Tax Newsletter - January 2021

Self-assessments may be corrected outside the voluntary filing period to claim tax benefits

According to various courts, claiming or not claiming tax benefits is a right not an electable tax option, so taxpayers are allowed to correct their self-assessments even after the end of the filing period for the tax concerned.

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Judgments

• Freedom of establishment.- EU law precludes national legislation that does not allow a company in a member state to deduct interest payments made to a related company in another member state, on the basis of a tax benefit that would not have been assessed if both companies had been established in the first state
• Personal income tax.- The provision of services to a company after the employment relationship has ended does not automatically mean that there has not been an actual severing of ties
• Nonresident income tax.- Taxation in Spain of dividends received by pension funds resident in third countries violates EU law
• Inheritance and gift tax.- For donations made by bank transfer, the right to assess becomes statute bared four years after the end of the filing period
• VAT.- Making vehicles available to employees in exchange for no payment or without the employees giving up part of their salaries or other benefits is not a transaction for consideration 
• Transfer and stamp tax.- Termination of a condominium on an indivisible asset is subject to stamp tax not transfer tax (as a transfer for consideration), even if co-ownership of other assets remains unchanged
• Transfer and stamp tax.- Tax authorities have burden of proving that a property’s reported value does not match its actual value 
• Transfer and stamp tax.- Recording of a transaction with a condition precedent is subject to stamp tax
• Tax-related liability.- Payment by one jointly and severally liable party releases the others
• Tax-related liability.- Contractor or subcontractor’s liability is restricted to debts related to services provided by the subcontracted entity

Decisions

• Corporate income tax.- Deductibility of remuneration as a result of audit work on the recipient must be reported via an “accounting error”
• Personal income tax.- Late-payment interest arising from adjustment in respect of a supervening breach of requirements for RIC reserve does not give rise to new late-payment interest
• Nonresident income tax.- Reductions allowed in Personal Income Tax Law for residential rental income do not apply for same types of income obtained by nonresidents
• VAT.- Eligibility for reduced rate allowed for renovations of residential properties is determined by reference to predominant use of the building 
• Inheritance and gift tax.- In inheritances organized as an Aragonese executorship, no prepayment self-assessments are required on the death of the decedent
• Tax on fluorinated gases.- Regulations on Fluorinated Gases and the Greenhouse Effect do not prevent the specific tax being charged
• Management procedure.- An expense cannot be adjusted in a limited review because accounting records cannot be examined in these procedures
• Audit procedure.- A provisional assessment does not toll statute of limitations for right to assess 
• Penalty procedure.- It is a tax infringement to issue forged invoices to obtain subsidies, even if they do not cause a loss for the finance authority

Requests for resolution

• Corporate income tax.- Tax treatment clarified of purchase of treasury shares under put option granted to shareholders
• Corporate income tax.- DGT makes determination on eligibility for tax neutrality regime of a downstream merger and its effect on limit for deduction of finance costs on debts incurred to purchase shares
• Corporate income tax.- Patent-box reduction for licensing know-how has not been claimable since 2018, even if license agreements were signed earlier
• Corporate income tax.- Share based incentives paid in cash are deductible where employees generate the right to receive them
• Personal income tax.- Self-employed individuals cannot deduct utility costs at principal residences in which they are working due to COVID-19
• Wealth tax.- An employee hired full time, but with multiple employment, is not sufficient for leasing company to claim relief for family businesses
• Inheritance and gift tax.- Taxation of inheritance according to the Spain-Sweden tax treaty is clarified
• Tax on economic activities and waste collection fees.- The homes of employees working from home are not employer’s premises
• Local authority fees.- The waste collection fee may be divided among co-owners of a building, unless it is a non-tax levy

Legislation

• Approval of the Annual Tax and Customs Control Plan for 2021
• Filing period for January returns paid by direct debit extended due to storm Filomena
• Brexit.- UK traders allowed to recover VAT incurred in Spain

Miscellaneous

• Filing dates pushed back for first self-assessments of tax on financial transactions and digital services tax