Tax Newsletter - October 2023

A non-proportional spin-off must benefit from the tax neutrality rules, even if the spun-off assets do not constitute lines of business

Castilla y León High Court has recalled that the European Commission has commenced penalty proceedings against Spain for requiring that in non-proportional spinoffs the spun-off assets must constitute lines of business. According to the court, nor is it necessary to wait for that proceeding to end to conclude that this requirement goes against the directive.

The right to amend the taxable amount for VAT purposes is not forfeited due to insolvency proceedings on the debtor, even if it is exercised outside the time limit, whereas it is forfeited in debt remissions

The National Appellate Court has held that the right to amend the taxable amount is not forfeited due to insolvency proceedings on the debtor, even if the procedural requirements are fulfilled outside the time limit, because otherwise the neutrality of VAT would not be respected. Whereas it has denied the right to amend the taxable amount where, under an out-of-court agreement, the price agreed with the customer is reduced after the transaction has been performed, because this debt remission scenario is not set out in the law.

Tax auditors cannot copy the data from a personal electronic device without having court authorization

According to the Supreme Court, access can only be gained to a taxpayer’s computer if prior court authorization has been granted. In these cases, the applicable rules are not those on the entry and search of a constitutionally protected home, but rather involve the constitutional rights to personal and family privacy, secrecy of communications and data protection.

The tax authorities have an obligation to expressly declare the statute-barring of a tax management procedure

Although the statute-barring of a management procedure takes places by operation of the law after the maximum time period for the procedure has run, it must be expressly declared, and without that declaration, according to the Supreme Court, an audit cannot be commenced on the same items.

An assessment made without considering the taxpayer’s submissions is void

The Supreme Court has underlined the importance of the submissions periods (including the right-to-be-heard period before the notices of the auditors’ assessments are issued) to protect the taxpayer's right of defense. Therefore, an assessment issued without taking those submissions into account is not valid.

The reduction allowed by the Madrid autonomous community for gifts is applicable, even if recorded in the presence of a foreign notary

Madrid TEAR has concluded that documentation recording a gift formalized in the presence of a foreign notary has the value of a public document for the purposes of the 99% reduction to the tax liability, if the notarial legislation in the country concerned is fulfilled.

Transfers of shares in photovoltaic companies which have not commenced the construction phase can benefit from the exemption in article 21 of the Corporate Income Tax Law

The DGT has confirmed that the exemption applies to the transfer of shares in subsidiaries of an entity engaged in the installation of photovoltaic solar panels, even if when the sale takes place the subsidiaries have only performed preliminary tasks (such as negotiating lease or surface rights agreements, or identifying and managing the permits and licenses needed for construction) using group employees. According to the DGT, those subsidiaries cannot be classed as holding companies for the purposes of the exemption.

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