On 5 July 2006, the European Commission announced that it had sent a formal request to Spain to amend an anti-abuse rule dealing with cases in which a Spanish company pays a dividend to a company established in another EU Member State that is itself owned by a company resident in a third country, i.e. outside the European Union.
The disputed Spanish anti-abuse provision (Art. 14.1.h of the Non-Residents Income Tax Act) states that the tax exemption on dividends…