The contradictory expert appraisal in the TP verification procedure

June 4, 2022

In Spain, the National Court has issued ruling 1332/2022, which allows the taxpayer the possibility of requesting a contradictory expert appraisal in the procedure to verify the value of related-party transactions and gives the reports drafted by the Tax Inspectorate the value of an expert opinion. 

1. Background

On the one hand, there is an important Spanish group in the dairy products industry, and on the other hand, the Spanish Tax Agency, which would have examined the fiscal years 2009 and 2012, is the object of appeal in the current judgment on the non-conformity assessments signed for the fiscal year 2012.  

The company alleges that the Inspection did not grant it the possibility of initiating a contradictory expert appraisal in the settlement agreement under appeal. It was only indicated that it could file an appeal for reconsideration or an economic-administrative claim.  

The Tax Agency claims that there should be no such possibility since there is no procedure in the valuation of related transactions to verify values, existing a specific procedure for the valuation of these transactions, regulated by the regime of related transactions of the LIS.   

For the Administration, the contradictory expert appraisal could only be applied if verification of values of Article 57 of the LGT had been carried out in application of the regime of related transactions. 

2. Petition

In this sense, the National Court must determine whether the market valuation carried out by the Tax Authorities regarding related transactions must verify values under article 57 of the LGT.  

On the one hand, the business group argues that the report prepared by the Valuation Team of the National Office of International Taxation constitutes an authentic expert opinion of the Administration. On the other hand, the Tax Agency assures that said report does not constitute one of the means established in article 57.1 of the LGT for the verification of values. 

3. Position of the National Court

The National Court points out that the taxpayer would have set the remuneration of the license for the use of the trademark at 5%, based on a valuation report, whereas the Inspection report establishes a royalty of 3.75%.  

Therefore, the Court determines that the Administration “has made a truly expert opinion, for which purpose it has used the valuation parameters that it considered appropriate (in this case, those resulting from the study of comparables that make up the Annex CUP) to obtain conclusions that have determined the valuation correction reflected in the liquidation from which this appeal arises.”  

Thus, it is ordered to backtrack the proceedings and expressly provide the taxpayer with the option of requesting said contradictory expert appraisal, annulling the resolution, and the settlement agreement.

Source: Legal Today 13/05/22