In its ruling of May 29, the Central Economic-Administrative Court (TEAC) adopts for the first time the criterion established by the Supreme Court on April 11. This criterion implies a reduction in the fines imposed by the Treasury in cases of tax debts. According to the TEAC, the Tax Agency must calculate the penalties based on the liquid quota instead of the differential quota, which was the method previously used. Since the decision of the Supreme Court, the Tax Agency must consider withholdings, payments on account and installment payments made by the taxpayer as part of the debt already satisfied when imposing penalties for economic loss.
The Central Economic-Administrative Court (TEAC) establishes a new criterion that determines that, when calculating the penalty for economic loss, the liquid quota must be used, which includes the payments on account, withholdings and installment payments as part of the satisfied debt.
The court issued its decision regarding the appeal filed by a taxpayer against the resolution of the Regional Economic-Administrative Court of Madrid. The taxpayer received an income of €603,900 in a company as part of a commission for brokering the sale of a property. However, a tax inspection determined that the transaction was simulated and that said income constituted a capital gain, which led to the regularization of the Personal Income Tax (IRPF) corresponding to the year 2013. As a result, the taxpayer had to pay to the Treasury the sum of 312,847 euros for Personal Income Tax.
According to article 187 of the General Tax Law, the penalties imposed by the Treasury must take into account the economic damage. According to section ‘b’ of article 187.1, this damage is calculated as the percentage between the base of the penalty and the total amount that should have been paid.
The penalty is determined according to the resulting percentage. If the economic loss is between 10% and 25%, the penalty is increased by 10 percentage points over the amount owed to the tax authorities. If the economic loss is between 26% and 50%, the increase is 15 percentage points. If it is between 51% and 75%, the increase is 20 percentage points. If the loss exceeds 75%, the increase is 25 percentage points. Therefore, the basis used in the calculation is relevant in determining the penalty. In this particular case, given that the taxpayer had not paid any of what he owed, the Treasury considered that the initial percentage of the penalty was 100% and an additional 25% was increased due to the fact that the detriment exceeded 75%.
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