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Spanish Constitutional Court rules minimum advanced income tax payment regime unconstitutional

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July 2020


The Spanish Constitutional Court on July 1 unanimously held that Royal Decree-law 2/2016, which introduced a minimum corporate income tax advanced payment regime for large taxpayers, was unconstitutional and thus null and void. The Court reasoned that a Royal Decree-law is not a constitutional legal instrument for changing the corporate income tax legislation when those changes materially impact the determination of a taxpayer’s tax burden.

This decision could have far-reaching impacts, as several corporate income tax changes have been enacted through Royal Decree-laws in recent years.

The takeaway

Taxpayers impacted by the minimum advanced income tax payment rules may want to review their individual situations to determine whether they could be eligible to file a refund or interest claim (depending on whether the advance tax payment amount in excess of the final tax liability has already been refunded). 

Additionally, corporate taxpayers with an increased tax burden resulting from measures Royal Decree-law 3/2016 introduced also may want to consider filing claims challenging their tax liability determination. In certain cases, the Constitutional Court limited the effect of their decisions to litigation commencing  before their decision date; thus, a protective claim may be an effective way to safeguard the taxpayer’s rights, although it may have other implications that will need to be evaluated (such as on the statute of limitations).

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Bernard Moens

US International Tax Inbound Leader, PwC US

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