Tax Newsletter - June 2024

A complete adjustment by the tax authorities is required even if it affects statute-barred fiscal years

In relation to the tax authorities’ right to review tax losses in a ten year period, the Supreme Court underlined that when performing this review they must take into account all the consequences that have a determining effect on correct fulfillment of the tax obligation, regardless of whether or not they are favorable to the taxpayer, even if this requires reviewing revenues and expenses (and any other item) from statute-barred years.

Notification of the claim to the insolvency practitioner should not be required for modification of the taxable amount in cases involving insolvency proceedings

In relation to modification of the taxable amount in the event of insolvency proceedings on the debtor, the National Appellate pointed out that the VAT Law does not require the claim to be notified to the insolvency practitioner. For that reason, if the requirements that the law does lay down are met, that modification cannot be denied on the ground of failure to make that notification.

Late-payment interest on refunds made due to Royal Decree-Law 2/2016 being held unconstitutional must be calculated from when the prepayments of the tax were made

The Supreme Court has confirmed that any amounts paid over when making prepayments and based on the rules introduced by Royal Decree-Law 2/2016 (minimum prepayment and higher rates than those envisaged until the entry into force of that decree-law) are incorrect, and therefore the related late-payment interest must be calculated from when those payments were made.

Directors’ compensation for non-executive functions is deductible even if it is not envisaged in the bylaws

TEAC has changed its interpretation by allowing compensation in respect of directorship functions (non-executive functions, in other words) to be deductible even if according to the bylaws directors are not to be compensated for their services, as long as there is proper support and recognition in the accounts, and there is a valuable consideration.

Transfer pricing adjustments require the taxable amount for VAT purposes to be modified if they can be viewed as alterations to the pricing of earlier transactions between the parties

According to the DGT, where transfer pricing adjustments relate to supplies of goods or services made between the parties, the taxable amount for VAT purposes must be modified by making the necessary corrections. 

For further details on this month’s judgments, decisions, resolutions and legislation, SEE THE WHOLE NEWSLETTER HERE.