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On September 2010, the Commission requested the UK
to amend its rules regarding the introduction of effectively a maximum 6 year time
limit (as a consequence of s107 FA 2007) for common law claims for the repayment
of taxes under the care and management of the Commissioners of Inland Revenue.
S107 FA 2007 was introduced by HMRC (with retrospective effect) to seek to prevent
the decision of the Courts in Deutsche Morgan Grenfell (DMG) from applying to
common law claims against HMRC and, therefore, was enacted to block High Court claims. DMG had determined that for claims made on
the basis of mistake of law, the start of the 6 year limitation period could be
postponed until the discovery of the mistake or when the mistake could have been
discovered with reasonable diligence.

The significance of the Commission infringement proceedings is that it suggests that
the parallel and much wider earlier s320 FA 2004 blocking provision iro common
law claims made on or after 8 September 2003 is also now more likely to be found
to be in contravention of the M&S Teacakes case (C-62/00) principle that such
measures are only lawful if an adequate prospective transitional period is given.


No se corrigio ya?

to 3 Dutch pension funds in Spain
The Spanish Audencia Nacional national judicial court (equivalent to court of appeal)
has delivered a judgment regarding withholding taxes levied on foreign pension
schemes in Spain. Three Dutch pension schemes (ABP, PGGM and MN Services), had
brought a joint action before the court due to the fact that the Spanish dividends
distributed to them were subject to a 15% withholding tax, whereas Spanish pension
funds are not subject tax under Spanish Corporate Income Tax Law.
The claimants argued that the tax treatment suffered by them as foreign pension
schemes in Spain was discriminatory under EU Law. Claimants stressed that the
Spanish tax law was discriminatory on the grounds of nationality as well as violating one
of the four main principles of EU Law, namely the free movement of capital (Art. 63
TFEU). Claimants also based their arguments on the primacy of EU Law over national
The Spanish Audencia Nacional has now concluded that the Spanish Tax Authorities
(STA) should not have levied withholding tax on the dividends distributed to the Dutch
pension funds and the STA will therefore have to refund the amounts withheld to the
pension funds. Moreover, the court has confirmed that the Spanish regulations have
been discriminatory in the past against foreign European pension funds in Spain. It
argues that this discriminatory treatment has led to a differentiated tax treatment
between resident and non-resident entities and this in turn, has violated the EU principle
of the free movement of capital.
It is important to note that as a result of this judgment, it is confirmed that Spain is now
one of the jurisdictions where companies may obtain a refund when they have been
treated in a discriminatory manner under EU Law and are subject to greater tax burdens
than local entities, provided the pension funds have made appropriate claims within the
relevant time limits. The appeal court judgment is however likely to be appealed by the
STA at the supreme court. In principle, the judgment only refers to pension funds but the
court decision may apply for other investment vehicles such us UCITS as well provided
that the court refers to the change of law in Spain per 3 March 2010 which says that
foreign pension funds and UCITS are subject to Spanish withholding tax but exempt
from taxation on dividends and capital gains (with retroactive effect to 1 January 2010).
Spain, thus, follows the line of thought established in ECJ cases such as Fokus Bank.
EU/EEE pension funds are advised to file protective claims. They may still need to
litigate in order to obtain a refund in Spain. Late payment interest will be accrued.