The Catalan employers' association Foment del Treball, chaired by Josep Sánchez Llibre, has presented an appeal before the National Court to ensure that Spain incorporates the limit of 50% of annual income in the joint taxation of income tax and wealth tax. a threshold that the European Court of Human Rights (ECHR) set as non-confiscatory and that other European countries such as Germany and France have included in their legislation.
Jordi de Juan, partner in the tax area of the Crowe Legal and Tax law firm, who signed the appeal, explained that the objective of this appeal is for the National Court to promote a question of unconstitutionality against the Wealth tax, for which it is requested that it be declared that It contravenes the Spanish Constitution – which prohibits the tax system from being confiscatory – as well as the international treaties signed by Spain, especially the Rome Convention and its development protocols.
Currently, the law that regulates this tax establishes that the joint taxation of Personal Income Tax and Assets cannot exceed 60% of the taxpayer's annual income, but since it establishes a minimum taxation for Assets, in many cases this threshold is exceeded. According to Foment, the low profitability of assets in recent years has led many people to have to pay more for Patrimony than the income they obtain in a year, which forces them to sell assets to meet these tax payments.
The Constitutional Court (TC) already has on the table an appeal from the Popular Group against the confiscatory nature of the Wealth Tax, but the one promoted by Foment, according to De Juan, has other grounds for its request, in addition to also questioning the inappropriate use of the decree law and the budget law to recover it.
De Juan recalled that the PP has legitimacy to go directly to the TC (groups with more than 50 deputies or senators can do so), while Foment has chosen to request the National Court to raise the question of unconstitutionality, an initiative that this court has already taken on other taxes, such as corporate taxes.
The appeal, De Juan explained, opens the way for Foment to go to the European courts. If the National Court did not agree to raise the issue with the TC, the employers could appeal to the Supreme Court and subsequently go directly to the ECtHR, as they could also do if the TC ruled endorsing the constitutionality of the tax.
“We have opened an unprecedented path,” acknowledged Juan, which goes beyond the resources conveyed through political parties or groups. De Juan recalled that Crowe is a firm specialized in this type of procedures, which he described as “high legal technology.” “Many tax experts limit themselves to questioning the application of the law while we question the same rule,” he points out, a strategy that they have applied with varying success to question the corporate tax, the distribution of dividends and the solidarity tax of large companies. companies.
“In Spain, the limit of admissible taxation has not been addressed to comply with the precept of the Constitution that requires it not to be confiscatory,” De Juan recalled. The employer's appeal is based on a ruling by the ECHR regarding an appeal presented by a Hungarian citizen who considered an effective taxation that reached 52% of the income she received to be an illegitimate interference with the property right recognized by the Rome Convention. This limit of 50% of income to the tax effort was later assumed by the federal Constitutional Court of Germany and by the Council of State in France.
De Juan acknowledged that the legal battle will last “years” and that the doctrine of the TC, in rulings such as the one that annulled the capital gains tax, rule out its retroactive effect, so it is foreseeable that it will not affect declarations of assets prior to the ruling. For this reason, he explained, "in our office we advise paying the tax and claiming a refund for undue income, since there needs to be a claim to get the Treasury to return what was unduly collected."
