Brussels warns Spain tax payment legislation illegal

An ultimatum issued by Brussels warns Spain that tax legislation that restricts citizens and companies’ ability to make tax payments from abroad is contravention with European regulations.

The ultimatum issued by the European Commission is the second stage in the infringement process, with Spain now having two months to respond or face being taken to court.

The Commission argues that the design of the Spanish regulations prevents citizens and companies from outside the country, from paying their taxes. This is because the Spanish tax legislation requires that banks must be classified as “collaborating entities” to be able to make these payments.

The system is according to the Commission in contravention of the regulations that govern technical and business requirements for transfers in euros.

Practically, that makes it very difficult for a foreign bank or finance company to obtain this authorisation and therefore to make tax payments on behalf of their clients.

In effect, in order for anyone or any business to pay their Spanish taxes they will need to have an account with a local bank that is registered as a “collaborating entity”, and not all are either.

The ultimatum gives the country two months to respond to Brussels and to get their house in order. That means Spain has two months to provide the Commission with proof that the legislation has changed or is in the process of changing failing which the country could be taken to the European Court for Justice.

Failure by Spain to deal with the warning from Brussels over the tax payment legislation could result in the country being fined.

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