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Newsletter Fiscal October 25

Tax Newsletter

October 25

Daniel Tarroja, Tax Partner
30/10/2025
Newsletter Fiscal October 25

Case law:

Value Added Tax (VAT)

  • Judgment of the Court of Justice of the European Union of 9 October 2025. VAT. Services rendered.
    • The European Court hears case C-101/24, which is a request for a preliminary ruling from the German Federal Fiscal Court. First, the CJEU must rule on whether, in circumstances where a German taxable person (the developer) provided services electronically, prior to 1 January 2015, to non-taxable persons (end customers) established in the territory of the Union, through an app store of an Irish taxable person, Article 28 of the VAT Directive should apply, resulting in the Irish taxable person being treated as if they had received those services from the developer and provided them to the end customers, given that the app store did not mention the developer as the service provider or mention German VAT until it issued the order confirmation to the end customer. Second, if the response to the first question is affirmative, the CJEU must clarify whether the place of provision of the fictitious service provided by the developer to the app store is considered to be in Ireland, in accordance with Article 44 of the aforementioned Directive, or in Germany, in accordance with Article 45 of the Directive. Finally, if, based on the answers to the first and second questions referred for a preliminary ruling and considering that the developer has not provided any services in Germany, the Court must confirm whether this person is liable for German VAT under Article 203 of the aforementioned Directive by virtue of the fact that, as stipulated in the contract, the app store named such person as the supplier in its order confirmations sent by email to the end customers and mentioned German VAT, even though the end customers are not entitled to deduct the input VAT.
    • The CJEU rules on the questions raised and declares, first of all, that Article 28 of the VAT Directive, as amended by Council Directive 2008/8/EC, must be interpreted as meaning that, where a taxable person established in a Member State has, before 1 January 2015, provided electronic services to non-taxable persons established in the European Union through an app store made available by a taxable person established in another Member State, the application of Article 28 cannot be excluded on the sole ground that the order confirmations sent by the latter taxable person to the final customers designated the former taxable person as the supplier of the services and indicated the VAT rate applicable in the Member State of establishment of the latter. Secondly, it rules that the VAT Directive, as amended by Directive 2008/8, must be interpreted as meaning that, where a taxable person established in a Member State is deemed to have personally received and supplied a service under Article 28 of that directive, the place of supply of services fictitiously supplied to such taxable persons by a taxable person established in another Member State must be determined in accordance with Article 44 of that Directive. Lastly, it declares that Article 203 of the VAT Directive, as amended by Directive 2008/8, must be interpreted as meaning that, where a taxable person established in a Member State has supplied services electronically to non-taxable persons established in the territory of the Union via an app store made available by a taxable person established in another Member State, so that the latter taxable person is deemed to have received those services and to have supplied them to the end customers, the first taxable person cannot be regarded as liable for VAT in its Member State of establishment under Article 203 by virtue of the fact that, in the order confirmations sent to the final customers, that first taxable person was designated, with its consent, as the supplier of the services and the VAT rate applicable in its Member State of establishment was indicated.
  • Supreme Court ruling of 29 September 2025. VAT. Principle of comprehensive adjustment.
    • The Supreme Court rules on appeal number 634/2022, brought against the judgment handed down by the High Court of Justice of the Balearic Islands, which dismissed the contentious-administrative appeal brought in relation to the provisional settlement of VAT for the 2013 financial year. The question raised to which the Supreme Court must respond is whether, having denied a taxpayer the right to deduct certain VAT payments made in a limited verification procedure, in accordance with the provisions of Article 14.2.c) of the RRVA (Administrative Review Regulations), and in accordance with the principle of full regularisation established by the repeated case law of the Supreme Court, the Spanish Tax Agency, within the same tax management procedure, must also take the necessary steps to determine whether the legal requirements are met to recognise the taxpayer's right to a refund of the undue payments consisting of the VAT amounts that, in the same verification period, were unduly charged to them, thus fully regularising the situation of such person with regard to VAT.
    • The Supreme Court declares the appeal admissible and, setting out case law doctrine, determines that, reiterating its own criteria [SSTS of 26 May 2021 (Appeal 574/2020), 10 February 2023 (Appeal 5441/2021), among others], Article 14.2.c) of the RRVA, interpreted under the principle of full regularisation, means that when the Administration regularises, within the framework of a tax inspection or management procedure, including limited verification, the tax situation of a person who deducted VAT that was unduly charged to them, it must carry out the necessary checks to determine whether such taxpayer is entitled to a refund of such unduly charged VAT, fully regularising their situation, and therefore it is not appropriate to refer such person to a new procedure for the rectification of the self-assessment and refund of undue payments.

