Tax Newsletter - December 2017

1. Judgments

• 1 Corporate income tax. Gains arising on transfer of permanent establishment to nonresident company are not taxable if not required in an equivalent national transaction (Court of Justice of the European Union. Judgment of November 23, 2017, case C-292/16)

• 2 Personal income tax.- Spending longer than 183 days outside Spain by reason of a fellowship is not allowed to be treated as sporadic absence (Supreme Court. Three judgments of November 28, 2017) 

• 3 Inheritance and gift tax.- Personal items do not have to be reported if there is no permanent residence (Valencia high court. Judgment of June 28, 2017) 

• 4 VAT.- Right to reduce taxable amount for VAT purposes in the event of nonpayment due to insolvency order (Court of Justice of the European Union. Judgment of November 23, 2017 in case C-246/16) 

• 5 VAT.- Exemption may be denied if there are abusive practices, even if the law does not expressly give the power to do so (Court of Justice of the European Union. Judgment of November 22, 2017 in case C-251/16) 

• 6 VAT.- No exemption for supply of building if “first occupation” has not taken place (Court of Justice of the European Union. Judgment of November 16, 2017, in case C-308/16) 

• 7 VAT.- Detailed rules on indication of address of issuer of invoice cannot be determining condition for deduction of VAT (Court of Justice of the European Union. Judgment of November 15, 2017 in cases C-374/16 and C-375/16)

• 8 VAT.- Taxable amount must take into account estimate of contingent price (Supreme Court. Judgment of October 31, 2017) 

• 9 Tax procedure.- Genuine respect for right of defense means real possibility to access administrative case file (Court of Justice of the European Union. Judgment of November 9, 2017, case C-298/16)

• 10 Audit procedure.- Absence of reasoning in decision to extend time for an audit may be pleaded at any point in the procedure (Supreme Court. Judgment of October 5, 2017)

• 11 Review procedure.- Evidence is allowed to be produced in the judicial review jurisdiction (Madrid High Court. Judgment of September 14, 2017)

2. Judgments, decisions and rulings

• 1 Corporate income tax.- Late-payment interest arising from audits are not treated a tax deductible expense in the years the Revised Corporate Income Tax Law was in force (Central Economic-Administrative Tribunal. Decision of December 4, 2017)

• 2 Corporate income tax.- The absorbed company having unused net operating losses does not prevent the neutral regime from applying (Directorate General for Taxes. Rulings V2435-17, of October 2, 2017; V2568-17, of October 10, 2017; V2618-17, of October 13, 2017; V2635-17, of October 16, 2017; V-2710-17, of October 24, 2017)

• 3 Corporate income tax.- The merger of two US companies forming part of a group and holding investments in Spanish companies does not give rise to a capital gain in Spain (Directorate General for Taxes. Ruling V2674-17, of October 20, 2017)

• 4 Corporate income tax.- Capital increase is not necessary in merger between companies whose shareholders are individuals (Directorate General for Taxes. Ruling V2444-17, of October 2, 2017)

• 5 Corporate income tax.- Requirements for the leasing of real property to be deemed a line of business for the purposes of neutrality tax regime (Directorate General for Taxes. Ruling V2441-17, of October 2, 2017; Ruling V2445-17, of October 2, 2017; Ruling V2636-17, of October 16, 2017)

• 6 Corporate income tax.- The cost of containers and packaging is not included in calculation of tax credit for publicity and advertising expenses related to support programs for events of exceptional public interest (Central Economic-Administrative Tribunal. Decision of November 2, 2017)

• 7 Corporate income tax / Value added tax.- Taxation of assignment for no consideration of intangible asset between enterprises belonging to same consolidated tax group (Directorate General for Taxes. Ruling V2439-17, of October 2, 2017)

• 8 Personal income tax.- The exemption for reinvestment of lifelong annuities may not be claimed on a capital gain obtained as a result of deferred collection of the price after the end of 6 months from the transfer (Directorate General for Taxes. Ruling V2712-17, of October 24, 2017)

• 9 Personal income tax.- The 30% reduction cannot be applied to a hiring bonus paid to worker joining a company on condition he stays for 24 months (Directorate General for Taxes. Ruling V2661-17, of October 18, 2017)

• 10 IRPF.- The expenses arising from the acquisition of a lottery ticket for clients are deductible subject to a limit amounting to 1% of net revenues (Directorate General for Taxes. Ruling V2490-17, of October 4, 2017)

• 11 Wealth tax.- Shares of nonresident enterprise owned by nonresident and held at Spanish bank are subject to wealth tax (Directorate General for Taxes. Ruling V2380-17, of September 19, 2017)

• 12 VAT.- The taxable value of vehicles for personal income tax purposes may be used to determine the tax to be charged and paid for VAT purposes (Central Economic-Administrative Tribunal. Two decisions rendered on November 22, 2017)

• 13 Real estate tax.- The procedure for recalculating cadastral value tolls statute of limitations period for the right to determine the tax debt (Directorate General for Taxes. Rulings V0035-17, of October 10, 2017; V0036-17, of October 10, 2017 and V2722-17, of October 24, 2017)

• 14 Tax on increase in urban land value.- Taxation of the vesting of ownership as a result of death of the usufruct right holder (Directorate General for Taxes. Ruling V2431-17, of September 28, 2017)

• 15 Administrative procedure.- The expiry of the previous procedure and the commencement of another new procedure may be notified in the same administrative notice, which must specify how to challenge each decision (Central Economic-Administrative Tribunal. Decision of November 16, 2017)

• 16 Administrative procedure.- The administrative assessment does not toll the statute of limitations period for the right to apply for a refund of incorrect revenues (Central Economic-Administrative Tribunal. Decision of November 2, 2017)

• 17 Administrative procedure.- General requests for information must be reasoned and adopted using procedures determined in the law (Central Economic-Administrative Tribunal. Decision of November 2, 2017)

• 18 Tax procedure.- Registration on the enabled electronic address system is held until the company is extinguished (Central Economic-Administrative Tribunal. Decision of November 2, 2017)

• 19 Collection procedures.- Enforced collection interlocutory orders may be rendered for debts not paid in the voluntary period of a debtor in an insolvency proceeding, without first being classified as post-insolvency order claims (Central Economic-Administrative Tribunal. Two decisions rendered on November 30, 2017)

• 20 Review procedure.- It is allowed to produce to regional economic-administrative tribunals documents and items of evidence that had not been produced earlier, if no audit and investigation activities by the tribunal are necessary (Central Economic-Administrative Tribunal. Decision of November 2, 2017)

3. Legislation

4. Miscellaneous

• 1 List of non-cooperative tax jurisdictions

• 2 Favorable report by the Council of State on the rendering null and void ab initio of an assessment and a penalty for adversely affecting rights and freedoms protected by the Constitution