In the now distant 1991 and derived from the Treaty of Accession of Spain to the European Communities that forced us to adapt our tax legislation to the community standards and the modifications that were produced therein, Spain incorporated into the Corporate Tax regulations a regime special tax that allowed the deferral of taxes that could be accrued in business restructuring operations (mergers, splits, exchanges, non-monetary contributions, etc.) when these were carried out under the protection of valid economic reasons. The legislator simply sought to facilitate the execution of business restructuring through tax neutrality.

Since then the Tax Agency has routinely verified this type of operations, essential for the business and economic development of the country.

Despite this (or precisely because of it), in many cases, it has regularized operations by carrying out large liquidations. And the point that has motivated many of these regularizations has been the rejection of the economic reasons alleged by the taxpayer as valid causes to undertake the business restructuring process.

Surely for this reason, great significance has been given to the recent consultation V2214-23 in relation to the limits that the Administration itself admits when regularizing restructuring operations.

Possibly it has not done so as an act of good nature, or a change of criteria for the benefit of taxpayers, but motivated because the Supreme Court recently established doctrine in its ruling 1503/2022, of November 16, determining:

• that the Administration is not the one to determine which operation should have been executed,
• that when examining whether the operation is carried out to obtain a tax advantage in fraud (which would obviously prevent the application of the advantageous tax regime), it is the rule itself that establishes that the restructuring presumes the concurrence of a valid economic reason, which requires the Administration to carry out special evidentiary work to justify the requirement of a fraudulent motive
• that obtaining a tax advantage is an essential part of the special regime itself that seeks to grant a tax advantage to those who benefit from it, such as tax deferral,
• and that therefore this tax advantage cannot be classified as undue or fraudulent, since, thus, the regime could never be applied legitimately, and all those operations in which the tax advantage is limited to not having been taxed on the capital gains arising from the restructuring operation; that is, what is typical of the deferral regime.

So the aforementioned resolution to the binding consultation V2214-23 of July 27, follows the line of this Judgment, which in fact is mentioned as the basis for it.

But in addition, the consultation delves into the problem of how to regularize in those cases in which the regime is denied for some reason. This is very important: remember that the Corporate Tax Law already states in its article 89.2 that in the verification actions of the Tax Administration that determine the total or partial non-application of the special tax regime, exclusively the effects of the tax advantage will be eliminated. .

And then, is the deferral itself a tax advantage and therefore a verification could eliminate it and make taxes payable for it?

In the aforementioned binding consultation, the response is that the tax advantage that can be adjusted in the event of denial of the special regime is only the:

“fiscal advantage sought by carrying out the operation, distinct from the deferral of the income generated, inherent to the regime itself.”

Therefore, it is clear that the income or taxable events that have accrued as a result of carrying out the merger, division or non-monetary contribution cannot be regularized in either the Corporate Tax or the Personal Income Tax. The improper tax advantage that was pursued with the execution of the restructuring operation can only be regularized in the form of an avoided or reduced tax.

End of the problem and the inspections? Well, although it may surprise, perhaps not entirely. It is worth remembering the innumerable unfair actions that the Administration has been carrying out in recent years, despite the previous existence of other consultations that had already admitted this theory (see V-2887/2015) with verifications that were ignored. to its content despite the fact that the criteria established in response to binding queries should have obligated the Tax Agency in its actions.

But let's end with a certain optimism. Let us trust that now, with the extra help of the Supreme Court ruling, future verifications must act in the direction indicated by the high court and by the resolutions to the binding consultations, otherwise administrative and judicial resources will end up annulling them.