In the last few days we have been informed of a very recent decision from the Spanish Central Administrative Court (TEAC), dated 11 February 2021. This decision rejects the possibility of claiming the unconstitutionality of the CIT pre-payment of April, 2018.

As we already informed you in our Tax Flash dated 17 September, 2020, the Sentence from the Constitutional Court dated 1 July, 2020 declared the unconstitutionality of Decree-Law (DL) 2/2016. This DL stated an increased 24% tax rate in the CIT pre-payments and a minimum 23% pre-payment on the accounting profit. Those two measures were applicable to companies with a turnover over 10 million euros.

The declaration of this DL as unconstitutional was based on the undue use of a DL, instead of a law, to regulate those elements.

DL 2/2016 was in force since the second CIT pre-payment, 2016, until July, 2018, as a result of the entry into effect of Law 6/2018 (budget law for year 2018). This new law confirmed the changes introduced by DL 2/2016, and passed them into law.

This TEAC decision corresponds to a claim filed against the CIT pre-payment filed in April, 2018, which was calculated while DL 2/2016 was still in force. The decision states that the effects of the declaration of unconstitutionality of DL 2/2016 cannot be extended to the 2018 pre-payments, as Law 6/2018 had retroactive effects “to the fiscal years started from 1 January, 2018”.

In consequence, as this new law was in force from 1 January, 2018, the unconstitutionality of DL 2/2016 was offset from that date.