Spain has won backing from a European Union court for tax breaks intended to help its companies acquire foreign stakes after judges said EU regulators failed to prove that the aid gave receipients an unfair advantage.

The ruling by the Luxembourg-based General Court came as the European Commission ramped up its fight against tax breaks which help companies save millions of euros but seen by regulators as a form of subsidy at ordinary taxpayers’ expense.

The Commission in its 2009 and 2011 decisions on Banco Santander, Autogrill Espana and Santusa Holding said the Spanish tax breaks for share purchases within the 28-country European Union and outside the bloc breached EU state aid rules. The tax break applied to companies which hold a foreign stake of at least 5 per cent for a minimum of one year.

The three companies subsequently challenged the EU rulings at the General Court, Europe’s second highest. Judges agreed with their arguments by annulling the Commission’s decisions. “The Commission failed to establish the selective nature of that regime,” the court said.

The Commission, which can appeal the verdict at the Court of Justice of the European Union, Europe’s highest, on points of law, did not immediately reply to an email for comment. Santander declined to comment The EU executive last month ordered Spain to recover corporate tax breaks from companies which acquired indirect stakes in firms abroad.

The tax measures were related to a 2012 scheme. The Commission is now investigating sweetheart tax deals offered by Luxembourg, Ireland, the Netherlands, Malta, Belgium, Cyprus and Gibraltar to see if they give companies such as online retailer Amazon, coffeehouse chain Starbucks , Italian car maker Fiat and iPhone maker Apple an unfair advantage.

The cases are T-219/10, Autogrill Espana v Commission and T-399/11 Bancao Santander and Santusa Holding v Commission.

Reuters