Global Site
Argentina Aruba Barbados Bolivia Brazil Canada Cayman Islands Chile Colombia Costa Rica Curacao El Salvador Guatemala Honduras Mexico Paraguay Peru Puerto Rico Saint Martin Suriname United States Uruguay Venezuela
Australia Cambodia China Hawaii Hong Kong India Indonesia Japan Macau Malaysia Maldives Mongolia Myanmar Nepal New Zealand Pakistan Philippines Singapore South Korea Sri Lanka Taiwan Thailand Vietnam
Albania Andorra Armenia Austria Azerbaijan Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Georgia Germany Greece Hungary Ireland Italy Kazakhstan Kosovo Latvia Lithuania Luxembourg Malta Moldova Netherlands Norway Poland Portugal Romania Serbia Slovakia Slovenia Spain Sweden Switzerland Tajikistan Turkey Ukraine United Kingdom Uzbekistan
Algeria Angola Bahrain Egypt Ghana Israel Jordan Kenya Kuwait Lebanon Liberia Mauritius Morocco Mozambique Nigeria Oman Qatar Saudi Arabia Senegal Sierra Leone South Africa Tanzania Togo Tunisia Uganda United Arab Emirates Yemen
Contacto
home Temás de Interés
Newsletter Fiscal June 25

Tax Newsletter

June 25

Daniel Tarroja, Tax Partner
30/06/2025
Newsletter Fiscal June 25

Case law:

Value Added Tax (VAT)

  • Judgment of the Court of Justice of the European Union of 19 June 2025.VAT. Exemptions.
    • The European Court hears case C-785/23, which is a request for a preliminary ruling from the Supreme Administrative Court of Bulgaria. The issues raised and on which the CJEU has to rule are, firstly, whether services provided by the licensee for the provision of the universal postal service in the territory of the Republic of Bulgaria are to be regarded as services which are provided by a “public postal service” within the meaning of Article 132 of the VAT Directive and are therefore “in the public interest”. Secondly, whether the services provided by a person who is a licensee of the universal postal service do not have the status of a universal postal service within the meaning of that Directive if they are provided in accordance with an individual contract at a price lower than that authorised for the corresponding type of universal postal service and it has not been demonstrated that the price thus agreed covers the costs of provision. Thirdly, whether the principles of transparency and non-discrimination are infringed if a person who is a licensee for the provision of the universal postal service concludes individual contracts for the provision of the universal postal service in which it lays down other conditions for the provision of the service which are more favourable than those which are published and publicly available. And fourthly, if the answer to the third question is in the affirmative, whether this will constitute a ground for not treating the transactions as exempt within the meaning of Article 132 of the VAT Directive.
    • The CJEU gives a general decision on the questions referred for a preliminary ruling and finds that Article 132(1)(a) of the VAT Directive, read in the light of the second and fourth indents of Article 12 of Directive 97/67/EC, as amended by Directive 2008/6/EC of the European Parliament and of the Council, must be interpreted as precluding supplies of postal services provided, in accordance with separate contracts, by a holder of an individual licence to provide the universal postal service from benefiting from the VAT exemption provided for in Article 132, when such supplies, which are intended to meet the special needs of the persons concerned without being offered to all users, are provided under different, more favourable conditions than those approved by the national authority designated in the Member State concerned to regulate the universal postal service or those provided for in the standards relating to that service.

Administrative legal commentary:

Value Added Tax (VAT)

