Written by Canarian Weekly Business
By Mariano Zunino
THE Supreme Court has recently nullified the legal costs in tax proceedings, which means that any lawsuits with the Inland Revenue Office will be free from now on.
This has been established by the Supreme Court in a judgement, which accepts the Spanish Association of Tax Advisors (Aedaf) reasoning and nullifies Article 51.2 of Royal Decree 1073/2017, approved in December 2017.
The ruling contains harsh assertions of the Tax Office and the legislator, for not respecting the principle of legal security.
System of the 2017 regulation
According to the Royal Decree article, when a citizen sues the Inland Revenue Office, within an Economic-Administrative proceeding, and his reasons are not accepted, he must pay the legal costs, to be calculated at 2% of the sum claimed, with a minimum of €150-500 euros, depending on the cases.
This is, of course, a hidden, dissuasive measure because the taxpayer would think more than twice before starting a proceeding that could end up with a dismissive resolution, and legal costs to be charged apart.
Needless to say, if the Tax Office is defeated, no costs are to be paid, always in relation to the Economic-Administrative proceeding.
The Supreme Court does not dispute the inadmissibility of the costs themselves, which, anyway, could be the subject of constitutionality. However, it concludes that the model of legal costs of the said Royal Decree is null because it supposes a generic system, “disconnected from the procedure”, which, instead of a procedural cost, becomes “rate” or “sanction”.
The General Tax Law establishes that the economic-administrative procedure will be free, but it may be regulated if there are costs for the cases, which the economic-administrative court deems appropriate.
Legal costs in a tax proceeding?
The costs of the procedure are neither taxes, sanctioning measures, nor patrimonial benefits, says the Supreme Court. It adds that when quantifying the amount in a general and abstract way, the legal costs lose their true nature.
That’s because they can no longer be considered costs of the procedure, but identified as a rate, or a sanctioning measure.
Supreme Court warns of uncertainty
What draws our attention is that the Supreme Court warns about a “deep, legal uncertainty” in tax matters. The Highest Court says: “Immediate certainty” in the development of the norms “is a legal requirement, directly connected with the principle of legal security, and whose breach must result in the legal consequences, which the order reserves for constitutional violations.”
Mariano E. Zunino Siri, is a lawyer registered at the Tenerife Bar Association since 1991. Email: email@example.com ; firstname.lastname@example.org ; Web: www.abogadosmadridtenerife.com