Publications

Corporate income tax

TEAC clarifies how to calculate the 70% limit on depreciation in cases of items under finance lease agreements

Central Economic-Administrative Tribunal. Decision of June 7, 2018

For several fiscal years, the deduction of the depreciation of assets has been restricted to 70%.

In relation to items under finance lease agreements, TEAC has confirmed the interpretation that the limit on the deduction for tax purposes of depreciation applies to the lower of the following amounts: (i) the portion of the finance lease payments that relate to recovery of cost of the item; and (ii) the amount obtained by multiplying the cost of the item by twice the rate for depreciation on a straight-line basis according to the approved official tables.

Personal income tax

In the dissolution of a condominium there is a capital gain or loss if the allocations are not made in proportion to the share in ownership

Central Economic-Administrative Tribunal. Decision of June 7, 2018

The Personal Income Tax law provides that no capital gain or loss occurs in dissolutions of condominiums.

TEAC concluded in this decision, however, that for a capital gain/loss not to exist, the allocations made to each owner must match their shares in ownership. So, if one of the co-owners receives property or rights with a higher value than he is entitled to receive according to his share in ownership there will be a capital gain/loss for the others. This also applies to indivisible property.

The opposite view to this decision was adopted by the Catalonia High Court, for example, in its recent judgment of February 1, 2018 (application 507/2015).

Transfer and stamp tax

The contribution of properties mortgaged to secure debts with third parties is subject to tax as a transfer for valuable consideration, even if there is no subrogation in respect of the debts

Central Economic-Administrative Tribunal. Decision of June 14, 2018

Company A had contributed to company B a property mortgaged to secure a debt that company A owed to company C. Company B was not expressly subrogated in respect of the debt, although the debt was naturally taken into account to appraise the value of the contributed property.

In this context, TEAC concluded that there are two taxable events for transfer and stamp tax purposes: 

1. One subject to the tax as a corporate transaction (capital duty), on the value at which the property is contributed to the company, which relates to the paid capital figure.
2. Another subject to the tax as a transfer for valuable consideration, by reason of the transfer in payment for assuming debts, even though the beneficiary of the property is not formally subrogated in respect of the debt, due to the fact that this debt was taken into account to determine the value of the contribution. In short, it must be interpreted that there is a “tacit subrogation” in respect of the debt, and therefore, that the taxable event related to an express transfer in payment for assuming debts arises at the beneficiary.

Management procedure

A request for a report on an audited reported value does not stop the clock on the statute of limitations period if the taxpayer is not informed

Central Economic-Administrative Tribunal. Decision of June 14, 2018

TEAC concluded in this decision that the request for an report on an audited reported value does not stop the clock on the statute of limitations period if the taxable person concerned is not officially notified that the request was made. All of the above in line with (i) the interpretation laid down by the Supreme Court in a judgment rendered on October 31, 2012 and (ii) the provisions in article 102.4 of the regulations on managing, collecting and auditing taxes, which require both periods of justified interruption and delays for reasons not attributable to the tax authorities to be adequately reported for them to be recorded in the case file.

Collection procedure

A person required to fulfill an attachment order is not allowed to decide to stop paying without authorization from the tax authorities

Central Economic-Administrative Tribunal. Decision of June 28, 2018

The taxable person received a notice requiring him to pay his debts (in respect of a property lease) payable to a third party under an attachment order, to the public finance authority. Later, the party under an attachment order sent a notice to the debtor stating that he no longer owned the leased property, and therefore all future rent payments under the lease had to be paid to the new owner. As directed in this notice, the debtor stopped making the rent payments under the lease to the public finance authority and started making them to the new owner of the property.

TEAC objected to this step and set as a standard that it is not up to the person required to fulfill an attachment order to decide the consequences of any modification affecting his creditor (the person under the attachment order). In cases of the type examined, the only option available to the debtor is to notify that modification to the tax authorities for them to instruct him how to act.

Moreover, a unilateral step by the party required to fulfill an attachment order by altering any of the elements of that fulfillment, if fault or negligence is involved, is a factual premise for declaring joint and several liability.

Collection procedure

The enforcement period begins when an application for deferral is discontinued and the tax debt is not paid simultaneously

Central Economic-Administrative Tribunal. Decision of June 28, 2018

When an application for deferral made in the voluntary payment period is discontinued, its discontinuance must be accompanied by full and immediate payment of the debt, because it is not allowed to keep the stay of enforcement of the debt in force after the application has been discontinued. Otherwise, the enforcement period begins.

Collection procedure

An injunctive stay remains in force until a decision on the ancillary stay proceeding

Central Economic-Administrative Tribunal. Decision of June 28, 2018

A taxpayer had applied for a stay of enforcement of a tax debt in the economic-administrative jurisdiction with a type of security other than those envisaged in article 233.2 LGT (General Taxation Law), which determined an injunctive stay of the collection procedure. That application was denied by the collection authority, and against that decision the taxpayer lodged an application for the relevant ancillary stay proceeding. In parallel, and before a decision was rendered on that ancillary proceeding, an enforced collection order was issued.

In this context, TEAC changed its interpretation and concluded that the injunctive stay granted with the initial application for stay must be maintained until the decision on the ancillary proceeding by the competent court, which made the notified enforced collection order unlawful.