  • Central Economic Administrative Court ruling 00/05698/2023 of 13 May 2025.VAT. Irrecoverable receivables.
    • The Central Economic Administrative Court (TEAC) rules on the economic administrative claims filed against the resolution agreements with provisional settlement in relation to VAT for the periods January, March, June, September and December of the financial year 2022. The background of the aforementioned procedures derives from the presentation by the appellant entities (which are part of the group of companies provided for in the Value Added Tax Act) of notifications for changes to the gross taxable base in cases of irrecoverable receivables (Form 952), stating that they had made a number of changes to the VAT assessment bases. Likewise, these entities also submitted written statements in relation to the changes made, referring to the actions taken to recover the VAT associated with the unpaid receivables. In this respect, in the decisions that were the subject of the complaint the administration rejected the reductions in VAT bases and amounts accrued due to failure to comply with the requirements set out in section 80(4) of the Value Added Tax Act and article 24 of the VAT Regulations.
    • The Central Court rejects the claim, confirming the challenged decisions and referring to the Supreme Court’s legal commentary in its ruling of 31 March 2025 (appeal 932/2023) in relation to the time limit specified in section 80(4)(b) of the VAT Act for amending the tax base due to irrecoverable receivables, and holds that the requirements set out in the VAT regulations have not been met and confirms that none of the receivables in respect of which amendment of the tax base is sought by the entity meets the conditions required by law and regulations to be considered irrecoverable and therefore the amendments made to the taxable amount can only be considered inadmissible. Specifically, the SC’s legal commentary, which the TEAC refers to and which underpins its ruling, establishes that the period of one year and three months from the accrual of the tax in which to amend the VAT taxable amount of unrecoverable receivables stipulated in section 80(4)(b) of the VAT Act complies with European law, in particular with the effectiveness, neutrality and proportionality principles as construed by European case law.
  • Binding Consultation V0320-25 of 18 March 2025. VAT. Construction works.
    • The petitioner is a homeowners’ association made up in turn of five homeowners’ associations which have agreed to change the use of communal football pitches to parking spaces (some at ground-level and others above ground-level) assigned to these homeowners’ associations (one space per property and one for communal use) and have secured the relevant municipal licence for this purpose. The construction work required has been outsourced by the petitioner to a business undertaking. The query raised concerns whether the VAT reverse charge mechanism in section 84(1)(2)(f) of the VAT Act would be applicable to the construction work and what the VAT rate for such construction would be.
    • The DGT addresses the query raised and determines, firstly, that the undertaking carrying out the works has the status of an entrepreneur or professional practitioner and the supplies of goods and services it delivers in the performance of its business or professional activity in the territory of application of the tax is subject to VAT. Secondly, it establishes that homeowners’ associations in general do not meet the requirements set out in the regulations to be considered an entrepreneur or professional practitioner and are therefore end-consumers for VAT purposes. This means that the associations may not pass on the input VAT paid by the joint owners when collecting proportional payments or deduct the input VAT paid on the purchase of goods or services. However, when these homeowners’ associations perform any entrepreneurial or professional activities, these transactions are subject to VAT. Under section 91(1)(3)(3) of the VAT Act, the construction work in the query, with or without the supply of materials, will be subject to VAT at the rate of 10% provided that it is the result of contracts directly concluded between the homeowners’ association of a residential building and the contractor, its purpose is the construction of additional parking spaces for this residential building, it is performed on common land belonging to these homeowners’ associations and the number of parking spaces to be allocated to each of the owners is no more than two. Furthermore, pursuant to section 84 of the Value Added Tax Act and article 24(c) of the VAT Regulations and in response to the query raised, it would appear from the information provided and in the absence of any other evidence that the consulting homeowners’ association is not acting as a entrepreneur or professional practitioner for VAT purposes in relation to the transactions in question and consequently the reverse charge mechanism in section 84(1)(2)(f) of the Value Added Tax Act does not apply since the construction work is not carried out for the benefit of another entrepreneur or professional practitioner.

Corporate Tax (CT)

  • Binding Consultation V0311-25 of 17 March 2025. CT. Special regime for mergers, demergers, transfers of assets, exchange of securities and changes of registered office (FEAC).
    • The corporate purpose of the consulting company is building, developing, buying, selling and renting plots, properties, land, housing, premises and all types of real estate, including publicly-subsidised housing; undertaking renovation, rehabilitation and building work on real estate; land excavation, demolition, removal, consolidation and preparation of land and also laying foundations and paving land. Its corporate assets consist of two sets of business premises, one of which is let (managed by one of the partners) and the other used as a warehouse for machinery and auxiliary equipment for the construction business, and some cash. The company is owned by two partners at 49% and 51% respectively. It is intended to divide the company into two independent firms. One of them will be assigned the premises used for letting and its purpose will be building, developing, buying, selling and renting plots, properties, land, housing, premises and all types of real estate, including publicly-subsidised housing. The other will be assigned the premises used as a warehouse for machinery and auxiliary equipment for the construction business and its corporate purpose will be performing renovation, refurbishment and building works on real estate. One of the partners will be allocated 100% of the equity holdings in one of the companies and the other 100% of the equity holdings in the other company, in addition to cash in proportion to their holding in the divided company. The query concerns whether the transaction described above is eligible for the tax system in Chapter VII of Title VII of the Corporate Tax Act (FEAC).
    • The DGT responds to the query raised and determines that based on section 76(2)(1)(a) of the Corporate Tax Act, the transaction referred to in the consultation document complies with the conditions established in the Corporate Tax Act to be considered as a full division provided that it is carried out in the business area under Royal Decree Act 5/2023 of 28 June. However, based on section 76(2)(2) of the Corporate Tax Act and insofar as the partners of the divided entity receive equity holdings in the companies benefiting from the division in a proportion other than that existing in the former, the transaction will be classified as a non-proportional full division which for tax purposes requires that the divided assets each make up a line of business in their own right. The concept of “line of business” presupposes the existence of assets able to operate by their own means, clearly identified in reference to the transferring entity and which from the organisational point of view form a bundle of assets and liabilities from a division of a company which in organisational terms constitutes an independent undertaking, i.e. a bundle able to operate by its own means. On the basis of the information provided in the consultation document, it appears that two buildings are being divided simply by separating the real estate assets into two companies and not that two lines of business are being divided as an economic unit with the material and human resources necessary for its operation. The fact that the real estate assets are split into two companies does not entail the existence of the organisation required for the assets to be considered as belonging to more than one line of business, and therefore the transaction will not be eligible for the FEAC system under the Corporate Tax Act.