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Newsletter Tax January 25

Tax Newsletter

January 25

Daniel Tarroja, Tax Partner
31/01/2025
Newsletter Tax January 25

Case law:

Value Added Tax (VAT)

  • Ruling of the Court of Justice of the European Union of 12 December 2024.VAT. Right to deduct.
    • The European Court has heard Case C-527/23 concerning a request for interpretation of EU law made by the Prahova Regional Court of Romania. The questions referred to the CJEU are, firstly, whether Article 168 of the VAT Directive precludes the tax authority from refusing the right to deduct input VAT in respect of administrative services acquired where the costs recorded for the services purchased have been included in general costs, the taxable person only carries out taxable transactions and the supply of the services is confirmed by the tax authority. Secondly, the question arises whether administration and management services provided between companies of the same group for the benefit of its members can be considered by each member as being used for its own needs within the meaning of Articles 2 and 168 of the VAT Directive. Thirdly and finally, the question arises whether, where it is established that the intra-group services are not supplied to a member of the group, that company may be regarded as a taxable person within the meaning of Article 2 of the VAT Directive.
    • The Court finds in relation to the first and second questions that Article 168 of the VAT Directive precludes national legislation or a national practice under which the tax authority refuses the right to deduct input VAT paid by a taxable person when acquiring services from other taxable persons belonging to the same group of companies on the grounds that those services were supplied at the same time to other companies in that group and that their purchase was not necessary, where it is established that the taxable person uses such services for the needs of its own taxable transactions. Finally, the CJEU considers that since it is not disputed whether the appellant company was a taxable person within the meaning of the VAT Directive, the third question referred for a preliminary ruling is inadmissible.
  • Ruling of the Court of Justice of the European Union of 19 December 2024. Excise duty. Online purchase of products.
    • The European Court has heard Case C-596/23 concerning a reference for a preliminary ruling from the Helsinki Administrative Court. The questions raised and which the CJEU has to resolve relate to the interpretation of Article 36(1) of Directive 2008/118/EC concerning the general arrangements for excise duty. In particular, it is asked whether that provision precludes an interpretation of national law according to which a vendor of goods subject to excise duty established in another Member State is deemed to be involved in the transport of the goods to the Member State of destination and liable to pay excise duty for distance selling in that Member State, solely because it indicates to the purchaser on its website that the purchaser should use the services of a particular transport undertaking. The CJEU is also asked whether a vendor who on its website recommended particular transport undertakings and gave information on the transport costs to be incurred by the purchaser is deemed to have directly or indirectly dispatched or transported goods subject to excise duty and is liable to distance selling tax within the meaning of the Directive.
    • The CJEU resolves the questions referred for a preliminary ruling and determines that Article 36(1) of Directive 2008/118/EC concerning the general arrangements for excise duty must be interpreted as meaning that, in the situations referred to in that provision, excise goods are to be regarded as dispatched or transported to another Member State directly or indirectly by or on behalf of the vendor, such that that vendor is liable for excise duty in that other Member State where it guides the purchaser’s choice of the company responsible for the dispatch or transport of those goods by suggesting and facilitating the use of certain companies to which those services may be entrusted.

Inheritance and Gift Tax (IGT)

  • Ruling of the Supreme Court of 9 December 2024. Inheritance and Gift Tax. Reduction.
    • The Supreme Court has heard appeal no. 2233/2023 brought by the Ministry of Economy and Finance of the Government of Catalonia against the ruling handed down by the Supreme Court of Catalonia in relation to inheritance and gift tax, in which a gift was regularised due to failure to comply with the requirements for the application of the reduction for family businesses. The question on which the Court has to rule consists of clarifying the period of time in which compliance with the requirements to benefit from the 95% reduction regulated in section 20(6) of the Inheritance and Gift Tax Act for the gift of equity interests in a family entity must be verified. Specifically, it is asked whether, when verifying the income received for the performance of management duties that account for more than 50% of the recipient's income, the time at which the gift is made should be considered or whether the year in which the gift is made should be used. In addition, it is asked whether the case law established by the Supreme Court ruling of 16 December 2013 (appeal no. 28/2010) applied to a mortis causa transfer of company equity interests can be extended to cases in which a gift is made.
    • The High Court accepted the appeal lodged by the Government of Catalonia and responded to the questions raised by the appeal by stating that the decisive moment with regard to the performance of paid duties by the recipient is the moment at which the gift is made. Thus in the case at hand, no remuneration of any kind had been received from the company at the time of the gift. The Supreme Court therefore concludes that in the present case, the requirements for the family business reduction were not met at the time of accrual of the tax.

