By Carlos Albinana, partner and head of tax at Allen
& Overy in Madrid
On June 28 2014 Spanish law 10/2014 on the organisation,
supervision and solvency of credit institutions came into
effect. Amongst other things, the law sets out a special tax
, i.e. preferred shares issued, directly or indirectly, by
The law confirms the existing favourable tax regime for this
type of instrument, which has been in place since 1985. And
it clarifies that instruments that qualify as additional tier
1 (AT1) capital according to the Capital Requirements
Regulation (CRR), fall within the scope of this special tax
Considerations payable on instruments that qualify as debt
under Spanish GAAP - tax rules follow accounting rules for
that purpose - are tax deductible according to Spain's
general tax rules, while considerations on equity are not.
But law 10/2014 expressly states that...