Other decisions of interest:

  • Supreme Court ruling of 29 September 2025. LGT. Double shot doctrine.
    • The Supreme Court rules on appeal number 4123/2023, brought against the ruling of the High Court of Justice of Galicia, which partially upheld the contentious-administrative appeal filed in relation to inheritance and gift tax (ISD), for a transfer mortis causa. The questions raised, which must be answered by the Supreme Court, concern, firstly, the time limit available to the Spanish Tax Agency (AEAT) to issue a settlement in execution of an economic-administrative decision that annuls a previous one, based on the lack of grounds for such an act. Secondly, the Supreme Court must determine the consequences of exceeding the deadline for processing a verification procedure and issuing the appropriate settlement in execution of an economic-administrative decision, in cases where the infringement triggering the repetition is for allegedly formal reasons. Thirdly, it must clarify whether exceeding the time limit available to the management bodies to comply with an annulment agreement, in these cases, prevents a new procedure from being initiated with the same purpose or, on the contrary, whether it is possible to initiate further proceedings, following a declaration of expiry, as long as the limitation period has not been reached. In particular, it must clarify whether the expiry provision established in Article 104.4 of the General Tax Law (LGT) is applicable to proceedings in which no power of verification or management is exercised, but rather mere compliance with the decision of a reviewing body. Finally, it must determine whether the Administration may, once a settlement has been annulled in economic-administrative proceedings due to lack of grounds, issue the settlement agreements it deems necessary, without being subject to any limits, on the grounds that those issued in execution of such economic-administrative decisions incur different defects each time.
    • The Supreme Court declares the appeal admissible and, laying down case law, determines that, firstly, the power recognised to the Administration to repeat the content of acts replacing others that have been annulled (referred to in administrative and judicial practice as double shot), regardless of the nature of the defect or legal infringement involved, whether formal or material in nature, allows the Administration to issue a second act, specifically one that complies with the previous act in the review process that orders or authorises it, depending on its nature. However, this power does not authorise the Administration to repeat this activity and implement it in a third or subsequent settlement acts. Secondly, it states that under no circumstances is it lawful for the Administration to issue a third administrative act, nor any subsequent acts, even if the second act were affected by any formal or material defect in breach of the legal system. The general principles of good administration and good faith, among others, prohibit such a possibility entirely. It is inadmissible to grant the Administration unlimited opportunities to repeat administrative acts of taxation until it finally succeeds to the detriment of citizens.

Administrative legal commentary:

Wealth Tax (IP)

