Judgment of the Court (Third Chamber) of 13 March 2008.#Commission of the European Communities v Kingdom of Spain.#Failure of a Member State to fulfil obligations - Freedom of establishment - Freedom to provide services - Restrictions - Research and development - Rules for the deduction of costs incurred abroad.#Case C-248/06.

Subject of the case

Re:

Failure of a Member State to fulfil obligations – Infringement of Articles 43 EC, 48 EC and 49 EC and Articles 31 EEA and 36 EEA – Rules for deducting costs for research and development and technological innovation incurred abroad more rigorous than those applicable to costs incurred in Spain.

Operative part

Operative part

The Court:

1. Declares that, by maintaining in force rules for the deduction of costs relating to research and development and technological innovation which are less favourable in respect of costs incurred abroad than costs incurred in Spain – such rules deriving from Article 35 of the Law on corporation tax, as amended by Royal Legislative Decree 4/2004 of 5 March 2004 – the Kingdom of Spain has failed to fulfil its obligations under Articles 43 EC and 49 EC on freedom of establishment and the freedom to provide services, and the corresponding articles in the Agreement on the European Economic Area of 2 May 1992, namely Articles 31 and 36 of that Agreement;

2. Orders the Kingdom of Spain to pay the costs.