Tax Newsletter - November 2020

Surcharges cannot be imposed if the supplementary returns were filed directly or indirectly as a result of previous administrative tax assessments

Central Economic-Administrative Tribunal (TEAC) changes tack over surcharges on voluntary late filings of returns. This is a topical issue considering that the bill on measures to prevent and fight against tax fraud provides that surcharges will not be imposed on anyone regularizing their tax affairs.

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Judgments

• Personal income tax.- Surrendered pension plan can be lowered by contributions that did not reduce net taxable income
• Personal income tax.- Departure due to pre-retirement agreed within a collective layoff procedure qualifies for relief
• Personal income tax.- The valuation method for income in kind in respect of vehicles supplied for use by employees cannot change from one audit to another without giving reasons
• Transfer and Stamp tax.- The transfer of a mortgage is taxed on the actual mortgage collateral, meaning the outstanding principal
• Tax on increase in urban land value.- A property's book value cannot be rejected as a means of evidencing, at least on a prima facie basis, the absence of an increase in value of the land
• Principles of effectiveness and equivalence.- The time limit set for applying for a refund of taxes in breach of EU law cannot be shorter than that determined for similar refunds based on an infringement of domestic law
• Tax options.- It should be allowed to correct an elected option if the circumstances in which the election was made have changed, unless the taxpayer’s conduct warrant a penalty
• Management procedures.- The tax authorities cannot audit the same tax obligation twice, even if in the first audit they did not expressly give their view on some of the audited elements
• Audit procedure.- There is a single statute of limitations for audits, even if its scope is extended after work commenced
• Audit procedure.- If a final tax assessment is in breach of the law, the tax authorities must withdraw it
• Review and collection procedures.- A decision partially upholding the claim stops interest on stayed debt obligations accruing
• Collection procedure.- A breach of the duty to report to the collection authority the filing of an application for judicial review does not trigger commencement of the enforcement period

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Decisions

• Corporate income tax.- The offset of tax losses in a tax group has a double limit where the losses were generated before the entity joined the group
• Corporate Income Tax.- It is contrary to EU law to establish a different double taxation tax credit mechanism depending on the residence of the paying entity
• Inheritance and gift tax.- Household items cannot include any unrelated assets
• Administrative procedure.- In a decision on an appeal for reconsideration tax authorities cannot correct errors in the reasons given in the assessment decision
• Shifting of liability.- In cases involving gifts made in fraud of creditors, the giver cannot be held liable if it is not proven that they acted with the intention of preventing steps by the tax authorities

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Requests for resolution

• Corporate Income Tax.- The accounting and tax treatment of provisions for tax contingencies has been revised
• Corporate income tax.- A line of business exists, even if the entity performing the spin-off keeps some of the employees and assets needed for the spun-off business
• Corporate income tax.- The neutrality regime does not apply to non-monetary contributions of shares in resident entities to a foreign company
• Personal income tax, corporate income tax and transfer and stamp tax.- The DGT analyzes the tax effects of the acquisition of own shares for redemption in exchange for a temporary pension
• Personal income tax.- The medical retainer fee offered by a clinic and giving access to the medical services it provides is not deductible as a medical insurance premium
• Wealth tax.- A cash contribution to a Spanish silent investment agreement (contrato de cuentas en participación) is reported at its market value on the date the tax becomes payable

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Legislation

• Romania-Spain tax treaty published
• Cape Verde-Spain tax treaty published
• The contents and designs of the record books kept on the information sharing system (ISS) have been adapted
• VAT rates on certain medical supplies and for face masks have been reduced and certain corporate income tax credits have been amended
• Azerbaijan-Spain tax treaty published

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