition of shares in companies of the same group. The taxpayer argued that the intra-group acquisition and debt helped to redistribute the funds of the Group and that Spanish subsidiary was less leveraged than the Group as a whole.

The Spanish tax authorities found the transactions lacked any business rationale other than tax avoidance and therefor disallowed the interest deductions.

The Court held in favor of the authorities. The court found that the transaction lacked any business rationale and was “fraud of law” only intended to avoid taxation.

The Court also denied the company access to MAP on the grounds that Spanish legislation determines:
Article 8 Reglamento MAP:
Mutual agreement procedure may be denied, amongst other, in the following cases:

(d) Where it is known that the taxpayer’s conduct was intended to avoid taxation in one of the jurisdictions involved. (…)

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Spain vs SGL Carbon Holding April 22 2019 1885

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