Spanish Supreme Court Rules on VAT and IGIC Double Taxation and Refund Rights for Businesses

• Spain’s Supreme Court clarified that VAT and Canary Islands IGIC cannot apply simultaneously to the same transaction due to different territorial tax systems.
• A travel agency was forced to pay both IGIC (7%) and VAT (21%) on the same transactions after a tax audit, without being able to pass the VAT cost to customers.
• The Canary Islands tax authorities denied the agency’s request for an IGIC refund, arguing only final consumers could claim it.
• The Supreme Court ruled that the business, not the consumer, bore the tax burden and was entitled to a refund when double taxation occurred.
• Denying the refund would violate tax neutrality and unjustly enrich the tax administration; the court upheld the agency’s right to recover the IGIC paid in error.

Source: bdo.global

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.

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