The Central Economic-Administrative Court (hereinafter, TEAC), has just issued a very recent resolution in which it reiterates its criteria from last April and May in relation to the special tax regime for business restructuring. In his opinion, its application is conditional on proving that the main purpose of the operation is due to valid economic reasons other than fiscal ones. Ultimately, it is about preventing the special tax regime from being applied with the main purpose of achieving fraud, or, better yet, an abusive tax advantage.
We must not forget that the tax regime for mergers, divisions, contributions of assets and exchange of securities, colloquially called the FEAC regime, is the one provided for in the Mergers Directive, whose art. 15 contemplates an anti-abuse clause known as the “valid economic reasons” clause. However, the wording of its transposition into our domestic law is not a true reflection of its “original” version.
Indeed. The Directive states that “the fact that the operations are not carried out for valid economic reasons, (…) may constitute a presumption that this operation has as its main objective or one of its main objectives fraud or tax evasion.”
However, our domestic law establishes that “the regime will not apply when the operation is not carried out for valid economic reasons, (…) but with the mere purpose of obtaining a tax advantage” (art. 89.2 of the Sobriety Tax Law , hereinafter, LIS). The wording difference is subtle but important.
While the Directive establishes that the absence of valid economic reasons “may” constitute a presumption of fraud, our national law states that the tax regime “does not apply” if the operation is not justified by valid economic reasons other than tax ones.
The use of the word “may” means that what is stated depends on whether or not a specific circumstance occurs, in our case, the existence of fraud or abuse.
This means that, in these cases, and only in these, the absence of valid economic reasons corroborates or confirms their existence. Therefore, if there is no abuse, such reasons are irrelevant. Let us remember that the purpose of the Directive is to prevent fraud.
However, the LIS seems to say that the absence of such reasons prevents the application of the special tax regime.
The difference in criteria is important because while our system focuses its attention on the existence of valid economic reasons, the Directive focuses on fraud.
The solution to the conflict is being resolved by the Courts in favor of the need to justify such reasons. However, such an interpretation violates art. 15 of the Directive, which states that its absence is only an indication of fraud, but not proof of its existence.
The problem, furthermore, is that valid economic reasons are just that, subjective reasons, that is, reasons whose valuation depends on whoever values or appreciates them. This means that the assessment of the same reason may be different for the Administration and for the taxpayer.
Thus, for example, the company may consider that the main purpose of the operation is succession planning, and not the tax advantages that are also achieved, and the Administration may consider the opposite, that is, that its main purpose is to obtain those advantages. prosecutors. Good proof of this are the TEAC Resolutions to which I refer. The conflict is, therefore, served.
The issue is complicated because our courts are focusing on assessing the existence and importance of such reasons, forgetting that what is important is whether or not the business is certain. Neither the Administration nor the courts stop to think that what is important is to prove the objective existence of fraud, that is, the existence of an abuse of the right referred to in our Civil Code and General Tax Law.
Its existence therefore requires the concurrence of two circumstances. The first, the objective existence of an abuse in the negotiation forms, that is, having chosen a “path”, or business, that is not the one that the law considers normal to achieve the result that has been achieved. The second, its lack of justification for reasons other than fiscal ones.
Consequently, the existence of such motifs is the piece of the puzzle that allows the puzzle to be finished. If there is no fraud, that piece is of no use to us. In short, if the business is true and legal, the special tax regime is always applicable.
The Courts therefore have two options. Either continue with that subjective assessment of the reasons, or redirect it to the necessary objective assessment that the law requires. The first is to escape from the law. The second, apply it. The first is to promote legal uncertainty. The second, guarantee legal security. The destination, however, is the same in both: avoid fraud.
I am therefore reluctant to admit that the appropriate option is subjective assessment. Let us not forget that the principle of legal certainty requires certainty. The issue is important because what is basically being debated is the limit of the autonomy of the citizen’s will, a limit that, in our opinion, is only the certainty of business.
#Fiscal #subjectivity #business #certainty
