The contribution of a property encumbered with a mortgage cannot be taxed under the neutral regime on the portion of the debt that did not fund the acquisition

In the incorporation of a company, the appellant contributed a property encumbered with a mortgage, together with the mortgage debt. That debt was much higher than the outstanding portion of the cost price. The special regime for restructuring transactions provided in the Corporate Income Tax Law was elected for that contribution.

The auditors argued, and the National Appellate Court so confirmed in this judgment, that the portion of the contributed debt that exceeds the debt obtained to finance the acquisition of the property cannot be taxed under that special regime, because there is not a direct relationship between the whole loan and the contributed property.

The court underlined that it is one thing to claim the neutrality regime and defer the tax on any income that might arise on the contribution of the asset and the outstanding debt on its acquisition and it is another completely different thing to attempt to defer the gain arising in the hands of the transferor on the transfer of a liability with a higher value, unrelated to the acquisition of the property.

Personal income tax

The personal income tax law in force until 2008 under which the general component of taxable income had to include interest received by related parties is lawful

National Appellate Court. Judgment of February 27, 2019

Until 2008, the personal income tax legislation laid down that the interest received from loans with related parties had to be included in the general component of taxable income instead of in the savings component, unlike the other types of income from movable capital arising from the transfer of own capital to third parties.

The National Appellate Court concluded in this judgment that this legislation is not in breach of either the Spanish Constitution or EU Law, because:

  1. From one angle, the constitutional principles of equality and economic capacity are not affected.
  2. From another (EU Law), it may be seen that the legislation was applicable to any resident for personal income tax purposes, with no exception, wherever the income was from, as long as the related party requirement was met.

Inheritance and gift tax

The main source of income may, in exceptional circumstances, be a source from the year before death

Supreme Court. Judgments of April 5 and April 8 2019

To be able to claim the “family business” reduction the economic activity carried on by the decedent must be their main source of income.

According to the Supreme Court, the general rule is that this requirement must be examined by reference to the income obtained in the decedent’s year of death, in other words, the year in which inheritance and gift tax fell due. It accepted, however, that in exceptional cases, this conclusion may be refined.

Specifically, in the case at issue, the decedent had died in the first six months of the calendar year, and the farming business, because of the type of crops involved, did not generate income until the second six months of every year. It had also been evidenced that in earlier years that economic activity was the decedent’s main source of income.

The court held therefore that, because of the exceptional circumstances of the type of activity, the year to be taken into account to examine whether the revenues from the activity are the main source of income was the year immediately before the year of death.

Tax on increase in urban land value

The “Cuenca mechanism” is not valid for calculating the base for the tax on increase in urban land value

Supreme Court. Judgment of March 27, 2019

As we announced in our Tax Alert dated April 16, 2019, the Supreme Court has rejected the option of using the “Cuenca mechanism” for calculating the base for the tax on increase in urban land value, which had been allowed by a few courts.

We will still have to wait for the Constitutional Court's new conclusions in relation to the other unsettled issues in relation to this tax.

Real estate tax

The reduction for properties under construction also applies in the period following their completion

Valencia High Court. Judgment of January 8, 2019

The court examined the timeframe for claiming the real estate tax reduction for properties under construction that are used in the businesses of urban and real estate development and construction companies. The law says that this reduction (which interested parties must apply for before the work starts) may be claimed for up to three years and may amount to up to 90% of the real estate tax liability.

Valencia High Court concluded in this judgment that, according to the letter of the law, the reduction must also be applicable in the tax period following completion of the work, provided the general three year limit laid down in the law is not overstepped.

Tax on radiotoxic elements

Constitutional Court overturns Catalan tax on radiotoxic elements

Constitutional Court Judgment of March 27, 2019

The Constitutional Court has held unconstitutional and rendered null and void the Catalan law approving the Catalan tax on radiotoxic elements, after concluding that this tax is equivalent to the central government tax on generation from spent nuclear fuel.

In this same judgment the Constitutional Court recalled the constitutional nature of the Catalan tax on empty homes as decided in constitutional court judgment 4/2019, dated January 17, 2019.

Administrative procedure

A change of interpretation cannot have an adverse effect on the taxpayer

National Appellate Court. Judgment of April 17, 2019

The National Appellate Court examined a case concerning a taxpayer reporting their taxes according to the interpretations then in force and recognized by the tax authorities as obtained from a number of binding rulings by the DGT, a report by the Spanish tax agency AEAT and the personal income tax manuals published by AEAT in several fiscal years. Following a change of interpretation in a decision by the Central Economic-Administrative Tribunal (TEAC), the auditors issued several assessments to the taxable person, claiming payment of the debt arising from TEAC’s new interpretation. According to the auditors, no penalty was imposed because the tax authorities’ interpretation known when the taxable person filed their tax returns had been followed.

