The Constitutional Court gives free rein to the treasury to squeeze the interests of big companies

The decision in question, the ruling of which has just been announced, upholds the constitutionality of the Treasury’s ability to require large corporations to make their advance payments of corporate tax according to their gross profits, without deducting deductions, incentives and exempt income recognized by law and regardless of how much this scheme may lead to companies. We expect a much higher amount Which they will be responsible for paying in the final settlement of the tax.

According to data published by the Tax Agency, in 2023 companies headquartered in Spain They advanced €34.174 million In the three installments stipulated by the regulations, of which the Treasury was subsequently forced to return 13,500 million to companies, 70% (more than 9,300 million) to large groups.

This huge and increasing volume of resources that the Treasury seizes in advance from large corporations and then returns them months later without interest, was the reason for the extremely harsh vote cast by five constitutional judges against the ruling.

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The special vote, which replicates the internal split (7 votes for the progressive majority versus five votes for the conservative justices) that had already emerged in the ruling declaring the government’s large wealth tax constitutional, considers the approval of this partial payments system by a majority of the Constitutional Court to be Legitimizing “a type of pyramid business”“Partial payments to taxpayers for a year unconstitutionally finance refunds of wrongfully paid excesses the previous year” and consolidate a system that allows the state to finance itself at the expense of corporations. “It is one thing to use a tax to finance public spending and turn it into a zero-interest public debt instrument,” the write-up says.

The judges openly question the constitutionality of the criteria used by the Constitutional Court to approve the current system of premium payments and warn that it gives absolute power to the executive when it comes to modifying what is understood in financial terms as the economic capacity of companies, even above what is determined by law.

“The ruling supports that the accounting result is a reliable criterion when assessing a company’s ability to generate wealth, but in corporate tax law, economic capacity is determined by the tax base and this law sets the framework within which companies pay their taxes,” explains a member of the IDAF group of corporate tax experts who prefers to remain anonymous and who stresses that despite this discrepancy they strictly respect the ruling. “the Premium payments must be in advance of the tax payableBut this is not the case, and the truth is that they are moving further and further away from the real amount that was paid in the end.”

“Starting from the accounting result to calculate the installment payment is not a correct tax approach because it does not have to coincide with the tax base, and in fact, in the case of large companies, it almost never coincides,” warns Robin Jimeno, technical secretary of the Register of Tax Advisers (Reaf). “It is assumed that companies They have to forgo the resources needed for their investments Until the Treasury Department returns it several months later.”

What the official information published by the tax authority says is that in 2023 there were more than 860,000 companies that announced a positive accounting result, but less than 650,000 companies that paid the companies what they paid. There are 200,000 companies that could be progressing towards Treasury dividends, and they are notat least in the eyes of current corporate tax. “Deductions and exempt income exist to avoid double taxation or advance economic policy objectives. “What you can’t do is organize them and then ignore them when it comes to raising money,” laments another advisor.