
A court orders the refund of IAE to a company during the state of alarm.
The 3rd Court of Valencia has ruled against the criteria of the Treasury and in which it upholds a company that paid the famous Economic Activities Tax (IAE) during the state of alarm, a period in which many companies were forced by law to close their businesses.
Euriux Abogados as a specialised law firm explains the legal arguments why this case has been decided.
The judge has ruled that the taxpayer will be able to recover the money unjustly paid for this tax. In a ruling of 11 January 2022, this court upheld the appeal lodged by a company.
In this case, the company was forced to close down its activity from 14-3-2020 to 21-6-2020. And to limit the capacity to 75%, from 21-6-2020 to 6-11-2020. And from that date, until 31 December, it was only allowed to occupy one third of the capacity.
Article 10 of Royal Decree 463/2020 of 14 March declared a state of alarm and provided that "hotel and catering activities are suspended, and only home delivery services may be provided".
The court has taken a position in favour of the company by allowing the refund of the amount paid for this tax, basing its argument on article 89 of Royal Legislative Decree 2/2004, which provides that in the case of cancellation due to cessation of the activity, the fees shall be prorated by calendar quarters, excluding the quarter in which the cessation of the activity takes place. To this end, taxpayers may request a refund of the part of the tax liability corresponding to the calendar quarters in which the activity was not carried out.
Despite this "revolutionary" ruling, the TEAR (Regional Economic-Administrative Court) of Aragon, a body under the Ministry of Finance, rejected in a resolution of 22 July 2021 the claim filed by a taxpayer requesting a refund of the IAE due to the impossibility of carrying out his activity during the state of alarm.
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The SC rules on the tax effect of the sale of frozen bread
The Supreme Court has ruled that, for tax purposes, baking frozen loaves of bread cannot be considered to be equivalent to making bread. Therefore, establishments that sell this type of pre-cooked products cannot be considered bakeries or "bread bakeries", but rather retail sales. This was stated in a ruling published on 18 February and reported by Cadena Ser.
This is a ruling on an appeal lodged by Santander City Councilagainst a ruling by the High Court of Justice of Cantabria, which ensured that the municipal administration should return the fees for the Economic Activities Tax (IAE) that the supermarket chain Lupa had been charging.
The High Court has agreed with the supermarket chain, as it considers that putting a frozen loaf of bread in the oven or 'bake off' "does not constitute the whole process which, from the mixing and kneading of the raw materials or ingredients, concludes with the bread made and ready for sale". "At most it could be accepted that the baking or heating of the frozen bread concludes or completes a production process, but it does not complete it in any way'.
The SC states instead that "it forms part of the broader activity of retail trade in food products", for which the company was also taxed. The judgment points out that the final baking "is not a job that requires either highly specialised knowledge or complex processes or means or equipment inaccessible to consumers".
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