Imagine that you are appointed CEO of a bank. Imagine that in the middle of the real estate bubble a millionaire pension is awarded. That the bank that you ran is in ruins due to its mismanagement, the abuses at the time of the real estate bubble and the excesses it committed at that time. And when he is about to be sentenced to prison, he returns the money received from the generous pension and although he is sentenced he avoids going to jail. To return the money, he claims from the Treasury the taxes he had paid when collecting that juicy pension plan that had been awarded in the times of wine and roses. But not only that, you also claim default interest since you paid the taxes. As the Treasury ignores him, he resorts to the judge. And he agrees years later and forces the Tax Agency to pay hundreds of thousands of euros for those interests. That is roughly what has happened to Ricard Pagès, the former CEO of Caixa Penedès, who was the third largest Catalan savings bank and which ended up being rescued by the State, merged into BMN and absorbed by Banco Sabadell in the face of the difficult situation of the entity.
The National Court has upheld the appeal imposed by Pagès against the Tax Agency. “We recognize the right to be paid the default interest on the amount of 2,856,440.53 euros, which will have to be calculated from the date that your deposit was made,” says the Hearing in a sentence handed down on July 27 and published now. The ruling, which can be appealed to the Supreme Court, does not set a specific figure, but according to an estimate made with the calculator of the Tax Agency, Pagès should receive more than 400,000 euros from the Treasury for late payment interest since the improper income was made in 2011 until the return in January 2015.
Sentence explains that the former director of Caixa Penedès “in 2011 received significant sums of money from insurance companies derived from insurance policies signed fraudulently; appearing these amounts attributed by the insurer to the tax period in question and that the taxpayer included in his income tax return for 2011 for the concept of income from work ”. The former director general of the Catalan entity received 10,768,275 euros of pension, which meant a payment to the Treasury of 3,168,743.46 euros, including 2.86 million in withholdings and 312,302 euros when presenting the return of personal income tax, as detailed in the sentence.
Pagès was sentenced to two years in prison for a corporate crime and unfair administration at the head of Caixa Penedès, “with the concurrence of repairing the damage caused by the return of the amounts received by the policies prior to the ruling and declaring at the same time the nullity of the same ”.
After having returned to the savings bank the amount he had received for the pension, Pagès, who was considered by the prosecutor in the case that led to the first conviction of former directors of savings banks in the financial crisis, the brain of the strategy to achieve a “disproportionate capital gain at the expense of the cash,” he claimed the refund of the taxes he had paid for the pension and the corresponding default interest.
The Treasury did not hesitate to return the 3.16 million paid, but claimed that it only had to pay late payment interest for the part of the self-assessment (312,302 euros) and not for the rest. He defended that there had been no “errors in payment” because the taxpayer believed he had the right to collect the pension and only returned it to the cash register when a judgment considered that he had fraudulently subscribed the policy.
The Hearing, however, agrees with Pagès: “All amounts paid into the Treasury constitute undue income, regardless, as we say, whether it comes from the liquidation of the personal income tax return or whether it derives from withholdings. made, because when the self-declaration was made including some income that later turned out to be inappropriate, resulting in a fee to be paid after deducting the withholdings made, the undue income for the two concepts has already materialized, while the “withholdings on account” are up to the moment in which said self-assessment is made, and as has been explained, they are likely to have the status of ‘undue’, as well as the rest of the amount paid together with the settlement ”. “The distinctions made by the Administration cannot be understood when it happens that the cause that motivates the return is the same in both cases.”
The judges, therefore, rule that all amounts paid by Pagès should be considered as “undue income” and not only the 312,302 euros settled in the personal income tax return, but also the amounts previously withheld on account and therefore obliges the Treasury to pay default interest also of the other 2.86 million.