Tax Newsletter - November 2023

Senior managers’ compensation is deductible, even where they are directors, if it relates to actual services

The Supreme Court has concluded that directors’ compensation cannot be classed as free gifts or as expenses precluded by the law, and that it is not reasonable to consider that they must provide their services for free. If the compensation relates to actual services, it must be deductible.

R&D&I tax credits may be applied, even if they have not been reported on the self-assessment for the period in which they arose

According to the Supreme Court, R&D&I tax credits not reported on the self-assessment for the period in which they arose may be applied without needing to correct that self-assessment, for a maximum period of 18 years. The court confirmed the DGT's interpretation in several decisions, although it did not expressly analyze later resolutions in which the DGT changed its interpretation and concluded that the correction is indeed necessary.

The tax authorities cannot spontaneously send additions to an administrative case file, which also must contain a table of contents providing an organized view

In two new judgments, the Supreme Court has concluded that the period in which the tax authorities have to send the administrative case file is preclusive, and therefore the case file cannot be completed at their discretion after the end of that period if this has not been requested by either the tribunal or the taxpayer. Additionally, the case files must have a suitable table of contents, which can be used to make organized searches for documents.

The deduction of input VAT and the offset of VAT from previous periods are a right for the taxpayer, not an option

TEAC has concluded in two decisions that the deduction of input VAT or the offset of VAT carried over from previous periods are rights for the taxpayer, not options, and therefore can be exercised for a four year period, even by modifying previously reported information.

Receipts may be a valid means of supporting a deductible expense for personal income tax purposes, although they cannot be used to evidence residence in another country

The Catalan High Court has validated the deduction of a lawyer’s expenses to purchase ties, even though they were supported by receipts (especially since proof of the charge to his bank account was provided), due to considering that they are expenses related to his activity. TEAC, by contrast, denied the validity of receipts for meal and taxi expenses in another country outside Spain, as proof of the time spent (and residence) in that country.

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