As we explained in our Tax Alert dated May 27, the National Appellate Court overturned the decisions that confirmed those assessments and harshly criticized the tax authorities’ actions, to uphold the principle of legitimate expectations. Further information, here.

Administrative procedure

Rendering general provisions null and void does not automatically render null and void decisions based on them

Supreme Court. Judgment of April 01, 2019

The Charter for Andalucía Tax Agency, approved by Decree 324/2009 of September 8, 2009, was later rendered null and void. After it had become null and void, a taxpayer initiated a procedure for reviewing decisions that are null and void as a matter of law against an assessment and a penalty (which had become final) rendered by Andalucía Tax Agency.

The Supreme Court concluded, however, that the rendering null and void of general provisions does not automatically make null and void final administrative decisions made while those provisions were in force, even though those decisions may fall in each specific case within any of the grounds for being rendered null and void as provided for in article 217 of the General Taxation Law.

Administrative procedure

A notification is valid if it is proved that the taxpayer was aware of its content

Supreme Court. Judgment of April 11, 2019

The Supreme Court examined whether a notification of the commencement of an audit proceeding was valid if it was sent to a person other than the person with tax obligations or that person's representative at an address other than the address provided for receiving notifications (and which, moreover, is not the tax domicile of either) and underlined that the key factor for deciding as to the validity of a notification is whether, through it, the intended recipient had actual knowledge of the notified information.

In relation to which it made the following distinctions:

  1. Notices observing all the formalities in the law: In these cases it must be presumed that the information has been brought to the interested party's attention but the interested party is allowed to prove that this was not the case.
  2. Notices with a breach of material formalities: In these cases it is presumed that the information did not come to the interested party's attention, and they were not given the right to defend themselves, but the authorities are allowed to prove that this was not the case. In other words, in these cases the burden of proof lies with the authorities.
  3. Notices breaching secondary formalities: In these cases it is presumed that the information came to the interested party’s attention unless proof to the contrary is provided.

Because in the examined case the notification was made to a third party (other than the person with tax obligations and their representative) at a place that was not the address of either, or the tax domicile of one or the other, it must be presumed it did not come to the interested party's attention; but this presumption allows proof to the contrary by the authorities, as mentioned above.

Management procedure

A provisional assessment decided in a procedure initiated through a return has precluding effects

Supreme Court. Judgment of April 10, 2019

In this judgment the Supreme Court examined the effects of assessments issued in tax management procedures initiated through a return. Specifically, in the reviewed case, the tax authorities’ assessment recognized the right to claim a tax benefit.

The court affirmed that, after the right to a given benefit has been recognized in an assessment by the authorities, that benefit cannot later be reviewed by tax auditors. In other words, if the management body grants the benefit, it must be considered that it has reviewed compliance with the requirements laid down by the law to enjoy that benefit.

The auditors are only allowed to amend the conclusions from the management procedure if in a later audit new facts or circumstances come to light as a result of different work to that performed and specified in the provisional assessment.

Review procedure

A request for a preliminary ruling is needed before deciding that domestic law is not applicable

Constitutional Court. Judgment of March 26, 2019 (BOE of April 25, 2019)

The Supreme Court rendered a judgment in 2016 holding that the method for determining the percentage shares of energy assistance relief was precluded by the EU directive on the electricity industry, and therefore set it aside. It based its judgment on earlier case law from the Court of Justice of the European Union (CJEU) for similar cases.

The tax authorities appealed against this judgment because they considered that the Supreme Court should have submitted a reference for a preliminary ruling to the CJEU for the CJEU to decide whether Spanish law was precluded by EU law. In short, according to the tax authorities, the Supreme Court had incorrectly applied the “clear act” theory (according to which it is not necessary to submit a request for a preliminary ruling if the CJEU has already rendered its conclusion on a similar case to the one being examined).

The Constitutional Court set aside the appealed judgment after deciding that, in this case, the “clear act” did not apply and concluding that the Supreme Court’s actions had breached the right to due process, because it decided not to apply domestic law without obtaining the CJEU’s opinion. There was a dissenting opinion to the judgment in which a judge questioned whether the Constitutional Court should enter into examining the similarity between cases decided by the CJEU and that submitted to the Supreme Court (on energy assistance relief) to assess whether it is a case of a “clear act”, because it involves an ordinary law issue.

Penalty procedure

Liability for collaborating with a tax infringement cannot be shifted and a serious penalty imposed for the same facts

National Appellate Court. Judgment of March 06, 2019

In the examined case, a false invoice had been issued by a taxable person. The auditors shifted liability for the penalty imposed on the taxable person to the person who allegedly cooperated with him to issue the invoice and at the same imposed a penalty on the liable party. In other words a penalty proceeding was carried out alongside the shifting of liability in another proceeding, both against the liable person.

