ECJ Upholds Decision in Favor of Iberdrola and Telefónica in Spanish Financial Goodwill Case

Latham & Watkins has secured a remarkable triumph for clients, Iberdrola and Telefónica, as the European Court of Justice (ECJ) upheld a previous ruling of the General Court in their favor. In that judgment, the General Court annulled a third decision adopted by the European Commission in relation to a Spanish tax scheme that allowed amortization of financial goodwill in acquisitions of shareholdings in foreign companies, a scheme that was declared illegal State Aid in two initial decisions by the Commission in 2009 and 2011.

This ruling marks a final victory in the Spanish Financial Goodwill Saga as it confirms that in the third decision the European Commission illegally departed from the recognition in those initial decisions of the principle of legitimate expectations and the right to amortize the financial goodwill for acquisitions done before 2007. Today’s victory allows Iberdrola and Telefónica to claim back from the Spanish Administration significant amounts which had been unlawfully claimed by the Spanish Tax Authorities at the request of the Commission. 

TEAM

The Latham team was led by Brussels Antitrust & Competition partner, Javier Ruiz Calzado and Madrid tax partner, Jordi Dominguez, and associates Laia Marco Perpiñà, Álvaro López Usatorre, and Almudena Chiesa Jiménez-Becerril in Brussels, and associate, Ana Serrano in Madrid.

Antitrust & Competition partner Alfonso Lamadrid also played a major role in this victory, representing co-defendants Banco Santander, AXA, Abertis Telecom, and Ferrovial while at his previous firm.