Tax Newsletter - February 2017


February newsletter prepared by professionals from the Tax Department.

1. Judments
  • 1 Corporate income tax and penalty proceeding.- Special reasoning required for the penalty imposed for  incorrect application of the neutrality regime (Supreme Court. Judgment of January 31, 2017)
  • 2 Corporate income tax.- If the intention to use some buildings in a business activity is proven, they can be  classified as propety, plant and equipment (National Appellate Court. Judgment of September 29, 2016) 
  • 3 Personal income tax.- To take the reinvestment exemption, possession of the new residence need not  take place during the reinvestment period (Madrid High Court. Judgment of December 5, 2016) 
  • 4 Tax on the increase in the value of urban land (“IIVTNU”).- The tax is unconstitutional if there is no increase  in value (Constitutional Court. Judgment of February 16, 2017)  
  • 5 Penalty proceeding.- No culpability exists solely because the taxpayer has signed the assessment on an  uncontested basis or because it has means to be well advised (Supreme Court. Judgment of December 22, 2016) 
2. Decisions and Rulings
  • 1 Corporate income tax.- Minimum reversal of impairment expense must be done on the last day of the tax  period (Directorate-General of Taxes. Ruling V0155-17, of January 24, 2017)
  • 2 Corporate income tax.- Brazilian dividends and interest on net equity gives entitlement to exemption to  avoid double taxation (Central Economic-Administrative Tribunal. Decision of January 12, 2017)  
  • 3 Corporate income tax.- Impact of restructuring transactions on capitalization reserve (Directorate-General  of Taxes. Rulings V5233-16, of December 12, 2016 and V5470-16, of December 28, 2016)
  • 4 Corporate income tax.- The remission of collection rights recorded at less than face value generates a gain  t the donee subsidiary that is not eliminated in consolidation (Directorate-General of Taxes. Ruling V5469-16,  of December 28, 2016)
  • 5 Corporate income tax.- The tax group’s net revenue does not include that of the entities excluded from  the tax group in the fiscal ear (Directorate-General of Taxes. Ruling V5286-16, of December 14, 2016)
  • 6 Corporate income tax.- The one million euro minimum deduction is not affected by the tax losses offset  due to reversal of impairment losses (Directorate-General of Taxes. Ruling V5226-16, of December 9, 2016)
  • 7 Personal income tax.- The acquisition value cannot be “0” for the purpose of determining the capital gain  on the subsequent transfer of assets if it has not been reported by the taxpayer (Central  Economic-Administrative Tribunal. Decision of January 12, 2017) 
  • 8 Personal income tax.- The economic compensation agreed in a voluntary leave of absence generates salary  income that does not qualify as exempt or multi-year income (Directorate-General of Taxes. Ruling V5253-16,  of December 13, 2016)
  • 9 Personal income tax.- Vehicle adaptation expenses of a disabled employee constitute salary income in kind  (Directorate-General of Taxes. Ruling V5247-16, of December 13, 2016) 
  • 10 Wealth tax.- Unlisted shares must be valued according to the “last approved balance sheet”  (Directorate-General of Taxes. Ruling V5434-16, of December 23, 2016) 
  • 11 Inheritance and gift tax.- Reduction not affected by change of person performing executive functions after the gift of the family business (Directorate-General of Taxes. Ruling V5212-16, of December 5, 2016)
  • 12 Administrative proceeding.- Notification attempt is deemed prven if taxpayer is provided with content  of the decision in the authorized e-mail address (Central Economic-Administrative Tribunal. Decision  of January 12, 2017)
  • 13 Management proceeding.- “Interest on interest” must be paid where the tax authorities do not include  late-payment interest in their refund (Central Economic-Administrative Tribunal. Decisions of January 12, 2017) 
  • 14 Inspection proceeding.- Reasoning and documentation of value verification procedure based on compaable  samples (Central Economic-Administrative Tribunal. Decision of January 19, 2017) 
  • 15 Penalty proceeding.- Even if the fist penalty proceeding is replaced by another because the assessment  is modified the maximum period for completion of the penalty proceeding is computed from the fist  proceeding (Central Economic-Administrative Tribunal. Decision of January 12, 2017)
3. Legislation
  • 1 Forms 121 and 122 for personal income tax credits for large families or dependent disabled persons
  • 2 Regulation of certain aspects of tax on the extraction value of gas, oil and condensates
  • 3 Tax benefits to mitigate the damage caused y the latest storms
  • 4 Annual Tax and Customs Control Plan for 2017
4. Other
  • 1 Report by the CNMV on the accounting impact of the new rules on inclusion of impairment losses  on investments, approved by Royal Decree-law 3/2016



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