Tax Newsletter - January 2017

01 / 31 / 2017

January newsletter prepared by professionals from the Tax Department.

1. Judments

1 Corporate income tax.- Deduction of “goodwill” (Court of Justice of the European Union. Judgment of 21 December 2016, Joined Cases C-20/15 P and C-21/15 P)
2 Corporate income tax.- The freedom of establishment is hindered by a rule which denies an exemption if the interest is paid by a nonresident subsidiary (Court of Justice of the European Union. Judgment of 21 December 2016, Case C-593/14)
3 Corporate income tax.- Brazilian juros (net equity payments) give entitlement to claim the exemption for avoiding international double taxation (Supreme Court. Judgment of December 15, 2016)
4 Corporate income tax.- A penalty may be imposed for incorrect application of the special tax neutrality regime (Supreme Court. Judgment of December 13, 2016)
5 Corporate income tax.- The existence of an employee and premises without a minimum workload does not determine the existence of economic activity (Supreme Court. Judgment of December 7, 2016)
6 Personal income tax.- Tax legislation resulting in an advantage according to whether a person has their tax residence in a member state or whether they contribute their activity to that member state is contrary to EU law (Court of Justice of the European Union. Judgment of December 21, 2016, Case C-503/14)
7 Personal income tax.- If spouses live in separate homes, each one may claim a tax credit for their residence (Madrid High Court. Judgment of December 21, 2016)
8 Inheritance and gift tax.- The correcting multipliers must be applied even if the heir’s preexisting equity is negative (Supreme Court. Judgment of November 23, 2016)
9 Audit procedure.- A standard applied in relation to a tax must be maintained for other taxes related to the same transaction (National Appellate Court. Judgment of October 13, 2016)
10 Collection procedure.- Calculation of late-payment interest when discrimination contrary to EU Law has been upheld (National Appellate Court. Judgment of October 28, 2016)

2. Decisions and Rulings

1 Corporate income tax.- The transfer of shares of the beneficiary company in a partial spinoff to the other shareholders or the entity itself affects the proportionality of the spinoff (Directorate-General for Taxes. Ruling V5045-16, of November 21, 2016)
2 Corporate income tax.- A number of issues concerning the capitalization reserve (Directorate-General for Taxes. Rulings V4956-16 and V4962-16, of November 15, 2016)
3 Corporate income tax.- Order in which tax credits must be applied (Directorate General for Taxes. Ruling V4765-16, of November 10, 2016)
4 Corporate income tax.- Application of the most favored national clause to royalties from Brazil (Directorate General for Taxes. Ruling V4699-16, of November 8, 2016)
5 Personal income tax and corporate income tax.- transfer of funds by a publicity rights company to the athlete following a tax audit (Directorate General for Taxes. Ruling V4779-16, of November 10, 2016)
6 VAT.- The lease of a residential property to a legal entity is exempt if the lease agreement contains precise specification of the individual who will occupy the residential property (Central Economic-Administrative Tribunal. Decisions nos 03856/2013 and 03857/2013, of December 15, 2016)
7 Wealth tax.- The performance of management and executive activities at an operating company may give entitlement to apply the exemption at the holding company (Directorate General for Taxes. Ruling V4970-16, of November 1, 2016) 8 Application of taxes.- The DGT’s rulings are binding for the autonomous communities in relation to devolved taxes and the tax authorities are required to explain the rationale for applying the DGT’s rulings to taxpayers other than the requesting parties (Central Economic-Administrative Tribunal. Decisions of November 24 and December 15, 2016)
9 Collection procedure.- The injunctive remedies may not exceed individually the amount of the various decisions on joint and several liability (Central Economic-Administrative Tribunal. Decision of December 20, 2016)
10 Collection procedure.- For import VAT refunds late-payment interest is calculated until the date of the refund decision (Central Economic-Administrative Tribunal. Decision of December 15, 2016)
11 Penalty procedure.- For the infringement defined in paragraph two of article 195.1 of the General Taxation Law (LGT) it is necessary for the party with tax obligations to have filed a return (Central Economic-Administrative Tribunal. Decision of November 24, 2016)
12 Review procedure.- A judgment by a Portuguese court is an essentially necessary document for the purposes of the special appeal for judicial review of final decisions (Central Economic-Administrative Tribunal. Decision of November 24, 2016)
13 Enforcement procedure.- Assessments rendered in the enforcement of a decision reversing an earlier assessment are null and void if a new procedure is not commenced (Central Economic-Administrative Tribunal. Decisions of November 24 and December 15 2016)

3. Legislation

1 Collar clauses: personal income tax on the refunds
2 Single administrative document (SAD): preparation instructions
3 ”Country by Country Report”
4 Calendar of non-business days within the scope of the General State Administration for 2017
5 Annual effective interest rate for the first calendar quarter of 2017 for the purposes of classifying certain financial assets for tax purposes

4. Other

1 Information notice from the Spanish Tax Agency (AEAT) on the deferred payments for self-employed workers and Direction from the Collection Department on the management of deferred and split payments following Royal Decree-Law 3/2016
2 Reverse charge mechanism for VAT. Proposal for an amendment to EU VAT legislation