Spain: New RETT rules on share deals coming

Real Estate Tax Services Newsalert ()

In July 2012 we announced the Spanish Supreme Court had asked the ECJ to conclude on Spanish Real Estate Transfer Tax (“RETT”) rules on share deals involving Spanish property rich entities and their compatibility (i) with the VAT Directive, and (ii) with the freedoms of establishment and movement of capital. The preliminary ruling is still pending.

0n 3 October 2012 the Parliament Official Gazette published the wording of the proposed new rules for RETT on such share deals. These new rules propose (i) excluding from the RETT scope those transactions occurring in the primary market, and (ii) taxing such transfers of shares, taking into account the nature of the underlying assets when there is a deemed intention to avoid taxes payable on an asset deal through the implementation of a share deal.