The Constitutional Court has decided to overthrow one of the measures that Cristóbal Montoro took as Minister of Finance in 2016 to meet the deficit objectives: limit deductions for large companies. A measure with an impact of several billion euros on public accounts that, as the conservatives and progressives of the court unanimously declare, was imposed irregularly.

The scope of the decision, in any case, is limited and the State will not be obliged to return all the billions of euros it has collected for this reform. If today a company has not appealed its case or claimed the money back through some mechanism, it will not be able to do so now. “This limits its effects to the past,” he explains.

The Constitutional Court understands that certain rights and freedoms cannot be affected through a Royal Decree-Law, in this case the duty to contribute to the support of public expenses. These precepts, he says, have had “a notable impact on structural elements of a fundamental piece of the tax system such as the Corporate Tax, affecting the essence of the duty of those liable to contribute.”

For days, the plenary session had been studying this measure promoted by Mariano Rajoy’s executive in 2016 to improve the collection of Corporate Tax and comply with the deficit objectives agreed with Brussels: limit the ability of companies to underpay this tax by alleging losses in previous years. As Minister Cristóbal Montoro himself explained at the time, the PP executive’s calculations were to raise some 4.5 billion euros more, the same day he announced other measures such as raising excise taxes on alcohol and tobacco.

Until then, the law limited this possibility of compensation to 70% and the Montoro reform lowered that limit to 50% for companies that invoiced more than 20 million euros. If the company’s business figures rose above 60 million, that margin fell even further, to 25%.

It was the National Court that questioned this rule and took the matter to the Constitutional Court, understanding that a Royal Decree-Law could not regulate “essential elements of the Corporate Tax”, only manipulable through a rule with a higher rank of law. A similar reason that led the same court to annul another Montoro tax reform that same year: the advance payment of Corporate Tax.

Another of the great measures of Cristóbal Montoro and Mariano Rajoy’s executive that overthrew the Constitutional Court was the 2012 tax amnesty, which according to Treasury data, around 30,000 Spaniards took advantage of. In that case, the plenary session also declared its unconstitutionality but limited the effects to those who had not regularized their situation to preserve “legal security.”

The effects of the sentence

The ruling, which has been approved unanimously by conservatives and progressives with César Tolosa as speaker, understands that approving a measure that affected the Corporate Tax and the obligations of citizens in this way could not be done through a Royal Decree-Law. . This legal formula, say the magistrates, “cannot alter either the general regime or those essential elements of the taxes.”

The Corporate Tax, according to data from the Tax Agency, collected more than 32,000 million euros throughout the year 2022. It is, according to the Constitutional Court, a “basic pillar of the tax system” and this 2016 reform had an “impact remarkable” in its operation.

The result, explains the Constitutional Court, is not that the State has to return everything it has collected irregularly in Corporate Tax in the last seven years. As has happened on previous occasions, they appeal to the “principle of legal certainty” so that cases cannot be reviewed that, as of the date of this ruling, “have been definitively decided by a ruling with the force of res judicata or by a final administrative resolution.” . Nor those that, to date, have not been contested or the settlements whose rectification has not been requested.


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