Pro-taxpayer DGT resolutions are binding for tax application bodies

España - 05 / 10 / 2021

TEAC notes that the tax authorities have to observe the principles provided given in the DGT's resolutions, meaning that any assessments that depart from those principles are null and void, without any need to examine the facts of the case.

Under article 89.1 of the General Taxation Law (LGT), Directorate General for Taxes (DGT) replies to written requests for resolutions are binding for tax authority bodies and entities responsible for the application of taxes.

It is not uncommon, however, for these bodies to issue assessments that overlook the DGT's principles provided in its resolutions, in cases that are identical or similar to those analyzed in those resolutions.

This occurred in the case examined by TEAC in its March 23, 2021 decision. Namely, as part of a limited review procedure on a taxpayer, the tax authorities analyzed whether the exemption for absolute permanent disability or comprehensive disability could be claimed in relation to a non-contributory disability pension. They concluded that the exemption was not allowed, even though the DGT had confirmed in a number of previous resolutions that the exemption was indeed claimable in these circumstances.

TEAC therefore concluded that the assessment was null and void. According to the court:

The tax authorities cannot adjust a taxpayer’s position where the DGT has issued binding resolutions that support the content of the taxpayer’s self-assessment.
This is automatically the case and it is not even necessary to examine the facts of the case. According to the court, were it to undertake such an examination, it would be opening the door for tax application bodies to potentially disregard the binding nature of the DGT’s resolutions.

In short, TEAC considers that it cannot open up an avenue (in this case, through a special appeal to a higher administrative body) for those bodies that are entitled to file such appeals to attempt to dispute any of the DGT's principles that they disagree with and that favor taxpayers. Instead, these principles are binding on those bodies and generate for taxpayers genuine personal rights to expect those principles to be applied to them.