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Session two presenting project on Alternative Dispute Resolution Methods

On 21 September, the Centre for Political and Constitutional Studies held the second session on the presentation of the book “Tax litigiousness: alternative means of resolution and facilitation measures”, reflecting the research promoted in this regard by Fundación Impuestos y Competitividad.

Emilio José Pajares Montolio, subdirector of Publications and Documentation, was charged with the formal presentation on behalf of CEPC, while Julio Cesar García Muñoz, a member of the Foundation’s Board of Trustees, spoke on behalf of FIC. Both made some general remarks concerning the activities of the Centre and Foundation, respectively, and the reiterated collaboration between both institutes, borne out by CEPC ‘s hosting of several acts organised by FIC in the past few years. Julio Cesar García stressed the sincere appreciation of the Board of Trustees for this reiterated hospitality.

Concerning the project presented, two of the proposals for alternative dispute resolution means included in the work were addressed.

Firstly, in relation to ”agreed assessments … implementation through economic-administrative proceedings may give a <<second opportunity>> , Adal Salamanca Cabrera (PwC Tax & Legal) and María Antonia Azpeitia Gamazo (Baker Mckenzie) took the floor and provided, respectively, an intentionally simplistic view of the proposal, presented as an attempt to secure a better return on an existing solution- namely the “agreement” …between the Administration and the taxpayer- with a positive track record over the years in which it has been in effect, and another, more technical evaluation of the terms of the formulation of the proposal, clearly having an open attitude to its possible specification through legislation in terms far more acceptable to the Administration, and in particular, the Economic Administrative Tribunals. This is consistent with the project’s thoroughly pragmatic approach, in all its proposals, drawn up after comparing ideas with the officials responsible for that administrative area during the seminars held to complete it.

The second proposal analysed “Promoting the effectiveness of the out-of-court tax resolution”, was discussed by Ángel García Ruiz (Garrigues) and Julio Cesar García Muñoz (KPMG). Their presentation started with a close focus on the principle of non-availability of the tax credit, Article 7.2 of the LGT, which necessarily results from the provision in Article 7 of the General Budgeting Law.

Based on the latter and the exceptional proceedings opened in paragraph 3 thereof, for compromise or arbitration solutions through a Royal Decree, and following consultation with the Council of State, they analysed the few cases involving solutions processed through that channel in order to underscore the Council of State’s view, favourable to compromise solutions of “availability of the tax credit”. Other considerations completed this view, special attention being paid to the proposals of the General Council of the Spanish judicial authority, specifically, its “Emergency Plan for the Judiciary”, following COVID-19.

Following on from the speakers, and with Mayte Salvador Crespo, the subdirector of Studies and Research at the CEPC, as the chair, the debate kicked off and the speakers were joined by two relevant representatives of the Tax Administration who did most of the talking.

José Antonio Marco Sanjuan, the chair of the TEAC, offered some preliminary considerations and underscored the objective to improve legal certainty which leads the tribunals’ work. Following the questions raised by the chair, he acknowledged that the shortage of resources and the negative comparison of functionaries’ salaries in the economic -administrative area with those of the AEAT was an issue in ensuring that the tribunals were properly equipped and increasing effectiveness.

Besides that, he analysed several details of the solutions proposed in the work analysed and implied- for example- that if that new option of “agreement” were included in the Economic-Administrative procedure, its effective implementation would, in his opinion, be very difficult if it depended on the tribunal’s initiative, preferring it to depend on the appellant’s initiative with its subsequent referral to the bodies of the AEAT. He insisted on the need for final validation of the possible agreement by the tribunal, judging the absence of damages for third parties or the general interest and he rejected the mandatory suppression of penalties as a result of the agreement of the assessed tax amount, under that hypothetical option in economic-administrative proceedings.

Diego Loma Osorio, a director of the AEAT’s Legal Services, underscored that broadly speaking, complaints about tax litigiousness and the resolutions issued, are not based so much on the incorrect or poor reasoning of the resolutions or judgements, but on processing delays and so, in his opinion, increasing resources would be the ideal solution. He highlighted how- by way of an example to consider- following a recent audit on a European level and its negative assessment of the timely resolution of appeals for reversal, measures had been adopted that were helping to meet legal deadlines in those proceedings.

Besides that, in his opinion, the Tax Administration’s constraint in relation to the principle of legality basically rules out possible compromise solutions while the exercise of possible mediation by external professionals, not part of the Tax Administration, is questionable.

Alongside some remarks by the speakers, there were contributions by the public, notably Cesar García Novoa, a Professor of Financial and Tax Law of the University of Santiago de Compostela, and author of one of the chapters of the book, who insisted on arguing against the absolute or ontological nature of the non-availability of the credit. Diego Loma conceded that it is certainly not an unwavering unchangeable principle.

Alejandro Miguélez Freire, a lawyer, also intervened in his capacity as a member of AEDAF, underscoring the inconsistency of the doubts concerning the feasibility of the new compromise measures with, for example, the evidence of the agreements processed by the Prosecutors Office through penal proceedings in cases of Offences against the Public Treasury.

Ginés Navarro Fernández, the director of FIC, ended the meeting, thanking CEPC and the members of the round table, as well as the public and private institutions – mentioned in the “justification” of the work that had participated in the project through the seminars held. Besides this, he underscored the reiterative requests from various instances for alternative solutions that help to reduce the high level of tax litigiousness and the delays in resolution and therefore the evident need to garner the legislator’s support.

Below is the video of the presentation.

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