Tax Newsletter - July-September 2020

The concepts of “classification”, “conflict in the application of tax provisions” and “simulation” are not interchangeable 

Supreme Court concludes that all these concepts must be used for their intended purposes when they were created, observing the procedures specifically defined for each. 

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Judgments

• International taxation.- The commentaries accompanying the OECD Model Tax Convention cannot be applied retroactively
• Corporate income tax.- Late-filing of self-assessment does not prevent offset of net operating losses
• Personal income tax.- Senior managers are entitled to apply the exemption in cases of dismissal as well as for resignation. They do not forfeit their right to this exemption, even if they become members of the company's managing body after their dismissal
• Personal income tax.- A dismissal cannot be reclassified by mutual agreement without solid proof
• Inheritance and transfer and stamp tax.- The attribution to a spouse of property under absolute ownership in respect of payment for a usufruct right in a testate succession implies an exchange subject to transfer and stamp tax (Catalonia)
• Inheritance and gift tax.- The rectification of a return filed in voluntary period does not interrupt the statute of limitations if tax authorities fail to review that correction within time limit
• Cadastral valuations.- Taxes calculated by reference to value in the cadaster that the tax authorities have acknowledged to be incorrect must be refunde
• Expiry of the statute of limitations and 'actio nata'.- Where an incorrect revenue is found as a result of an adjustment made to another taxpayer, the right to apply for a refund arises when the taxpayer has notice of that adjustment
• Collection procedure.- Denial by silence does not allow the tax authorities to initiate enforced collection proceedings
• Audit procedure.- If certain elements have been audited in a management procedure they cannot be audited again by the tax authorities in a later procedure
• Penalty procedure.- The 25% reduction is allowed for penalties imposed to replace others that have been voided
• Penalty procedure.- A penalty lapses if the infringer dies before it becomes final
• Review procedure.- A final and consented assessment may be held null and void

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Decisions

• Corporate income tax.- Directors’ compensation that goes against corporate law does not qualify for deduction
• Corporate income tax.- Withholding tax made on unpaid rents  cannot be deducted
• Personal income tax.- The penalty for failing to report residential rental income must be calculated by reference to the reduction applicable to that rent
• Value added tax.- If amounts of VAT for offset were generated in a year held statute-barred, their offset cannot be denied in a later year 
• Penalty procedure.- Penalties for not paying a personal income tax debt must be calculated by taking into account the withholding tax sought from the payer

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Resolutions

• Corporate income tax.- A company created outside Spain whose only shareholder and director is resident in Spain may be treated as tax resident in Spain
• Corporate income tax.- There is no obligation to withhold tax on a capital increase out of reserves or additional paid-in capital
• Corporate income tax and nonresident income tax.- Traveling and accommodation costs of a nonresident director are not subject to withholding tax and are deductible under the standard rules
• Corporate income tax.- Residential properties that can be used under a usufruct right or lease are not eligible for the special property leasing regime
• Personal income tax.- The number of days spent in Spain during the state of emergency counts for the purpose of the 183 day limit determining tax residence
• Personal income tax.- The existence of a short period of unemployment does not prevent the ability to apply the inbound expatriates regime
• Municipal capital gain.- Irrevocable gifts with effects that are postponed until the giver's death may benefit from the reductions allowed for inheritance

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Legislation

• Zero rated VAT and IGIC has been extended until October 31, 2020 for domestic supplies, imports and intra-Community acquisitions of certain healthcare materials, other tax measures were adopted and these measures were later repealed
• Amendments introduced to the collection management cooperation service provided by credit institutions
• Economic reactivation measures are approved in the fields of transport and housing to confront the impact of COVID-19
• Stamp tax relief introduced for moratoriums on mortgage payments for buildings used for tourism activities
• The Protocol amending the tax treaty signed by Spain and India has been approved
• Phone helpline launched using the cl@ve PIN system for carrying out certain formalities and steps with AEAT
• Publication of the annual equivalent rate for third calendar quarter of 2020, for the purpose of characterizing certain financial assets for tax purposes

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