  • Central Economic Administrative Court ruling 00/02959/2023 of 24 September 2025. Wealth tax (IP). Non-residents.
    • The Central Economic Administrative Court (TEAC) resolves the economic-administrative appeal brought against the decision issued by the National Tax Management Office (ONGT) of the Spanish Tax Agency (AEAT) regarding the rejection of the request for rectification of the self-assessment of wealth tax (IP) for the 2020 financial year, due to restricted tax liability (obligación real). In the rectification request submitted by the taxpayer, the only issue raised was the application of the regulations of a specific autonomous community, which provides for a 100% reduction in the wealth tax (IP) rate, given that most of their assets and rights are located in that territory. In particular, the taxpayer argued that the application of one tax to residents and another, very different and more burdensome tax to non-residents constitutes a discriminatory system that is contrary to the free movement of capital, which is legitimised by Article 63 of the TFEU. Furthermore, the taxpayer stated that such non-discrimination criteria had been imposed by the CJEU and shared by the Supreme Court, inter alia, in rulings 488/2018 and 492/2018. However, the National Tax Management Office (ONGT) rejected the requested rectification of the 2020 wealth tax (IP), on the grounds that the 4th Additional Provision of the Wealth Tax Law (LIP) in its current wording was not applicable in the aforementioned 2020 financial year because the taxpayer was a non-resident and that the new wording of the 4th Additional Provision of the LIP, which allows non-residents of an EU Member State to opt for regional regulations, in force as of 11/07/2021, is not applicable since the aforementioned regulations were not in force in the financial year for which the rectification is requested, i.e. 2020.
    • The Central Court upholds the present appeal and, altering its position with respect to that reflected in the rulings of 12/12/2024 (00/05676/2022 and 00/06114/2022), which had been dismissed in an identical case (rejecting the application of the regulations of the Autonomous Community in which most of their assets and rights were located to residents of third countries), establishes a new ruling in which it considers that taxpayers, even if they are not residents of an EU Member State, may opt for the application of the regulations of the Autonomous Community in which most of their assets and rights are located. The Central Economic Administrative Court (TEAC) considers that, although the fourth additional provision of the LIP, as amended by Law 11/2021 of 9 July, is not applicable retroactively, the doctrine of the Supreme Court that led to the aforementioned legal amendment, in application of the case law of the CJEU, is applicable to the case.

Non-Resident Income Tax (IRNR)

  • Binding Ruling V0700-25 of 15 April. Non-Resident Income Tax (IRNR). Inpatriate regime.
    • The enquirer, a British national, minority shareholder in a UK tax resident entity and recipient of passive income from abroad, decided to become a director of a newly formed Spanish company in order to pursue a project (in which his spouse will also be involved), consisting of setting up a club offering yoga and exercise classes, meditation, breathing classes and events. The club will also offer services such as a gym, a swimming pool and a sauna. For this purpose, a limited company was incorporated in Spain on 3 April 2024, of which he has been appointed sole director (for which reason he has established his residence in Spain since 2 April 2024) and in which he holds a 95% stake (the remaining 5% is held by his spouse). As the director of the company, he will receive a fixed salary and a variable remuneration based on the results for the financial year. Furthermore, as he holds a 95% stake in the company, the person seeking advice is classified under the RETA (Special Scheme for Self-Employed Workers). The company is expected to commence operations at the end of 2024. The enquirer's wife, who owns 5% of the company, has also moved to Spain and will acquire tax residence in Spain without applying for the special tax regime provided for in Article 93 of the Personal Income Tax Law. The question raised concerns the possibility of the enquirer applying the special tax regime provided for in Article 93 of the Personal Income Tax Law (LIRPF) (inpatriate regime) on an individual basis.
    • The Directorate-General for Taxation responds to the query submitted and, after analysing Articles 9 and 93 of the Personal Income Tax Law (LIRPF) and Article 18 of the Corporate Income Tax Law (LIS), determines that in order to apply this regime, the taxpayer must have their tax residence in Spain, in accordance with the provisions of the Personal Income Tax Law. Furthermore, in cases of relocation to Spanish territory as a result of acquiring the status of director, the director's shareholding in the company is limited if the company is considered to be a holding company. Therefore, in this case, where the enquirer's shareholding in the Spanish company would determine its status as a related company, and it is not considered to be a holding company, this requirement would be met. Finally, the Directorate-General for Taxation also highlights the fact that no income should be obtained that could be classified as having been obtained through a permanent establishment located in Spanish territory. In this regard, it would appear from the written enquiry that the enquirer will not render any services to his company other than those inherent to the performance of his duties as director. However, it should be noted that, in accordance with the provisions of Articles 17.1 and 27.1 of the Personal Income Tax Law (LIRPF), if the enquirer obtains income from economic activities through a permanent establishment located in Spanish territory, the requirement for the application of the aforementioned special regime, as provided for in Article 93.1.c) of the LIRPF, would no longer be met. As a consequence, the enquirer may opt for the special regime provided for in Article 93 of the LIRPF if, in accordance with the foregoing, he acquires tax residence in Spain in 2024 following his move to Spanish territory due to his appointment as director of the Spanish company, provided that the company is not considered to be a holding company and, in addition, he meets the requirements of letters a) and c) of Article 93.1 of the LIRPF.