Tax avoidance in Supreme Court jurisprudence

When presenting this work we should remember that, as defined in its by-laws, the Tax and Competitivity Foundation is committed to research on taxation with the ultimate aim of improving the Spanish tax system and the processes or procedures for the application of taxes. It is clearly assumed that the Spanish tax system is not only identified with the set of rules that make up the tax system, but also includes the practice of applying the different taxes that make up the system, an area in which the Courts play a fundamental role.

In addition, the programme statement made by the Foundation in March 2014 – during the processing of the Tax Reform approved in 2014 and 2015 -, considering that legal certainty is a key element for the improvement of the system, included, among other proposals, the following:

  • to increase legal certainty and reduce litigation,
  • to reduce the existing uncertainty regarding the interpretation of tax regulations,
  • to minimise the insecurity and cost for taxpayers derived from the multiplicity of administrations, rules and interpretations.

From this general perspective it is easy to justify the interest of the Tax and Competitivity Foundation in following, with great interest, the jurisprudence of our courts and, in particular, that of the Supreme Court.

This approach has naturally encouraged the study that is presented here, which addresses an in-depth exegesis of the judgments handed down by the Supreme Court – during the period 2012-2017 – in those cases in which an essential argument in the assessments made by the Tax Administration that are disputed and give rise to the litigation is the existence of intentional conduct by the taxpayer aimed at reducing the tax burden, to achieve tax savings, and when this occurs in the context of direct taxes on income.

This “tax avoidance” sought by the taxpayer – to cite this phrase employed in the title of the work and how it is used in the book – can be conceptualised in different ways and with clearly contrasting legal consequences.

This perspective has been lucidly assumed by the author of the book, titled “Tax avoidance and anti-abuse clauses in Supreme Court jurisprudence” , the professor of Financial and Tax Law at Seville University, Mr. Florián García Berro. When describing the purpose of his work, he states that:

“A thorough analysis of all jurisprudential output in relation to this subject and jurisdictional scope has been performed, systematising the most significant judgements …

The purpose … is to provide an easy-to-use instrument that supports the study and analysis of the extensive jurisprudence existing in the field of conduct involving tax avoidance …

… providing additional useful information for taxpayers in general, and companies in particular, in relation to their concerns over organising their businesses with the highest possible degree of security and, as far as possible, to avoid surprises resulting from possible administrative responses to their form of compliance with their tax obligations.”

As can be seen, as we progress along the path that is now commencing, there are major areas of uncertainty; … the value of legal security is particularly undermined by this fact. This value, which is sometimes misunderstood and which frequently receives insufficient attention from the public authorities in the different facets of tax legislation … is, in our view, one of the main concerns of tax law at the present time.”

In line with this approach, the book contains an initial, empirical section that compiles and arranges the judgements analysed systematically and historically, and a second section with evaluations and a critical review. These are completed with the executive summary that forms the third part of the book. The result is a work which, despite its considerable volume, is very manageable and of great interest.

It will be of interest to academic scholars of the tax system, but also to professional advisers or taxpayers who are the object of the direct taxation to which this study refers. The Tax and Competitivity Foundation also wishes the book to be of interest to the Tax Administration and the Courts, to whom, as essential interlocutors in the application of the tax system, we wish to convey this study and its conclusions, with the aim of achieving maximum collaboration and with the greatest respect for their work.