On 29 September 2006, the Central Economic and Administrative Court ruled (decision number 00/2396/2004) that Spain's pre-2004 thin capitalization rules, which limited the deduction of interest paid to EU related companies (but not to Spanish related companies), were incompatible with the freedom of establishment (Art. 43 EC Treaty) following the decision of the European Court of Justice (ECJ) in the Lankhorst-Hohorst case.
(a) Background law. Before Law 62/200…