The National Appellate Court reiterated in this judgment the interpretation made in earlier decisions and concluded that liability for cooperating with a tax infringement cannot be shifted while at the same time imposing on that person a serious penalty for the same facts, consisting also in cooperating with the same infringement.

There are currently two decisions admitting appeals on this same issue at the Supreme Court. Namely, the decisions of February 21, 2019 (appeal 7714/2018) and June 11, 2018 (appeal 1569/2018).

Procedimiento de gestión

La liquidación provisional acordada en un procedimiento iniciado mediante declaración tiene efectos preclusivos

Tribunal Supremo. Sentencia de 10 de abril de 2019

El Tribunal Supremo analiza en esta sentencia cuáles son los efectos de las liquidaciones emitidas en los procedimientos de gestión tributaria iniciados mediante declaración. En concreto, en el caso revisado, la liquidación administrativa reconocía la aplicación de un beneficio fiscal.

Afirma el tribunal que, una vez reconocido el derecho a un determinado beneficio en una liquidación administrativa, ese beneficio no se puede revisar posteriormente por los órganos de inspección. Es decir, si el órgano de gestión concede el beneficio, se debe entender que ha revisado el cumplimiento de los requisitos que la ley establece para el disfrute de ese beneficio.

Solo cuando en el procedimiento posterior de inspección se descubran nuevos hechos o circunstancias que resulten de actuaciones distintas de las realizadas y especificadas en la liquidación provisional, podrá la inspección modificar las conclusiones del procedimiento de gestión.

Procedimiento de revisión

Es necesario plantear cuestión prejudicial antes de decidir que el derecho interno no es aplicable

Tribunal Constitucional. Sentencia de 26 de marzo de 2019 (BOE de 25 de abril de 2019)

El Tribunal Supremo dictó en 2016 una sentencia por la que declaró que la metodología para la fijación de los porcentajes de reparto de la financiación del bono social eléctrico era contraria a la directiva de la Unión Europea reguladora de este sector, por lo que procedía su inaplicación. Para ello se basaba en jurisprudencia previa del Tribunal de Justicia de la Unión Europea (TJUE) para supuestos similares.

La Administración recurrió esta sentencia porque entendía que el Tribunal Supremo debería haber planteado cuestión prejudicial ante el TJUE para que fuera este el que resolviera si la norma española era contraria al derecho de la Unión Europea. En definitiva, según la Administración, el Tribunal Supremo había aplicado erróneamente la doctrina del “acto aclarado” (según la cual no es necesario plantear cuestión prejudicial cuando el TJUE ya se ha pronunciado sobre un supuesto análogo al que se está analizando).

El Tribunal Constitucional anula la sentencia recurrida al entender que, en este caso, no procedía aplicar la doctrina del “acto aclarado” y concluye que la actuación del Tribunal Supremo supone una vulneración del derecho a un proceso con todas las garantías, porque decidió no aplicar el derecho interno sin recabar la opinión del TJUE. La sentencia cuenta con un voto particular en el que el magistrado cuestiona que el Tribunal Constitucional deba entrar a valorar la similitud entre los asuntos resueltos por el TJUE y el planteado ante el Tribunal Supremo (sobre el bono social eléctrico) para valorar si se trata de un “acto aclarado”, porque se trata de un problema de legalidad ordinaria.

Procedimiento sancionador

No se puede derivar responsabilidad por colaborar en una infracción tributaria y a la vez imponer sanción grave por los mismos hechos

Audiencia Nacional. Sentencia de 6 de marzo de 2019

En el caso analizado, se había emitido una factura falsa por un sujeto pasivo. La inspección derivó la responsabilidad de la sanción exigida al sujeto a quien supuestamente colaboró con él en la emisión de la factura y, al mismo tiempo, sancionó al responsable. Es decir, se simultaneó un expediente sancionador con la derivación de responsabilidad de otro expediente sancionador, ambos frente a la persona del responsable.

La Audiencia Nacional reitera en esta sentencia el criterio establecido en pronunciamientos anteriores y concluye que no es procedente derivar en una persona la responsabilidad por colaborar en la realización de una infracción tributaria y, a su vez, imponer a esa persona una sanción grave por los mismos hechos, consistentes también en la colaboración en la misma infracción.

En la actualidad hay dos autos de admisión en el Tribunal Supremo en los que se plantea esta misma cuestión. Se trata de los autos de 21 de febrero de 2019 (recurso 7714/2018) y 11 de julio de 2018 (recurso1569/2018).