Companies are free to reorganise their assets, but it is undeniable that this freedom is largely limited by the tax burden that such decisions may entail. It is therefore not surprising that the European Union - the former European Economic Community - embarked on the arduous task of creating a common - but not special - tax regime to prevent, as far as possible, corporate restructuring operations from being hindered by particular restrictions, disadvantages or distortions arising from the tax provisions of the Member States.
In its worthy role, the European Union adopted Directive 2009/133/EEC1 by which it introduced a tax regime that was characterised - as we all know - by the deferral, until its effective realisation, of the taxation of capital gains corresponding to the assets contributed in restructuring operations. Under this, each member state developed its own national legislation in an attempt to achieve the purpose pursued by the aforementioned directive, under penalty of violating the secondary law of the European Union.
In the case of Spain, unfortunately, our legislator went a step beyond what was strictly necessary and decided to introduce as a requirement "sine qua non” for the application of the regime in which the so-called “valid economic motive” was present in business restructuring operations. This fact, far from being a trivial matter, meant that the application of the regime became - if I may use the expression - a real mission impossible.
It is true that Directive 2009/133/EEC in its article 15 authorized the member states to deny the application of the regime, as well as its benefits, in those cases in which the operations had as their main objective or as one of their main objectives tax fraud or evasion, however, it is a very different thing to allow the establishment of a requirement that entailed " "that the regime could not be applied in most cases.
In this regard, it should not be overlooked that the FEAC Regime is a common taxation regime, which, according to the very wording of the directive, must always be applied, except in those cases where there is a fiscal motivation that can be classified as abusive. In other words, the directive only seeks to prevent actions carried out in abuse of rights, in the sense that when such fraudulent or abusive practice occurs, the subject must be denied the consequences that would arise from applying the regime set out. Likewise, the fact that the Community regulation has not established a harmonized anti-abuse regulation does not authorize our legislator to outline, at his own discretion, its content.
Therefore, the directive only prohibits the application of the common regime in those cases where there is a tax saving that can be classified as “abusive” because it was achieved through an operation that, because it was carried out in abuse of law, must be considered “fraudulent” for these purposes. So, strictly speaking, the directive allows the application of the so-called economy of choice, according to which subjects have full freedom to choose the least tax-burdensome situation, as long as it cannot be classified as a fraudulent act or carried out in abuse of law. In other words, seeking a tax advantage is completely legitimate, except in cases where it is presented as a spurious objective, that is, false or feigned.
Last but not least, strictly speaking, tax reasons are economic reasons and, as long as they are not characterised as abusive, they should be completely valid in order to justify the application of the common regime. Therefore, the presence of “valid economic reasons” – as we know them – as a conditional requirement for the application of the common regime clashes head-on with the purpose of the directive, which consists of avoiding a tax imposition on the occasion of a business restructuring operation in all cases, except in those cases in which there is a fiscal motivation that can be classified as abusive. Moreover, according to the directive itself, the absence of a valid economic reason does not automatically lead to the non-application of the regime, but is a mere presumption that the main purpose of the operation has tax fraud or evasion as its main purpose or as one of its main purposes, and when such a situation occurs, it is necessary to assess whether it is a tax saving that can be classified as “abusive”, in order to deny its application. Therefore, the directive at no time requires the presence of a valid economic reason as a requirement.sine qua non” for the application of the regime, but states that its absence may be indicative that the purpose of the operation is a tax saving, but this does not mean that it has to be abusive. Therefore, in the absence of a valid economic reason, the correct thing to do would be to analyze whether there is an abusive or legitimate tax saving, in order to apply or not apply the regime.
For all the above reasons, our legislator, far from correctly transposing the directive, developed legislation that is totally contrary to it, by postulating all tax savings as abusive, subordinating the application of the regime to the presence of a “valid” economic reason – not a fiscal one – and requiring that, in the weighing of the possible economic reasons, the fiscal economic reason be “inferior” to the so-called valid economic reason. Such facts prevent the application of the general regime in all those cases in which there are fiscal economic reasons – but not abusive ones – and, furthermore, prevent the subjects from knowing with certainty whether they have the right to apply the common fiscal regime or not. It is undeniable that the national transposition of the directive does not respect, nor achieve, the purpose sought by it.
At this point, where the non-application of the regime has become the general rule in all those operations that are verified by the Tax Administration due to the "absence" of "valid" economic reasons, there is no choice but to rectify the national legislation, under penalty of violating the law derived from the European Union.
Maria Estevan Coscolla
Collaborator in the Tax Litigation Area of Tomarial
- COUNCIL DIRECTIVE 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares between companies of different Member States and to the transfer of the registered office of an SE or SCE from one Member State to another*1 ↩︎
