Last week we learned about the decision of the Supreme Court (TS) that represents a very relevant update related to tax deductions for Technological Innovationwhich set an important precedent.
The TS has established the binding nature of the Ministry of Science Report for the Treasury for the tax deduction for technological innovation. Consequently, all of us who work to study, identify and implement the best formulas for financing innovation are congratulated with the three rulings that have been handed down in appeals No. 948; 1633 and 1635/2023.
These are its key aspects:
1. The Contentious Chamber annuls the sentences of the National Court that supported the reports of the Computer Support Team of the Spanish Tax Administration Agency (AEAT) for contradicting the binding opinion on technological innovation that had been issued by the Ministry of Science and Innovation.
2. The Consolidated Text of the Corporate Tax Law (TRLIS) of 2004 provides that companies can request a report from the Ministry for the tax deduction for technological innovation. This report, according to the law, is binding on the AEAT in all its aspects.
3. Such binding reports cannot be refuted or ignored by the Treasury, neither in the classification of the projects as deserving of the tax deduction, nor in relation to the expenses included in the project.
In short, we interpret that this decision of the Supreme Court should provide legal certainty to companies in the application of tax deductions for R&D&I, guaranteeing that the Binding Reasoned Reports are fully respected by the Tax Agency.
However, given that the Supreme Court has ruled on deductions for fiscal years to which the TRLIS regulations applied (applicable until 2014), which, with regard to the regulation of reasoned reports, presents certain differences with respect to the current one Current Corporate Tax Law (LIS, Law 27/2014), after having analyzed the rulings once published, we want to share our opinion on their effects with current legislation.
Effects on fiscal years beginning on or after January 1, 2015
The TRLIS established the binding nature of these reports from the Ministry of Science, both in the qualification and in relation to the expenses included in the project. On the other hand, the LIS establishes the binding nature, for the exclusive purposes of the qualification of R&D&I activities. The difference is key and has been highlighted in the three rulings. So, what effects can this doctrine have on fiscal years beginning on January 1, 2015? Although the rulings refer only to the TRLIS, we consider that they can Some conclusions can be extrapolated to the current LIS.
In this sense, we believe that the classification of R&D&I activities cannot be separated from the expenses that comprise it, since, if this were to happen, the Ministry’s Report would be undervalued, which incorporates all the necessary elements for the tax deduction for R&D&i can be applied with complete legal certainty (the aforementioned binding nature for the AEAT, or in the words of the TS, “nothing can be and not be at the same time”).
The qualification of activities must be in line with R&D&I expenses as both concepts are deeply related. Furthermore, as stipulated in the three rulings, the Treasury cannot contradict the opinion of the report issued by the Ministry.
It is necessary to reform the current law to adapt it to new times
In conclusion, we consider that these binding reports should not be able to be refuted by the Tax Agency (neither in the qualification nor in the expenses), since a situation of legal uncertainty would occur contrary to the purpose of the rule itself, which is to promote and encourage the competitiveness and innovation of Spanish companies. Likewise, in our opinion, a reform of the current law would be convenient and necessary, so that it is better adapted to the new information technology sector, an industry that has an increasingly important and growing weight in our GDP, to better adapt the system of tax incentives for R&D&i projects in Spain.
We believe that we should focus on strengthening incentives for innovation by transferring the “good practices” of the countries around us in this regard, for example, Portugal, providing greater security and generating certainty regarding their correct application, especially so that SMEs, which represent 99% of the productive fabric in our country, can benefit from them in a climate of greater legal certainty.
In any case, we want to congratulate ourselves on this decision of the Supreme Court, since it provides the legal certainty that all actors in the R&D&i sector have been longing for for many years and ends a significant discrepancy between the Treasury and the Ministry of Science and Innovation that has spread for too long; and which, in addition, has contributed to slowing down the innovative drive of companies compared to the countries around us and, therefore, has slowed down the economic development of our country.
Welcome, then, to this doctrine that comes to support the ultimate goals of the legislator: to promote and encourage competitiveness and innovation in Spanish companies, whether small, medium or large.
#Supreme #Court #supports #tax #deductions #RDi
