Chapter 8: Spain

Abstract

This book chapter analyses the policy rationale and interpretation issues arising from 1) the general interest deduction limitation rule envisaged in the Spanish Corporate Income Tax Act (article 16 CITA), which is aligned with the BEPS action 4 proposal to limit base erosion involving interest deductions and other financial payments, 2) the special anti-abuse rule regarding the denial of interest deduction in leveraged acquisitions of intragroup companies (article 15.h) CITA), 3) the interest deduction limitation for leveraged buyout transactions (LBOs) (article 16.5 CITA) and 4) the interest deduction limitation for hybrid instruments (article 15.j) CITA).

Note: “Reprinted from Corporate Taxation, Group Debt Funding and Base Erosion, ISBN 978-94-035-1170-2, February 7, 2020, Pages 111-138, with permission of Kluwer Law International.”

Keywords: Spain, corporate income tax, interest limitation, interest barrier, BEPS action 4, leveraged buyout transactions, LBO, hybrid instruments

JEL Classification: H20, H87, F23, K33, K34