The Plenary Session of the TC, unanimously, declares certain corporate tax measures introduced by royal decree in 2016 by the Government of Mariano Rajoy unconstitutional.
The National Court raised a question of unconstitutionality before the Constitutional Court for the increase in corporate tax that the Executive approved in 2016 through a royal decree-law. The then Minister of Finance, Cristóbal Montoro, promoted the regulations with the aim of increasing tax collection and bringing Spain closer to the public deficit reduction objectives required by the European Union. This regulation has been modified and therefore was no longer applied.
The Constitutional Court considers that the approval of these measures by Royal Decree-Law has violated art. 86.1 of the Constitution, since said regulatory instrument cannot “affect the rights, duties and freedoms of citizens.”
Specifically, it considers affected the duty to contribute to the support of public expenses established by the Magna Carta. He has announced the formulation of a concurrent opinion by Judge Enrique Arnaldo. Judge Juan Carlos Campo has abstained.
The ruling recalls its established doctrine according to which the decree-law cannot alter either the general regime or those essential elements of the taxes that affect the determination of the tax burden, “which must be assessed based on the tax concerned, the elements those affected by the modification and its scope”.
The key to this issue is the modification of essential aspects of corporate tax. The Constitution allows the royal decree-law to legislate tax matters as long as it does not affect basic taxes, such as corporations or personal income tax. In this case, the rule substantially affects companies.
However, the dilemma that the Treasury now finds itself in is the refund of the tax once it has been declared null and unconstitutional. The sentence makes a clarification in this regard. For a matter of legal certainty, tax obligations accrued for corporate tax that have already been decided by a final administrative ruling or resolution cannot be claimed. Neither can those assessments be reviewed that have not been contested before today, nor can self-assessments whose rectification has not been requested by that date. That is, only those taxes that have been appealed and are unresolved may be claimed. In this way, the court intends to limit the effects, as was already done in the ruling on municipal capital gains.
The ruling explains that the elements of the Corporate Tax that the modification affects are the tax base and the quota, which are an “essential part” of the tax structure; and that the changes introduced, as recognized by the preamble of the decree-law itself, are “relevant”, and this is confirmed by the revenue impact forecasts provided by the Government, which adopted this norm to respond to the deficit problem.
The resolution recalls that Royal Decree-Law 2/2016 has already been prosecuted and declared unconstitutional, also for affecting the duty to contribute. In it, payments on account of the IS of large companies were increased, while the decree-law now being prosecuted affects the final quantification of the tax, widening the tax base and also directly increasing the quota.
As in the previous ruling, handed down in 2020, the court concludes that the questioned precepts have had, together and separately considered, “a notable impact on structural elements of a fundamental piece of the tax system such as the IS, affecting the essence of the duty to contribute of those obligated by this tax, which is why they must be declared unconstitutional and null.”
