Spain - Thin Capitalization: An Unanswered Question Following Recent Spanish Amendments
- G.M. Luchena Mozo
- European Taxation, 2012 (Volume 52), No 8
- 11 July 2012
The Spanish thin capitalization rule has been the subject of criticism in the past, in particular in recent decisions of the Spanish Supreme Court, in regard to its compatibility with EU and international law. Recently, however, the rule was replaced by an earnings-stripping rule that is similar to the German interest barrier rule. This article examines the former thin capitalization rule, the new earnings-stripping rule, and the consequences of this development.