Tax Newsletter - March 2019 | Decisions

VAT

Where the price agreed with the tax authorities is inclusive of VAT, the excess output VAT must be refunded to the supplier

Central Economic-Administrative Tribunal.  Decision of December 12, 2018

TEAC reviewed an application for a refund of incorrect payments filed by a local council against an incorrect charge (at the standard instead of the reduced rate) by one of its suppliers.

According to the court, the local council is not entitled to a refund of the excess amount charged because the VAT rules relating to the price of government contracts determine that the price of these contracts includes VAT, so the agreed fee cannot be changed (either increased or decreased) as a result of fluctuations in the VAT rate. In other words, public authorities are required to pay the overall price for the contract and the related distribution between taxable amount and tax charge is irrelevant.

In short, it is the supplier that is entitled to a refund of the excess amount charged, due to being the party actually harmed by the error made.

This decision reiterates the interpretation in the decision of July 17, 2014.

Audit procedure

TEAC alters its interpretations on the calculation of certain audit time periods

Central Economic-Administrative Tribunal. Decision of February 19, 2019

TEAC examined, in a recent decision, how certain time periods in the context of an audit must be calculated:

1. The maximum length of audit work: TEAC adapted its interpretation to the Supreme Court's interpretation in its judgment of April 4, 2017 and affirmed that the time period ends on the same date in the month concerned as the date of the notification of the start of the audit. Before this decision, TEAC had argued that the time period ended on the day before the day of the month relating to the start date of the period.
2. Calculation of the time period, after an accepted notice of assessment, for the assessment to be deemed to have occurred: once a month has elapsed from when an accepted notice of assessment is signed, the assessment is deemed issued and notified if a decision by the assessment body has not been notified in that time period (with any of the contents envisaged in article 156.3 of the General Taxation Law). According to TEAC, this one month period is calculated from date to date and is applicable to audits initiated before or after January 1, 2018.
   It must be taken into account that this interpretation is set only to determine when the assessment is deemed issued and notified, and does not clarify how the time periods for appealing against the assessment and payment of the tax debt must be calculated, and therefore, in principle, they must continue to be calculated date to date plus one day.

Economic-administrative procedure

It is mandatory to join economic-administrative claims filed against an assessment and a penalty if failure to join them alters jurisdiction

Central Economic-Administrative Tribunal. Decision of December 12, 2018

A taxpayer was issued an assessment and imposed a penalty. The taxpayer filed an economic-administrative claim with Madrid Regional Economic-Administrative Tribunal (TEAR), whereas, against the penalty, by reason of the amount, it filed an economic-administrative claim with TEAC.

In this context, TEAC recalled that, although the law allows two separate claims to be filed with two different authorities, the joining of those claims, insofar as they relate to an assessment and the associated penalty and that joining them alters the jurisdiction rules, is mandatory

In the specific case brought, Madrid TEAR had already settled the claim relating to the assessment, and therefore the mandatory joining of claims with Madrid TEAR could not be done. Despite this, as a result of the analysis described above, TEAC ruled that the jurisdiction to hear the claim against the penalty lay with Madrid TEAR, and for that reason it decided to forward the proceeding to that tribunal to settle the claim relating to the penalty.

Requests for information

A general request for information on the legal profession as a whole is precluded by the law

Central Economic-Administrative Tribunal. Decisions of February 14, 2019

TEAC has settled two economic-administrative claims filed against two requests for information. In both decisions TEAC took into account the interpretation set by the Supreme Court in a judgment rendered on November 13, 2018 (Tax Newsletter – September 2018), but reached different conclusions in each case, according to the differences between them:

1. In one case, it set aside the request sent to the General Council of the Spanish Legal Profession asking for information regarding the lawyers and court procedural representatives who had taken part in court proceedings in two specific years at any court or tribunal based anywhere in Spain. Among other information, they requested the dates of their participation in the proceedings, the amounts disputed in the lawsuit, and the identities of their clients. TEAC set aside the request because its contents were practically identical to that set aside by the Supreme Court in its judgment.
2. By contrast, it confirmed  a request sent to a specific bar association requesting information relating to the reports or opinions issued by that association in relation to invoices of its members and, only in relation to them, identification of the proceeding in which those invoices had been disputed and the invoices concerned were requested. TEAC held that in this case the request is sufficiently specific and defined and that, additionally, it had tax relevance. It concluded therefore that the interpretation in the discussed supreme court judgment of November 13, 2018 did not apply and the request was valid.