Tax Newsletter - December 2018 | Decisions and Rulings

Requests for information

The tax relevance of a request for information must be expressly explained when it does not arise clearly from the procedure

Central Economic-Administrative Tribunal. Decision of December 4, 2018

The information sought in requests for information must have tax relevance. This relevance is linked to the requirement to give reasons. TEAC concluded therefore that where the tax relevance of a request “does not ostensibly appear to be from the procedure”, an express explanation must appear in the request.

In the specific case examined by TEAC, the tax authorities had requested information on “the specific medical service that has been provided to a given client or the identification of the specific persons who provided the identified service”. TEAC concluded that with that brief request for information, the tax relevance “does not ostensibly appear to be from the procedure”, in that the requested data do not show any usefulness or financial content for the tax authorities.

Management procedure

An audit of reported values may be carried out in a limited review procedure

Central Economic-Administrative Tribunal. Decision of December 10, 2018

TEAC has set as an official interpretation that a limited review is a suitable procedure for carrying out an audit of reported values (both where this is its only purpose, and where the audit of reported values is a step within a broader audit of the taxable event), provided that the responsible authority considers that the procedure could give rise to an additional issue that does not simply involve auditing reported values.

TEAC's conclusion is based on the premise that all the guarantees offered by an audit of reported values, as an independent procedure, are present in a limited review and, in particular, the interested party's right to apply for an expert appraisal made at the taxpayer’s instance.

Review procedure

The absence of standing to bring challenges for a taxable person in a procedure is remedied if the assessments are notified with information on the routes for challenges 

Central Economic-Administrative Tribunal. Decision of December 04, 2018

A partial audit was conducted on a company. The assessments determined in the audit were notified to both the company and its shareholders. In the notification of the assessments to the shareholders it was expressly mentioned that the assessments related to the company but that, since the company had not appeared in the procedure, the assessments had been notified to the shareholders also. The notifications included the relevant “challenge footnote”.

Both company and shareholders all filed economic-administrative claims against the assessments.

In relation to their standing to bring claims:

TEAC did not question the standing to bring challenges of the company, which had not been dissolved and liquidated when the audit work was performed, and for that reason the work was considered to be carried out for formal purposes with the company and the assessments were issued in the company's own name.

1. In relation to the shareholders, TEAC affirmed, first, that precisely for the foregoing reasons, they did not have standing to bring claims.
2. However, the court considered that the fact that the assessments were notified to them including a “challenge footnote” entails an act by the tax authorities themselves which cannot be ignored or contradicted by the reviewing authority, because this notification has created a lawful expectation for the claimant. This transpires, among others, from Supreme Court Judgment of November 12, 2007.

Review procedure

A document prepared at the instance of a party does not have material value for the purposes of a special appeal for judicial review of final decisions

Central Economic-Administrative Tribunal. Decision of December 10, 2018

An individual applied for the division of a property. Malaga Cadaster Office rejected the application due to finding inconsistencies in a produced deed. The decision rendered by the authorities became final. Later, the individual filed a special appeal for judicial review of final decisions attaching a deed for correction of the one that was originally produced.

TEAC disallowed the appeal by arguing that a special appeal for judicial review of final decisions cannot be founded on the appearance of documents with material value when these have been prepared at the instance of the appellant before lodging the appeal (which was the case of the corrected deed). Those documents appeared in a contrived or sought way, not spontaneously as required by the Supreme Court's case law. In this respect, TEAC recalled that this special route for judicial review of final decisions is not provided to compensate for the insufficient evidence that the appellant provided to the managing authority.