VAT on Spanish Tax Journal — Álvaro Crespo Garcíahttps://spanishtaxjournal.com/en/categories/vat/Recent content in VAT on Spanish Tax Journal — Álvaro Crespo GarcíaSpanish Tax Journal — Álvaro Crespo Garcíahttps://spanishtaxjournal.com/img/og-cover-en.pnghttps://spanishtaxjournal.com/img/og-cover-en.pngHugoen-USPenalties of article 171.One.4 of the VAT Act for reverse charge: the proportionality doctrine is alivehttps://spanishtaxjournal.com/en/2026/03-30/nota-vat-art-171-disproportionate-penalty/Mon, 30 Mar 2026 00:00:00 +0000https://spanishtaxjournal.com/en/2026/03-30/nota-vat-art-171-disproportionate-penalty/The Spanish Supreme Court confirms that the court may directly annul the penalty of article 171.One.4 of the VAT Act for disproportionality in reverse charge cases, without need to refer the matter to the Constitutional Court or to the CJEU.The Spanish Supreme Court, in its judgment no. 401/2026 of 30 March 2026 (cassation appeal 4256/2024), confirms that the penalty provided for in article 171.One.4 of the Value Added Tax Act (LIVA) for the infringement of article 170.Two.4 —reverse charge without real economic prejudice to the public treasury— may be directly annulled by the court where it finds disproportionality in the specific case, without need to raise a constitutional question before the Constitutional Court or a preliminary reference before the Court of Justice of the European Union. The doctrine rests on the Spanish Supreme Court’s own case law (judgments 1093/2023 and 1751/2024) and on the CJEU’s criterion in Farkas (case C-564/2015, 2017) and Grupa Warzywna (C-935/19, 2021), where the Luxembourg court declared that formal penalties that do not attend to the economic reality of the breach are contrary to the EU principle of proportionality.

The practical consequence, for defensive purposes, keeps a robust line of argument alive. In cases where AEAT imposes a penalty under article 171.One.4 of the LIVA for a purely formal breach of the reverse charge, with no real revenue prejudice, it is advisable to raise the disproportionality of the penalty before the court from the first moment of the challenge. Administrative rejection does not exhaust the defence: the court may directly disapply the sanctioning rule if it finds it disproportionate, attending to the contributor’s specific conduct and the actual prejudice caused.

Full analysis in → Penalties under article 170.Two.4 of the VAT Act for reverse charge may be annulled as disproportionate

]]>Penalties under article 170.Two.4 of the VAT Act for reverse charge may be annulled as disproportionatehttps://spanishtaxjournal.com/en/2026/03-30/vat-art-170-two-4-penalty-disproportionate/Mon, 30 Mar 2026 00:00:00 +0000https://spanishtaxjournal.com/en/2026/03-30/vat-art-170-two-4-penalty-disproportionate/The Spanish Supreme Court confirms that penalties for breach of article 170.Two.4 of the VAT Act, quantified by article 171.One.4 at a fixed 10% rate, may be annulled as disproportionate without need to raise a constitutional question or a preliminary reference.Mixed holding and intragroup transfer of participations: differentiated sector under VAT, save autonomous economic unithttps://spanishtaxjournal.com/en/2026/03-11/nota-mixed-holding-vat-differentiated-sector/Wed, 11 Mar 2026 00:00:00 +0000https://spanishtaxjournal.com/en/2026/03-11/nota-mixed-holding-vat-differentiated-sector/The Spanish Supreme Court confirms that intragroup transfers of participations by a mixed holding company are part of the financial differentiated sector for VAT purposes, save where they entail the transfer of an autonomous economic unit.The Spanish Supreme Court, in its judgment no. 308/2026 of 11 March 2026 (cassation appeal 4660/2023), confirms that the intragroup transfer of participations made by a mixed holding company —an entity combining holding activity with additional economic activity, typically the provision of services to the group— is integrated, as a general rule, into the differentiated sector of financial activity for Value Added Tax (VAT) purposes. The transaction is subject to the pro rata regime characteristic of that sector. The judgment introduces, however, an important exception: the transfer may be non-subject to VAT where it entails the indirect transfer of an autonomous economic unit, in accordance with the doctrine of the Court of Justice of the European Union in Christel Schriever (case C-444/2010, 2011) —where it was established that the transfer of an operating set capable of carrying out by itself an autonomous economic activity falls outside the scope of VAT—.

The practical consequence affects the planning of any intragroup transfer of participations managed from a mixed holding. The characterisation —financial differentiated sector with special pro rata, or non-subjection by autonomous economic unit— requires case-by-case analysis. The examination must verify whether the transaction effectively transfers the material and personal means necessary for the continuity of the underlying business activity, an objective and verifiable requirement. It is advisable to anticipate this analysis at the closing of the operation and to document contemporaneously the elements that sustain the characterisation adopted.

Full analysis in → The intragroup transfer of participations by a mixed holding company forms a differentiated sector for VAT purposes, save where it entails the transfer of an autonomous economic unit

]]>The intragroup transfer of participations by a mixed holding company forms a differentiated sector for VAT purposes, save where it entails the transfer of an autonomous economic unithttps://spanishtaxjournal.com/en/2026/03-11/mixed-holding-vat-differentiated-sector-autonomous-economic-unit/Wed, 11 Mar 2026 00:00:00 +0000https://spanishtaxjournal.com/en/2026/03-11/mixed-holding-vat-differentiated-sector-autonomous-economic-unit/The Spanish Supreme Court confirms that intragroup transfers of participations by a mixed holding company are included in the differentiated sector 'financial activity' for VAT purposes, but may be non-subject to the tax where they indirectly transfer an autonomous economic unit.