Spanish Court gives taxpayers weapon in the battle against tax authorities

by admin

MADRID – Government administrations in Spain have to review taxpayers recovery claims even if they have not appealed within a month of their payment.

Expansion writes taxpayers now have a new weapon in their hands in disputes with the Spanish tax authorities. This concerns the possibilities of recovery after the tax was paid and when the collection of the tax in question no longer has a legal basis. For example, there is no legal basis because the tax has been declared unconstitutional or contrary to European law.

In such a case, the civilian now has the right to demand that the tax authorities initiate proceedings for the withdrawal of those payments, even if the tax authorities disagree with the taxpayer’s grounds on which such recovery procedure may be withdrawn. 

Claiming collection even after tax authorities reject it 

Civilians can therefore now challenge the decision of the tax authorities to reject the withdrawal of the tax paid. The Supreme Court guarantees that the judges adjudicating these disputes have the power to judge the case on its merits and, if they see fit, to annul the final payments.

The case that started it

The Court hereby recognises the claims of a taxpayer against the municipality of Bétara (Valencia). It concerned the collection of the municipal Plusvalía (tax on the appreciation of urban land, IIVTNU) by the municipality. After the citizen paid the tax, in 2017 the Constitutional Court declared it null and void in transactions concluded at a loss, ie without real capital gain.

Municipality invokes the administrative authority

The taxpayer from Bétara then tried to reclaim the tax paid by him based on that ruling. The municipality did not allow the claim for processing. It stated the authority to withdraw tax already paid lies solely with the administration itself.


The man then started a lawsuit. A court in Valencia ruled in his favour. The municipality then appealed. The Supreme Court subsequently ruled that there was an interest in cassation in clarifying the case. This means that the Supreme Court considers that it is in the interest of the unity of law or legal development to answer a legal question, regardless of the details of the case in question. That is why the Supreme Court called in help from the state lawyer.

Taxpayers also have the power to request revocation

Ultimately, the Supreme Court ruled that taxpayers have the power to request the revocation of tax payments. Even without the government administration hiding behind the argument that it “has exclusive authority to initiate this process ex officio” in resolving them.

Not only are government administrations competent

The Court added judges also have the power to review the merits of a case and, if necessary, to annul fixed tax schemes. This power does not only belong to the relevant tax-collecting government administrations. With this, the Supreme Court establishes new criteria. Based on these criteria the taxpayer can start and contest a withdrawal procedure with the government administration.

Therefore, taxpayers can initiate the retrospective withdrawal of taxes already paid “. This means the public administration is not the only one with full discretion to determine if it will initiate such a procedure or not.

Consequences of the ruling

The ruling is critical as it gives citizens a new way to discuss decisions of government administrations regarding taxes they already paid.

More favourable scenario for taxpayers

The fact the taxpayer has only one month to appeal a decision by the tax authorities limited his or her ability to recover money. Also in cases where Justice or the EU has subsequently annulled the legal grounds of certain taxes. And in particular, because of that, the administrative body did not start the withdrawal process on its initiative. With the Supreme Court ruling, the scenario for taxpayers in these cases now becomes more favourable.

Wide Application of Pronunciation

This case refers specifically to the payment of the municipal capital gains tax. However, its application will be extended to all tax settlement processes or definitively closed tax sanctions.

Related post: Spanish tax authorities crush citizens with ‘inquisitorial behaviour’

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