Spain: Transposition of directive 2017/1852 relating to the integration of mechanisms or the resolution of tax disputes in the European Union into Spanish domestic law

In Spain, the incorporation of Directive 2017/1852 of the Council, 10 October 2017, on the mechanisms for the resolution of tax disputes in the European Union took place through the approval of Royal Decree - Law 3/2020 of 4 February 2010, on urgent measures that incorporated into Spanish law various European Union directives in the field of public contracting in certain sectors; private insurance; pension plans and funds; taxation and tax disputes.

This has involved:

→ the modification of the Non-Resident Income Tax Law (LIRNR),

→ the modification of Law 29/1998, of 13 July, regulating the Contentious-Administrative Jurisdiction (LJCA) and

→ the draft amendment to the Mutual Agreement Procedure Regulations approved by Royal Decree 1794/2008, of 3 November, in the process of public consultation, pending approval.

Modification of the LIRNR

→ It extends its scope to the new procedures provided for in Directive 2017/1852.

→ It establishes the suspension of internal review appeals while MAP is substantiated and until its completion with respect to the elements of the tax obligation subject to MAP.

→ On the contrary, in the case of challenging sanctions, the suspension of MAP processing is established until the internal appeal against the sanction is finally resolved, when these sanctions exclude access to the arbitration phase of the mutual agreement procedure and, specifically, in the case of the mutual agreement procedure provided for in Convention 90/436/EEC. Here, the existence of a final sanction would prevent access to MAP or, where appropriate, would imply its termination.

For this purpose, the sanction cases are defined in the Spanish regulations: tax crimes, serious and very serious offences.

→ It deletes the reference to the non-accrual of interests during the processing of MAP.

→ It establishes the competence of the Central Economic Administrative Court (TEAC) to constitute the arbitration commissions.

Modification of the LJCA

It establishes the suspension of contentious-administrative appeals while MAP is being processed and until completion with respect to the elements of the tax obligation subject to MAP.

On the contrary, the pre-eminence of challenges against the sanctions is established and therefore, not the suspension of the contentious-administrative appeal against them, but the suspension of the processing of MAP, when the existence of these prevents access to that arbitration phase and, specifically in MAP regulated under Convention 90/436/EEC.

Project for the modification of the Mutual Agreement Procedure rules

Lastly, the incorporation of the Directive at a regulatory level will be reflected in the future modification of the Regulation of Mutual Agreement Procedures, currently being edited, which will entail the adaptation of MAP processing to the provisions of the Directive so as to improve and homogenise them, the incorporation of the regulation of the new MAP provided for in the Directive, as well as the possibility of opting for the latter, even if the procedure was initiated under the two pre-existing possibilities (MAP provided for in the DTI (Double Taxation Agreements) or MAP regulated under Convention 90/436/EEC).

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