Supreme Court Overturns €4.6 Million Tax Penalty on Sigma Reparaciones for Reasonable VAT Interpretation

• The Supreme Court annulled a tax penalty of 4.6 million euros against Sigma Reparaciones.
• Sigma applied a reduced VAT rate of 10 percent from 2013 to 2015, considering the insured as the service recipient.
• The Tax Agency argued the insurance company was the real recipient, requiring a 21 percent VAT rate.
• The Tax Agency imposed a penalty, confirmed by the TEAC and the National Court, leading Sigma to appeal.
• The appeal questioned if a reasonable interpretation of the law could exempt Sigma from liability.
• The Supreme Court ruled in favor of Sigma, annulling the penalty due to a reasonable interpretation of the law.
• The Court emphasized the need for specific motivation on culpability in tax penalties.
• The complexity of the case and contradictory criteria supported Sigma’s reasonable interpretation.
• A previous penalty for similar facts was annulled by the TEAR of Madrid in 2020.

Source: audiconsultores-etlglobal.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.