BackSupreme Court Ruling no. 1695/2024 of 29 October addresses whether the lack of proof on certain aspects related to the tax deductibility of an expense necessarily implies considering the taxpayer’s conduct as guilty for the purposes of penalties.
The Court clarifies that the lack of proof of a corporate income tax expense does not automatically lead to the classification of the taxpayer’s conduct as culpable, nor does it necessarily imply the opposite. In situations where the problem arises from the proof of a fact, its circumstances or its legal framework, it is up to the Administration to prove the taxpayer’s guilt in each case, thus undermining the presumption of innocence set out in Article 24.2 of the Spanish Constitution. Moreover, this guilt must be adequately motivated, in accordance with the Supreme Court’s jurisprudence.
The Chamber also points out that it is not possible to apply the exemption from liability for penalties provided for in article 179.2.d) of the General Tax Law (LGT) when the penalty is not based on the interpretation of a legal rule with respect to its application, purpose or validity, but on the lack of proof of a fact necessary to justify the deductibility of the corresponding expense.
It should be recalled that Article 179 of the LGT establishes that individuals, legal entities and other entities may be sanctioned for tax offences if they are responsible for them. However, section 2.d) states that there will be no liability if the taxpayer acted with the necessary diligence, including those cases in which he based his actions on a reasonable interpretation of the rule or adjusted his actions to the criteria established by the Tax Administration in publications or official communications, according to articles 86 and 87 of the LGT.
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