The Constitutional Court declares the measures affecting Corporate Income Tax since 2016 unconstitutional

The Constitutional Court (TC) announced the declaration of unconstitutionality of certain tax measures introduced in the Corporate Income Tax (CIT) in 2016.

Through a briefing note, the TC announced the ruling of the Plenary session of the TC declaring unconstitutional the measures regarding the CIT, introduced by Royal Decree 3/2016 of 2 December and which led to a significant increase in the CIT payments since the financial year of 2016.

Therefore, the following measures have been declared unconstitutional:

• Setting of stricter ceilings for the compensation of
  negative tax bases.
• Introduction of a new limit on deductions for double
  taxation.
• Obligation to automatically include in the tax base the
  impairment of shareholdings that have been deducted
  in previous years.

Past effects of the ruling are limited, since:

• Tax obligations that, at the date of the issuance of
  the decision, have been definitively resolved by a
  final decision or by a final ruling cannot be
  reviewed.
• Neither can tax assessments that have not been
  challenged at the date of the ruling nor
  self-assessments for which rectification has not
  been requested to be reviewed.

The TC’s basis for the declaration of unconstitutionality is that a Decree Law cannot alter the essential elements of a tax that affect the determination of the tax burden, such as the tax base and the tax liability, specifically of the IS.

Read Nota Informativa 6/2024 de 18 de enero.