The Court of Justice of the EU (CJEU) has ruled that the part corresponding to the autonomies of the hydrocarbon tax, which each community could apply as it decided, is illegal. “The directive opposes a rule that authorizes regions to establish different excise tax rates for the same product and use depending on the territory,” the rule issued by Luxembourg magistrates this Thursday strongly states. The regional section of the Special Hydrocarbons Tax was repealed in Spain in 2019 and since then there has been a uniform tax rate for the entire country.
This tax figure came to light when Cristóbal Montoro sat in the Ministry of Finance and was in force for five years, between 2013 and 2018. For this reason, the department now headed by María Jesús Montero has quickly pointed out the previous Government. “It is the umpteenth ruling by a court that annuls a fiscal measure by the PP Government,” explain sources from the ministry: “The mismanagement of the PP has consequences that in the end all Spaniards pay,” they add.
For now, the Treasury does not quantify the economic impact that the ruling and possible refunds will have. It is being “analyzed” and “it is still too early to know.” As an approximation, the special tax collected more than 6,000 million euros during the year it was in force.
The ruling confirms the opinion that the Advocate General issued in January based on the same argument. Both this opinion and the ruling of the CJEU come after preliminary questions referred by the Supreme Court after the DISA group, the fuel distribution company controlled by the Carceller family, appealed a ruling contrary to its interests in the Central Economic-Administrative Court and in the National Court in 2020.
The case, however, began earlier, when three companies dedicated to fuel logistics (CLH, TEPSA and SECICAR) that had to pay the tax, presented to the Tax Agency tax settlements corresponding to 2013 and 2015 in which the tax on DISA, your client. The Carceller family group revolted against these settlements and asked the Treasury to reject these settlements with the argument that the regional rate, which had come into force in 2013, was contrary to the European directive.
Luxembourg’s response agrees with DISA: “The list contained in the Directive of the cases in which differentiated tax rates may be applied is exhaustive and does not provide for the possibility of a Member State setting excise tax rates for a “the same product and the same use differentiated according to the regions or territories of that Member State in which that product is consumed,” the judges argue.
“None of the exceptions provided for by the Directive expressly authorizes Spain to apply, for the same product and the same use, excise tax rates differentiated according to the autonomous communities in which said products are consumed. This point has not been discussed by the Spanish Government, which does not deny that it has not obtained a specific exception to allow these autonomous communities to set differentiated regional tax rates,” the judges continue to reason, and finally add that establishing differentiated rates by region “could harm the proper functioning of the internal market, fragmenting it […] and compromise the free movement of goods.”
The Treasury insists that the ruling highlights that “the PP’s legislative malpractice” is being repeated. And they insist that the Constitutional Court already annulled at the beginning of this year part of the reform that Cristóbal Montoro established in 2016 in corporate tax. It is assumed that this ruling will have a billion-dollar cost for the State in refunds, since the legislative change strongly tightened the deductions and exemptions provided for companies. “The TC also annulled in 2020 the minimum rate of fractional payment of companies also approved by Montoro,” the Treasury insists. And they add that the European justice system annulled part of the sanctioning regime of model 720 for property and real estate abroad, while the guarantee court declared the tax amnesty unconstitutional. These two changes also occurred with Montoro in the Treasury.
Follow all the information Economy and Business in Facebook and xor in our weekly newsletter
#European #justice #declares #regional #section #hydrocarbon #tax #illegal