The Spanish Supreme Court has admitted a cassation appeal filed by the Tax Law Department of Giménez Torres Abogados, raising an issue of significant constitutional and tax importance: whether the Spanish Tax Authorities may rely on photographs and information obtained during a search of premises that was subsequently declared null and void for violating the fundamental right to the inviolability of the home, in order to support a tax assessment based on a valuation report that incorporates such unlawfully obtained evidence.
The Supreme Court has also recognized cassational interest in a second issue raised in the same appeal, which is of considerable relevance in the field of related-party transactions. Specifically, the Court will examine whether the concept of a “shareholder or participant” under Article 18.2(a) of the Spanish Corporate Income Tax Act (“An entity and its shareholders or participants”) also encompasses situations of indirect related-party relationships between an individual and a company, where the individual is not a direct shareholder of the company but holds an interest in another entity that, in turn, is a shareholder of the first company.
The forthcoming judgment is expected to provide important guidance on the constitutional limits of tax inspections and on the interpretation of related-party transaction rules under Spanish tax law.
