The Treasury will have to prove that there are abuses in the income tax exemption for non-residents

The Supreme Court established as a doctrine that the burden of proving an abuse that prevents the use of the right to exemption from the income tax of non-residents (IRNR) belongs to the Tax Administration, and not to the taxpayer. In other words, it will be the tax administration that must prove that there are no valid economic reasons for denying the exemption of dividends coming from Spain. In a recent sentence, the Court of Justice applies the jurisprudence of the Court of the EU, determined by judgments from 2017 and 2019, and modifies and adapts its doctrine to it in relation to the interpretation of the “clause against abuse” contained in Article 14.1.h of the consolidated text of the law on the said tax.

The General State Administration pointed out in the appeal that the burden of proving the application of the exemption is on the taxpayer who benefits from it. But now the Supreme Court concludes that it is up to the State Treasury to prove the abuse.