Administrative Doctrine:

Value Added Tax (VAT)

  • Binding Consultation V2122-24 of 1 October 2024.VAT. Summary invoice.
    • The person making the enquiry is a self-employed professional who issues summary invoices at the end of the month for a private customer who is not a businessperson or professional. In May 2024, due to technical problems he was unable to issue a summary invoice to this customer on the last day of that month for deliveries made during that period. The enquiry submitted to the Directorate General for Taxation (DGT) is whether it is possible to issue a summary invoice in the month after the month in which the transactions accrued.
    • The DGT has responded to the query raised and determined that taxable persons must issue and deliver invoices for all their transactions. However, the possibility of issuing a simplified invoice is envisaged when the circumstances set out in Royal Decree 1619/2012 regulating invoicing obligations in relation to VAT are met. Based on the information provided by the person submitting the query, it follows that the recipient of the supplies of goods is not a businessperson and therefore the general rule in relation to the accrual of the tax would apply which stipulates that the invoice should be issued at the time of accrual of the transaction, i.e. the delivery of the goods. If the recipient is a businessperson or professional acting as such, the invoice may be issued after the accrual date but before the 16th day of the month following that in which the tax accrued on the aforementioned transaction. Finally, with regard to the issue of a summary invoice, the possibility of issuing a single invoice including the various transactions performed for the same recipient is established provided that they have been made within the same calendar month and have been delivered no later than the last day of the month in which the transactions have been conducted.

Corporate Tax (CT)

  • Resolution 00/05937/2024 of the Spanish Central Economic-Administrative Court (TEAC) of 12 December 2024. CT. Special regime for mergers, demergers, transfers of assets, exchange of securities and changes of registered office (FEAC).
    • The TEAC has ruled on the appeal against the enforcement brought against the Decision of the Regional Inspection Unit of the Galicia Special Delegation of the AEAT in enforcing a previous decision of the TEAC in relation to the tax assessment notice that settled the appellant's personal income tax for the periods 2017 and 2018. The question at issue in this case is whether after confirming that the main purpose of a non-cash contribution of shares is tax evasion or avoidance, the abuse committed should be remedied by taxing the contributor for the initially deferred capital gain (arising from the existence of profits pending distribution by the companies grouped under the shares contributed at the date of the contribution) in the years in which it was obtained and the shareholder for the indirect availability of those profits. All this is in addition to taxing the dividends distributed after the contribution, indicating that they derive from profits of financial years subsequent to the non-cash contribution.
    • The TEAC dismisses the appeal against the enforcement and confirms the provisions of the enforcement agreement under appeal, reiterating its administrative doctrine whereby once it has been declared that the main purpose of a FEAC transaction was to avoid taxation in personal income tax of the contributing shareholder of the accumulated distributable profits (by interposing in their place a company to which the exemption of section 21 of the Corporate Tax Act applies), the effective application of section 89(2) of the Corporate Tax Act requires the interpretation that the profits distributed after that transaction (already obtained by a company that will apply the exemption of section 21 of the Corporate Tax Act) are the consummation or materialisation of the declared fraud or abuse, whereby its amount terminates the initial deferral of the taxation of the capital gain generated by the non-cash contribution. Finally, the TEAC states that there are no legal or economic reasons to justify the interest in choosing to distribute the most recent profit and not the previous ones. Accordingly, for tax purposes accepting such a choice would only mean leaving the neutralisation or deactivation of the consequences of its regularisation at the whim of the wishes of those who have engineered and taken part in the abuse.