Spain - Tax Newsletter - October 2017

1. Judgments

• 1 Corporate income tax.- In downstream mergers restriction on subrogation to right to offset NOLs does not apply (National Appellate Court. Judgment of June 1, 2017)
• 2 IVA.- Supplies of services by economic interest groups to members in financial services and insurance industries not exempt (Court of Justice of the European Union. Judgments of September 21, 2017, cases C-326/15, C-605/15 and C-616/15)
• 3 Transfer and stamp tax.- No stamp tax on renewal of call option (Valencia High Court. Judgment of June 7, 2017)
• 4 Catalan tax on supply of electronic communications services.- Held unconstitutional (Constitutional Court. Judgment of July 6, 2017)
• 5 Tax procedure.- Preparing for collection purposes a list containing personal data without obtaining consent is consistent with EU law (Court of Justice of the European Union. Judgment of September 27, 2017, case C-73/16)
• 6 Tax procedure.- Burden of proving absence of notification deficiency lies with tax authorities (National Appellate Court. Judgment of June 22, 2017)
• 7 Tax procedure.- After end of one month period to enforce a decision, proceeding becomes statute-barred (Asturias High Court. Judgment of June 19, 2017)

2. Administrative doctrine

• 1 Corporate income tax.- Not all patentable products automatically benefit from R&D&I tax credit (Central Economic-Administrative Tribunal. Decision of September 11, 2017)
• 2 Corporate income tax.– Tax group’s net revenues do not include net revenues of companies that left the group that year (Directorate General for Taxes. Ruling V2048-17, of July 28, 2017)
• 3 Corporate income tax.– Capital reduction at Mexican company will be taxable at Spanish shareholder according to characterization of the income in Mexico for tax treaty purposes (Directorate General for Taxes. Ruling V1787-17, of July 10, 2017)
• 4 Personal income tax.- Substitution of stock options with a cash payment prevents treatment as multiyear income (Central Economic-Administrative Tribunal. Decision of September 11, 2017)
• 5 Personal income tax.– Indemnification for emotional distress to an employee is exempt (Directorate General for Taxes. Rulings V1906-17, of July 18, 2017 and V1963-17, of July 20, 2017)
• 6 Personal income tax.– Sums paid as rent cannot be subtracted from sale price of a property to calculate capital gain (Directorate General for Taxes. Ruling V1895-17, of July 18, 2017)
• 7 Personal income tax.– Requirements to characterize the lease of real estate by an individual as an “economic activity” (Directorate General for Taxes. Rulings V1764-17 and V1765-17, both of July 7, 2017,and Ruling V1985-17, of July 24, 2017)
• 8 Personal income tax.– Continuity in the regime for incoming expatriates after the employment relationship that gave rise to the assignment has ended (Directorate General for Taxes. Ruling V1739-17, of July 6, 2017)
• 9 Personal income tax.- Taxpayers may be tax resident in a country where they are not liable to tax in respect of their worldwide income (Central Economic-Administrative Tribunal. Decision of July 11, 2017)
• 10 Nonresident income tax.– On existence or otherwise of permanent establishment where contract manufacturing and sales promotion services are received from Spanish subsidiaries (Directorate General for Taxes. Ruling V1746-17, of July 6, 2017)
• 11 Personal income tax.– Income from winding up Spanish company is capital gain not taxable in Spain according to tax treaty with Germany (Directorate General for Taxes. Ruling V1738-17, of July 6, 2017)
• 12 VAT.- Under arrangement for deferred payment of import VAT, not including import VAT on the return gives rise to a tax debt, even if the VAT is fully deductible (Central Economic-Administrative Tribunal. Decision of September 28, 2017)
• 13 Real estate tax.- Indirect challenge of determination of cadastral values is allowed where the individual allocation of value is specified, if this is confined to specific application of the determination of a cadastral value to the valued property (Central Economic-Administrative Tribunal. Decision of September 14, 2017)
• 14 Tax procedures.- Commencement of partial audit on certain obligations is not a prior requirement for adjustment of other obligations related them (Central Economic-Administrative Tribunal. Decision of September 21, 2017)
• 15 Tax procedure.- A statute of limitations period related to tax benefits subject to a condition starts at the end of the period for making a tax adjustment after that condition has been breached (Central Economic-Administrative Tribunal. Decision of September 14, 2017)
• 16 Review procedure.- Administrative appeal to a superior body not the right remedy for challenging factual elements (Central Economic-Administrative Tribunal. Decision of September 28, 2017)
• 17 Penalty procedure.- A partial audit of VAT on certain transactions tolls statute of limitations period for action to levy penalty for issuing false invoices (Central Economic-Administrative Tribunal. Decision of September 21, 2017)

3. Legislation

• 1 Multilateral agreement on the exchange of country-by-country reports
• 2 Annual effective interest rate for the fourth calendar quarter of 2017 for the purposes of classifying certain financial assets for tax purposes
• 3 Municipalities in which the revised cadaster value multipliers for 2018 apply