Tax Bulletin April 2012
Royal Decree-Law 12/2012, summarized in our Tax News Bulletin 2/2012, gave individuals and enterprises the option to disclose any assets or rights not deriving from income reported for personal income tax, corporate income tax and nonresident income tax purposes, by filing a special tax return using a specific form, up to and including November 30, 2012.
This may be done by paying over 10% of the acquisition cost of the assets or rights being disclosed, without any penalties, interest or surcharges for late filing and payment falling due. The amount that is reported will be treated as “reported income” for the purposes of the three taxes mentioned above.
It was announced in the same royal decree-law, albeit without giving any specific details, that the penalty regime was going to be toughened for future fiscal years to encourage disclosure on this special tax return.
Apparently the details of the tougher penalty regime will be published shortly, in view of the tax evasion prevention bill (approved by the Spanish cabinet on April 13, 2012), which also sets out a new obligation for residents in Spain to inform the tax authorities of accounts and securities located abroad. A breach of this obligation could mean that there will be no statute of limitations for capital gains not reported for personal income tax and corporate income tax purposes.
Moreover, the bill contains tougher penalties for these unreported capital gains, as it treats this as a very serious infringement subject in all cases to a proportional fine of 150% of the amount not paid over.
- 1. JUDGMENTS
1.1. Corporate income tax.- To take reinvestment tax credit, transferred assets must be used in the business, including under previous legislation (National Appellate Court. Judgment of February 16, 2012)
1.2. Personal income tax.- Cohabitation requirement to take the family tax allowance for descendants is unconstitutional (Constitutional Court. Judgment of February 15, 2012)
1.3. Personal income tax.- Company must prove professional use of vehicles by employees (National Appellate Court. Judgment of January 25, 2012)
1.4. Nonresident income tax.- Antiabuse clause in the parent-subsidiary exemption (Supreme Court. Judgment of March 21, 2012)
1.5. Tax on increase in urban land value.- Clause establishing purchaser’s liability for tax is abusive (Supreme Court. Civil Chamber judgment of November 25, 2011)
1.6. Value added tax.- Deductibility of input VAT on invoice issued to partners of a company prior to registration and identification for VAT purposes (European Court of Justice. Judgment of March 1, 2012, on case C-280/10)
1.7. Value added tax.- Input VAT on computers purchased for employee training is deductible, and subsequent supply of computers to employees is subject to VAT (National Appellate Court. Judgment of February 8, 2012)
1.8. Value added tax.- VAT exemption for publicly traded companies that obtain recognition as private welfare entities (National Appellate Court. Judgment of December 22, 2011)
1.9. Inheritance and gift tax.- The taxable amount of liquidations of specific bequests must not include the proportional part of household furnishings (Castilla y Leon High Court. Judgment of November 14, 2011)
1.10. Inspection proceedings.- Decision extending term for inspection proceedings is null and void when issued while criminal proceeding is in progress (Supreme Court. Judgment of March 15, 2012)
1.11. Criminal proceeding.- Aggravated offense due to particular extent and seriousness of evasion (Supreme Court. Criminal Chamber judgment of January 19, 2012)
1.12. Administrative proceeding.- Notification by public notice can only be used when authorities cannot determine interested party’s address by other means (Castilla y León High Court. Judgment of December 9, 2011)
1.13. Management proceeding.- Tax authorities can rectify ex officio their assessment decisions when clerical errors are evident (Castilla y León High Court. Judgment of November 30, 2011)
- 2. DECISIONS AND RULINGS
2.1. Corporate income tax.– No obligation to document market value of loans made to subsidiary for below market value (Directorate-General of Taxes. Ruling V0407-12, of February 23, 2012)
2.2. Corporate income tax.– Impairment adjustment to shares that was not deducted due to insufficient cost may be deducted later when cost increases (Directorate-General of Taxes. Ruling V0349-12, of February 16, 2012).
2.3. Corporate income tax.– Income from activities abroad exempt for members of joint venture even where they are not performed through permanent establishments (Directorate-General of Taxes. Ruling V0293-12, of February 13, 2012)
2.4. Corporate income tax and value added tax.– Real estate must be priced at arm’s length for corporate income tax and VAT purposes according to methods established in respective legislation (Directorate-General of Taxes. Ruling V0296-12, of February 13, 2012)
2.5. Personal income tax.– Definition of uniform securities (Directorate-General of Taxes. Ruling V0381-12, of February 21, 2012)
2.6. Personal income tax.– Application of the 40% reduction to salary increases relating to previous years and agreed in a later collective agreement (Directorate-General of Taxes. Ruling V0250-12, of February 6, 2012)
2.7. Value added tax.– Patron’s display of its status as such, in a collaboration agreement with a foundation, does not constitute a service for VAT purposes (Directorate-General of Taxes. Ruling V0316-12, of February 14, 2012)
2.8. Inheritance and gift tax.– Determination of autonomous community of residence in case of donee’s relocation to Spain from abroad (Directorate-General of Taxes. Ruling V0256-12, of February 7, 2012)
2.9. Oil and gas tax.- Adjustment through annual assessments constitutes material defect that does not preclude new assessments (Central Economic-Administrative Tribunal. Decision of February 14, 2012)
2.10. Administrative proceeding.- Actions by taxpayer to have proceeding held statute-barred do not toll statute of limitations for tax debt (Galicia Regional Economic-Administrative Tribunal. Decision of March 13, 2012) 16
2.11. Collection proceeding.- Interest due for partially upheld decisions on assessments with stayed enforcement (TEAC. Decisions of February 16 and March 1, 2012)
- 3. LEGISLATION
3.1. Correction of Royal Decree-Law 12/2012 in relation to prepayments and the special tax on foreign-source dividends and income
3.2. Spain-Hong Kong tax treaty
3.3. Spain-Armenia tax treaty
3.4. Personal income tax and net wealth tax forms for 2011
3.5. New tax treatment for timeshare agreements for tourist properties
4.1. Combating tax evasion
4.2. General State Budget Bill for 2012