EU regulators to drop Spanish bank tax credit probe

EUROPEAN Union regulators will shut down an investigation into the way Spanish banks use tax credits after Spanish authorities announced changes to head off concerns that the tool may break state aid rules, an EU official said on Monday September 28.

The European Commission said in April that EU regulators were looking into the treatment of banks’ DTAs by four EU countries: Spain, Italy, Portugal and Greece.

Deferred Tax Assets (DTAs) is an instrument which allows tax breaks to companies and is now going to be changed.

The changes mean that Spanish banks, the main beneficiaries of DTAs, will now make a retroactive payment of 1.5 per cent against the tax breaks which have been granted.

This change in law was agreed to by the European Commission, the Bank of Spain and the economy and treasury ministries. As a result of the reform the European Commission will now drop an investigation into Spanish banks’ use of tax credits.

“We will no longer look into this measure, as long as the Spanish authorities implement the changes as announced. It addresses our concerns sufficiently,” an EU official said.