There is no doubt that, in our current context, this is a best practice for tax prevention. Remember that, as Benjamin Franklin said, “in this world, nothing can be said to be certain except death and taxes”. Tax rules have developed so complex that it becomes difficult for any taxpayer to gain security that their interpretation and further application is correctly done.
Spanish tax regulations provide for a procedure that permits taxpayers obtaining a binding resolution on how tax laws are to be interpreted in the taxpayer’s particular case.
Spanish regulations allow the use of a tax prevention tool for taxpayers that consists of the possibility of filing a binding consultation to the General Directorate of Taxes (GDT). This procedure allows the taxpayer to obtain a resolution on the interpretation of the tax laws to their particular case. If the taxpayer files a tax return based on the criterion established in the GDT resolution, the Spanish tax office will be bound by it and will not be entitled to impose any penalties on your company.
When is it submitted?
✔ A binding consultation must be made before the conclusion of the term to file the tax returns or declarations to which the consultation refers.
✔ The process is essentially written and requires the taxpayer’s identification as well as a wide explanation of the taxpayer’s facts that give rise to the taxable event on which the question is being filed. It cannot be based on taxable events that are subject to review by the Spanish tax authorities.
✔ The organism in charge of resolving is the “Dirección General de Tributos – DGT (General Directorate of Taxes) depending from the Spanish Ministry of Finance.
✔ The resolutions are made public, on a no –name basis, so that any taxpayer can gain knowledge of the interpretation criteria they include.
What happens if a consultation is replied?
✔ For your company, the submission and reply of the consultation do not interrupt or suspend the terms established by the tax regulations for the fulfillment of its obligations.
✔ For the tax authorities, the criterion established in the reply from the GDT is binding; hence, the tax authorities will have to follow it. However, this binding effect does not extend to the economic-administrative courts nor the justice ones.
✔ Any taxpayer who bases their tax liability on the criteria established in a reply to a binding consultation made by a third party in an identical situation may be exonerated from tax responsibility. That is to say, their conduct shall not be punishable.
✔ It is important to note that whenever a taxpayer follows the criteria of a DGT resolution, it shall be excluded from being imposed tax penalties in a tax audit process, if the circumstances are similar to those of the resolutions and the regulations in force are the same.
What is the deadline for the Directorate General of Taxes to reply?
✔ The term legally established is of six months.
✔ It must be noted that if the reply is not obtained within such a legal term, it does not imply the acceptance by the GDT of the criteria expressed in the consultation.
✔ Although the legal term to resolve is of six months as from the filing, in practice, this term may be extended to nine – twelve months on average. Consequently, it is important to plan that the resolution is obtained prior to the end of the voluntary term to file the tax return corresponding to the facts about which the question is filed.
Who is entitled to submit it?
✔ Taxpayers, as well as collective entities (professional or other types of associations …), are entitled to file a tax consultation, in this latter case, when they refer to issues that affect most of its members.
✔ Tax professionals are only entitled to submit a tax consultation on behalf of your company providing that they are appointed as representatives of your company.
Is it recommendable to submit a Binding Consultation?
✔ A correct tax risk prevention policy should focus on taking advantage of the opportunities offered by the regulations to minimize, well in advance, any dissenting interpretation with the one applied by the company. Therefore, raising a binding consultation on which your company can rely will always be a sign of good tax management.
You might also be interested in:
- Spanish tax consequences deriving from teleworking – for non resident companies
- The new Spanish tax return for tax – related and tax – haven
- Contact with a tax expert company in Spain
Publicado el 05-2022 por PBS