Tax Newsletter – April 2024

A taxpayer’s residence cannot be determined using prima facie evidence from prior years

According to the National Appellate Court, tax residence must be analyzed year to year, because the circumstances may change from one year to the next. Therefore, a taxpayer may not be deemed resident in a territory in a given period based on evidence from other periods.

The Spanish Tax Agency cannot arbitrarily decide when to make notifications electronically or in person

Certain taxpayers are obliged to receive their notifications electronically. However, the National Appellate Court considers that if the tax authorities make their communications to a taxpayer electronically or on paper indistinctly, it may cause confusion, and this arbitrariness cannot benefit them when the taxpayer does not receive notifications on time.

A transaction that took place in a statute-barred year may be characterized as a sham where it has effects in non-statute barred years

The Supreme Court ruled that there is no statute bar for the tax authorities’ right to review transactions carried out in statute-barred years if they have an impact on the tax debt of non-statute barred years, since the amendment of article 115 of the General Tax Law took effect in 2015.

The tax authorities can use their right to two shots where the first assessment has been rendered void on the ground of substantive defects

As analyzed in detail in our Garrigues Tax Blog entry of May 7, 2024, the Supreme Court has confirmed that the tax authorities may initiate a new process for issuing an assessment on the same fact already reviewed, when the previous assessment has been rendered void on substantive grounds, for which the only restrictions are the statute bar and a prohibition of reformatio in peius (a change for the worse) and of repetition of the same error.

Penalties may be examined in a cassation appeal

According to the Supreme Court, in the cases of serious administrative penalties, the second instance of review must be ensured. If, as in the case analyzed, the administrative penalty was based on facts ruled out in a criminal proceeding, that penalty may be rendered void in a cassation appeal.

Termination of the employment relationship and the start of a new relationship as director do not result in exclusion from the inbound expatriates regime

The Directorate-General of Taxes confirmed that the inbound expatriates regime is not forfeited even though the taxpayer has come to Spain for an employment contract and, once it is terminated and after a short period, they become director of an entity (a different case which permits accessing this regime).

For further details on this month’s judgments, decisions, resolutions and legislation, SEE THE WHOLE NEWSLETTER HERE.