We analyze the reasons why the Constitutional Court declares the measure introduced through Royal Decree-Law 12/2012 null and void
What did the “tax amnesty” consist of?
In 2012, the Tax Agency were plummeting. With the government raising income tax and preparing an increase in VAT, the Ministry of Finance decided to implement a tax amnesty, initially aiming to raise €2.5 billion (around 3% of GDP).
This amnesty was legislated through Royal Decree Law 12/2012 in its first additional provision.
The main mechanism was to regularize the tax situation of those who had assets or rights not declared to the tax authorities by submitting a special tax declaration that required the application of a 10% tax on the amount or value of the acquisition of the declared assets or rights.
The Treasury collected €1.2 billion, less than half of what it had projected. 31,000 taxpayers program, regularizing almost €40 billion in outstanding tax debt.
Why has the Constitutional Court annulled this measure?
The Constitutional Court, in Judgment 73/2017, declared the amnesty null and void. The reason given was the breach of one of the substantive limits that the Constitution imposes on Royal Decree-Laws. According to Article 86.1 of the Constitution, this legislative instrument cannot affect the rights, duties, and freedoms of citizens regulated in Title I of the Constitution. Within this Title, Article 31.1 establishes the duty of all citizens to contribute to the financing of public expenditure, according to their economic capacity, through a fair tax systembased on the principles of equality and progressivity. These duties were also affected by the application of the amnesty, directly impacting the distribution of the tax burden, for three reasons:
- The first change was that it allowed for regularization "at a reduced rate," initially set at 10%, but effectively reduced to 3%. This occurred because the Tax Authority allowed for the exemption of payments for assets whose ownership had already expired, meaning these were regularized completely free of charge.
- It exempted the fraudsters from paying any kind of surcharges: neither late payment interest, nor penalties for tax fraud nor any other type of sanctions.
- It converted all the regularized assets into "declared income for all purposes", so the taxpayers did not have to give any further explanation to the Tax Office.
From this perspective, the aforementioned tax amnesty represented a renunciation by the State of its obligation to enforce citizens' duty to contribute to public spending according to their economic capacity. It undermined the equality of Spaniards before the tax authorities, placing tax evaders in a more favorable position than other taxpayers, citing reasons of budgetary pragmatism, and called into question the principle of tax progressivity.
What are the effects of this ruling?
The main consequence of the publication of Constitutional Court Ruling 73/2017 is the annulment of the tax amnesty established in Royal Decree-Law 12/2012. This would prevent the possibility of justifying future tax amnesties simply on the grounds of a high public deficit. Finally, it should be noted that those who opted for the special tax declaration will not be subject to inspection or any other form of audit, as the Court considered this the only way to guarantee the principle of legal certainty.
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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