Tax Newsletter - April 2023

Spain - 

The CJEU and the Supreme Court prohibit discrimination against real estate funds and hedge funds

According to the Court of Justice of the European Union, it is precluded by the free movement of capital for real estate investment funds resident in a country to be exempt from tax in that country on real estate income from there if funds resident in another country are not. In Spain there is a separate tax rate for this type of funds based on their residence (where they are not established in Spain), and therefore this interpretation by the CJEU is particularly relevant.

The Supreme Court, for its part, also considers to be precluded by the free movement of capital the different treatment that the Spanish tax legislation gives to resident and nonresident hedge funds with respect to income obtained in Spain. In other words, nonresident hedge funds should be treated in the same way as resident funds if they provide proof that they are open-ended entities, they have authorization, and that they are managed by an authorized management company as required in Directive 2011/61/EU.

Assessments of the tax on increase in urban land value which were still within the time limit for judicial review as of October 26, 2021 have to be set aside

Following the constitutional court judgment on October 26, 2021, which in effect set aside the calculation rules for the tax on increase in urban land value, although it limited the effects of the unconstitutional nature of those rules, Madrid High Court concluded that a review had to be allowed of assessments which at that date were still within the time limit for filling an application to be challenged by filing an application for judicial review.

Extended time limits requested by the taxpayer which are not expressly decided by the authorities do not amount to a delay attributable to the taxpayer

Where an extension is requested to reply to an administrative request, the extension is considered to be automatically granted if the authorities do not render a decision. However, according to the Galician High Court, this effect does not extinguish the authorities’ obligation to decide, and therefore, if they do not issue an express decision, the length of time by which the tax authorities’ work was extended cannot be considered a delay attributable to the taxpayer when computing the maximum period for completion of that work.

For the tax on economic activities, tax elements must be computed by reference to availability rather than effective use

The TEAC has held in a new decision that the debt in respect of the tax on economic activities must be calculated by reference to all the tax elements of the activity which are mentioned in the law and which are used in that activity, even if not all of them are used in the period to which the tax relates.


For further details on this month’s judgments, decisions, resolutions and legislation, SEE THE WHOLE NEWSLETTER HERE.