Dec 12, 2023 | Tax Flash
In relation to the calculation of the limitation of financial expenses for the purpose of determining the taxable base of the Corporation Tax, it should be noted that in the BOE of May 25, 2023, Law 13/2023 was published. This law, among other tax changes, modifies the wording of Article 16 of the Corporation Tax Law in its Fifth Final Provision; ‘Limitation on the deductibility of financial expenses’.
The main modification introduced in the wording of Article 16 of the LIS (Corporation Tax Law) refers to the fact that, for the calculation of the operating profit, financial income from holdings in equity instruments cannot be added, when it corresponds to dividends in which the participation percentage is at least 5% and they have not been integrated into the taxable base of the Corporation Tax, as a consequence of being exempt under the application of Article 21 of the LIS (95% exemption).
This new regulation is applicable for fiscal years starting on or after 1 January 2024.
For more information, click HERE
Nov 23, 2023 | Tax Flash
ETL GLOBAL Tax Working Group, in which Audiconsultores ETL GLOBAL participates, had published a summary of the main tax incentives considered in the European Union countries and in the UK with their respective Corporate Tax regulations. This can help companies to path themselves when they decide to start their international adventure.
It has been a pleasure to collaborate with the following European firms of ETL GLOBAL:
Acs Accountants (Belgium)
KODAP (Checz Republic)
In extenso (France)
DUTHILLEUL ET ASSOCIES (D&A) (France)
ETL Heuvelmann & van Eyckels GmbH StBG (Germany)
ETL-*Gruppe (Germany)
NEXUMStp S.p.a. (Italy)
Sheltons Group (Malta)
MDDP (Poland)
SWGK (Poland)
ETL GLOBAL Espanya (Spain)
Skattepunkten AB (Sweden)
mgr (UK)
ETL GLOBAL UK
You can consult it through this link, and we are at your disposal for any clarification you may need.
Nov 21, 2023 | Tax Flash
The Supreme Court, in the statement dated June 21st, 2023, has confirmed the TEAC criteria and considers that, when the services provided by the partner to the related party, and the service that the this entity provides to third parties is substantially the same, and the mentioned entity does not has the resources to provide the services, if it is not for the necessary and essential participation of the person (partner), not providing added value (or this being residual), it is correct to consider that the payment agreed in the transaction with third parties is an unrelated comparable transaction.
Access to the full statement HERE
Nov 14, 2023 | Tax Flash
As every year, from the 1st to the 30th of November, taxpayers of the Corporate Tax Law (CTL) and the Non-Resident Income Tax (NRIT) who operate through a permanent establishment in Spain, and who carry out transactions with related entities, will have to submit the Form 232.
This Form must considers the corresponding information in accordance with their annual accounts and the annual transfer pricing report. Late submission will result in the imposition of penalties by the Tax Administration.
From our transfer pricing department, directed by Arely Almaguer, we are able to assist our clients in preparing and submitting this form, both in the collection of information and in its presentation.
We remain at your disposal for any clarification.
Oct 24, 2023 | Tax Flash
The Supreme Court, in its Judgment of April 19, 2023, has established as a doctrine that the burden of proof of the abuse that prevents taking advantage of the exemption in the Non-Resident Income Tax (IRNR) corresponds to the Tax Administration.
Let us remember that the non-taxation in the IRNR of the dividends distributed by the subsidiaries resident in Spanish territory to their parent companies resident in other Member States of the EU is not applicable when, according to the wording of art. 14.1.h) of the IRNR Law, most of the voting rights of the parent company are held, directly or indirectly, by natural or legal persons who do not reside in Member States of the EU or in States that are members of the Economic Area European, “except when the constitution and operation of that responds to valid economic reasons and substantive business reasons“.
Well, with respect to this last anti-abuse clause, the Supreme Court, in a case in which the Tax Authorities considered that the payment of dividends of 7 million euros by a Spanish company to its parent company in Luxembourg should be subject to withholding because the entity had not demonstrated the existence of valid economic reasons for the constitution of the Luxembourg parent entity, concludes, after making an exhaustive review of the EU jurisprudence, that the burden of proof of the abuse falls on the Tax Administration.
If you need more information access HERE
Jul 28, 2023 | Tax Flash
In April 2021 the Constitutional Court admitted an appeal that questioned the constitutionality of the Wealth Tax following the reforms introduced by the General State Budget Law of that year.
The Wealth Tax was technically abolished in 2008 through the creation of a 100% rebate on its tax quota, but the economic crisis meant that its disappearance was short-lived and in 2011 and 2012 it was recovered through a measure that it had to be temporary. However, that temporary decision was extended year by year and since then the tax has been required until 2021, when the provision that determined its disappearance was definitively repealed by the General State Budget Law of that year, so that this year the tax has become indefinite and its disappearance is no longer envisaged.
In these circumstances, what is at issue in the appeal is the constitutionality of the following changes:
- The increase in the maximum marginal rate from 2.5% to 3.5%, which could breach the principle of non-confiscation established in Article 31 of the Constitution.
- The repeal of the temporary nature of the tax, making it payable indefinitely, which would mean to the creation of a new tax in breach of the provision of Article 134 (7) of the Constitution, which prohibits the establishment of taxes by means of a General State Budget Law.
If the reforms are finally declared unconstitutional, the Wealth Tax returns of the fiscal years 2021 and 2022 should be rendered ineffective, and the tax payments paid would be refunded together with the corresponding interest for late payment, although at this point the doubt arises as to whether the Constitutional Court could establish limits to the scope of its ruling, as it did when it declared the unconstitutionality of the so-called municipal capital gains tax (“plusvalia municipal”), when it prevented those tax returns that had not been challenged until then from benefiting from its effects.
In view of the uncertainty surrounding this issue and in order to try to ensure the recovery of the tax if the appeal is finally upheld, it seems advisable to request the rectification of the Wealth Tax returns corresponding to fiscal years 2021 and 2022 before the ruling of the Constitutional Court, although it should not be forgotten that requesting the rectifications means interrupting the statue of limitation period for the tax, which will give the Tax Administration more time to check those two years, so in each case it will be necessary to assess whether the benefit of a possible declaration of unconstitutionality outweighs the consequences that the interruption of the statute of limitations may have.
As for the time at which the challenges should be made, after two years from their admission for processing, it seems that the resolution of the appeal should not take too long, although this is an uncertain question considering that in this case the Constitutional Court is not subject to compliance with any deadline.
Regarding the grounds of the challenge, the unconstitutionality of the rule that made it necessary to file it should be defended, an issue on which the Administration cannot pronounce itself as it is reserved to the Constitutional Court, and therefore, until the latter resolves the issue, successive challenges before different instances will be rejected.
In this sense, it would be advisable to prolong the duration of the administrative procedure as far as possible while waiting for the Constitutional Court’s ruling, trying to avoid the contentious-administrative procedure, which entails additional costs, as it requires the intervention of solicitors.
It should be borne in mind that the different instances that would have to be exhausted before reaching the contentious-administrative route would be the following:
1) Request the rectification of the tax returns before the competent Tax Management Office.
2) Appeal for reconsideration
3) Economic-administrative claim before the competent Regional Economic-Administrative Court.
4) Appeal to the Central Economic-Administrative Court (only for tax quotas over €150,000).
The purpose of this Tax Flash is to inform you that our law firm has already started to challenge these submitted Wealth Tax returns by individuals non tax residents in Spain in order to obtain the refund of the paid amounts (plus delay interests) we are at your disposal to discuss the issue in more detail.
