Healthcare and Life Sciences
Temas de interés
Temas de interés
Daniel Tarroja, Tax Associate Director
I. Latest rulings
Personal Income Tax (IRPF)
Binding Consultation V2588-21 of 22 October 2021. Personal Income Tax. Jobs performed abroad. Amended tax return. Travel days.
The questioner filed a request to amend a personal income tax (IRPF) return after realizing that it included income that was exempt under Article 7.p) of the Personal Income Tax Law (LIRPF). The Administration denied the aforementioned amendment request and the dispute is pending resolution before the Tax Administrative Court. Based on the Spanish Supreme Court judgement of 25 February 2021, which recognizes the exemption established in Article 7.p.) of the Personal Income Tax Law for travel days abroad for work reasons, the questioner asks whether a new amendment may be filed that includes the aforementioned travel days. She also asks about what supporting documents must be provided to certify those travel days.
The Spanish Department of Taxation (DGT) maintains that the questioner may not file for another amendment of the aforementioned tax return, since the amendment procedure is not a procedure for review. Moreover, the first application for amendment of the return is pending resolution by the Tax Administrative Court. Regarding the supporting documents, the DGT is limited in its response, referring to the means admitted by law, and does not have the authority to issue a specific assessment thereof.
Binding Consultation V2599-21 of 26 October 2021. Personal Income Tax. Income from business activities. Expenses. Salaries paid to employees residing abroad. Social Security.
The questioner is a computer scientist, tax resident in Spain, and all income he earns is declared in Spain. He does not have an office in which to work, rather all employees work from home. He also hires personnel who reside in other countries, particularly Germany. The questioner is not registered as an entrepreneur, nor does he carry out business activities, in these other countries. He asks whether the salary expenses and social security contributions are deductible from the income earned and declared in Spain.
First, the DGT points out that the deductibility of expenses is determined on the basis of their relationship to the income. In other words, it must be demonstrated that these expenses originated from the performance of the activity and are related to earning income. If the aforementioned conditions are met, they are declared on the Personal Income Tax return. However, the DGT cannot decide on specific means of proof and is limited to explaining that such relationship can be demonstrated by any of the means admitted by law.
Income Tax for Non-Residents (IRNR)
Ruling of the Spanish Central Tax Administrative Court of 25 October 2021. Income Tax for Non-Residents. Petition for refund of dividend withholdings. Substantiation.
In this case, the Spanish Tax Administration (AEAT) denied the requested refunds because the certificates of the taxes withheld did not bear the name of the petitioning company. The claimant argued that the fund management company, based in Germany and certified by the German regulatory authority BaFin, was licensed to perform the aforementioned investment management activities. In other words, the company had thoroughly substantiated both the dividends earned and the taxes withheld on them.
The Central Tax Administrative Court reiterates its criteria and rules that the certification of ownership of the dividend, and the corresponding withholdings, can be accepted if, based on the information from the financial intermediary that meets the conditions of Article 15.3 of the Non-Resident Income Tax Regulation (RIRNR), along with the rest of the certifications provided by any other intermediaries involved, the traceability of the dividend can be verified from its payment to its receipt, net of withholding, by the company in question.
Corporate Income Tax (IS)
Judgement of the Spanish Supreme Court of 30 November 2021. Corporate Income Tax. Offsetting tax losses. Tax options. Autonomous community law.
The purpose of this appeal was to clarify whether a company may carryforward tax losses to offset net income in subsequent tax periods on a Corporate Income Tax return that is filed late. The Supreme Court had not previously ruled on this matter.
In this novel ruling, the Administrative Division of the Supreme Court upholds the principle applied by the Supreme Court of Justice of Catalonia, and establishes the interpretive principle that, in the Corporate Income Tax, and in the terms established in the tax regulations, taxpayers have the right to offset tax losses with the net income of subsequent tax periods, even if the tax return is filed late, and the decision whether to offset them or not does not constitute one of the tax options regulated in Article 119.3 of the General Tax Law (LGT).
ECJ Judgement of 25 November 2021. Principles of European Union Law. Administrative cooperation in the field of taxation. Effective legal protection. Decision for which information between Member States is required.
Regarding the first and second preliminary ruling, the ECJ declares that Art. 11., Art. 5, and Art. 20.2 of Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC, must be interpreted to mean that an information injunction can only be interpreted to refer to information that is not manifestly devoid of any foreseeable relevance when the persons subject to scrutiny or investigation under the latter provision are not identified individually by name in such injunction, but the requesting authority demonstrates through clear and adequate explanations that it is conducting an investigation of a limited group of persons justified by well-founded suspicions of non-compliance with a specific legal obligation. Conversely, with respect to the third ruling, Art. 47 of the Charter of Fundamental Rights of the European Union must be interpreted to mean that, when a person has been sanctioned for non-compliance with an unappealable information injunction decision during an exchange between national tax administrations, and such person has challenged the legality of the aforementioned decision in a motion made during an appeal of the disciplinary ruling, once the legality of the aforementioned rulings against such person has been established, the latter should be granted the possibility of complying with the information injunction decision within the period initially established for this under national Law, without this implying enforcement of the sanction imposed on him, to exercise his right to effective legal protection. Only in the event that such person does not comply with such request during that period would the imposed sanction be enforceable.
Judgement of the Supreme Court of 16 November 2021. General Tax Law. Exhaustion of administrative tax remedies. European Union Law.
In this case and anchored in the fundamental right to effective legal protection, the appellant argues that it is not necessary to exhaust the administrative tax remedies when the review of the administrative tax proceedings may depend exclusively on an interpretation of European Union Law.
In its ruling, the Supreme Court concludes that the administrative tax remedies provided for by law do not override the essential substance of the fundamental right to effective legal protection, and they accommodate the principle of proportionality from the moment they are available in the public interest (without deterrent costs, and without access to the courts being hindered by the absence or delay of the response), as recognized by the EU. In short, in accordance with the tax regulations, when administrative tax appeals are appropriate, they must be exhausted even if the ruling on the substance of the case may depend exclusively on the interpretation of European Law, since it corresponds to the administrative tax courts to ensure their proper application in the terms established by the case law of the Court of Justice.