Del Canto Chambers Spanish tax team, led by Paula Losada has recently achieved a significant victory against the Spanish Tax Authorities in an administrative court (Juzgado Central de lo Contencioso-Administrativo nº 2 de la Audiencia Nacional).
In 2019, a Spanish tax resident client faced a tax inspection regarding their 2015 Income Tax Return. The Spanish Tax Office claimed a significant amount due to an alleged error in the declaration.
The facts involved a UK resident selling their property in 2017 and moving back to the UK. The property sale was correctly reported in their 2017 Income Tax Return in Spain. However, despite having this information, the Spanish Tax Office sent all notifications about the tax inspection to the client’s former address in Spain.
As a result, the client remained completely unaware of the inspection and was denied the opportunity to present arguments or defend themselves. The Spanish Tax Authorities proceeded with a resolution imposing tax liability for the alleged error. By the time the client learned of the tax claim, it was too late to challenge the decision legally and the client was forced to pay nearly €70,000 to settle the tax debt.
Our legal team filed an administrative appeal against the Director of the Tax Management Department of the Spanish Tax Office, arguing the invalidity of the notifications and the resulting resolution. However, the Tax Office dismissed the appeal without properly assessing the notification process.
We appealed against this decision using the contentious administrative procedure before the No. 2 Contentious-Administrative Court of the National High Court (Juzgado Central de lo Contencioso-Administrativo nº 2 de la Audiencia Nacional), which has now ruled in our favour, recognising that the notifications were likely invalid and that the appeal should have been reviewed.
The judgment highlights that the Tax Office had sufficient information to know our client no longer lived at the property, as the sale was declared in the 2017 tax return. Instead, the authorities relied on publishing notifications in the Official State Gazette, a measure meant for exceptional cases.
This excessive use of gazette notifications undermines taxpayers’ right to effective administrative protection by failing to ensure they are properly informed of ongoing procedures.
At Del Canto Chambers, we specialise in Spanish tax litigation and would be pleased to discuss your case and evaluate its merits.
Please contact us at clerk@delcantochambers.com
