This September we would like to introduce our partner in the Tax Planning area, Arantxa Hernández. Arantxa is a lawyer and is an expert in the field of tax advice and tax planning for corporate groups, real estate operations and reorganisation of family business groups and taxation of public sector companies.
After almost 20 years in the legal sector, what are the main changes that a tax lawyer has faced this year 2019?
In fact, 2019 has been a year of transition in which there have been no major tax changes. The political situation has not allowed the approval of different measures that were foreseen in the Bill of the General State Budget for 2019. Many of these novelties involved an increase in taxes on capital income, both at the level of individuals and companies, by limiting the application of the rules for the elimination of double taxation.
However, other obligations related to tax risk management have come into force, which are reflected in the tax compliance systems and in the processes necessary for the effective application of the Good Tax Practices manual in the organizations of the State Agency of the Tax Administration. Some of these measures are of an international nature and stem from the BEPS Project launched by the Organization for Economic Cooperation and Development (OECD) and which has subsequently been translated into Community regulations or into bilateral or multilateral agreements to avoid double taxation, tax fraud and improve the exchange of information among States. In addition, at national level, AENOR has published the UNE 19602 Standard on tax compliance management systems. All this, for a better compliance with transparency and tax obligations to be implemented by companies. In any case, it represents a change of trend (since control is transferred to the companies themselves), thereby reaffirming that it is the taxpayers who are responsible for their tax obligations.
But it is not all obligations. The courts have issued rulings that have opened up the possibility for taxpayers to claim against the criteria that the tax administration has been maintaining, for example, with regard to the Tax on the Increase in Value of Urban Land (Municipal Capital Gains), in the Tax on Inheritance and Donations by Non-Residents, among others. This has allowed us to claim fees paid by taxpayers that must now be compensated.
Among his areas of knowledge, it is worth mentioning his longstanding specialization in the optimization of taxation in the reorganization of assets and their transfer, business restructuring. What are the points to be taken into account if we want to preserve assets?
In addition to a structured and well-targeted investment policy that anticipates the market situation, it is essential to take advantage of all legal measures to reduce/optimise taxation.
Thus, for example, in the business field, an analysis is required of the deductions and exemptions applicable to certain income from corporate tax, as well as the special regimes in force for certain activities, such as the rental of housing.
At the level of the investor, the correct application of exemptions in the Wealth Tax and its correlation with the rebate in the Inheritance Tax of participations in companies and businesses takes on special relevance. Correct planning can be the difference between being able to accept an inheritance or not being able to do so because of its cost, and having to settle part of the estate to satisfy taxes.
In the case of foundations and non-profit organizations, what should these organizations take into account in the tax field?
Most third sector entities carry out activities that are subject to but exempt from VAT. This situation, which may seem to be an advantage, in most cases entails an extra cost for these entities, as they have to bear the cost of VAT on their purchases without being able to deduct it.
However, many of these entities also carry out other subject and non-exempt operations and, on the other hand, sometimes benefit from the receipt of subsidies.
Such complex cases require a detailed analysis of the VAT deduction system that may be applicable to them in order to minimise, as far as possible, the extra cost of this tax.
Furthermore, I recommend analysing whether the legal form they use is the most appropriate for their current situation. These entities usually start with a goal that evolves over the years. Thus, there are many associations that, in reality, could be in the form of a foundation and benefit from the regulations of the Law on Patronage, with advantages in terms of taxation on corporate income tax and deductions for partners and contributors.
What are the main challenges in your area for 2020?
We are living a moment of change that we are not sure what legal developments will bring. In any case, we are prepared to analyze the different scenarios that may arise.
The situation in Europe and the Brexit must also be taken into account because of the effects it can have on direct taxation, VAT and customs duties and how it can affect each company that has economic links with the United Kingdom.
The demands on government are progressively increasing and it is up to the private sector to meet more and more obligations, so it is necessary to be flexible and able to adapt to them.
Likewise, we keep a close eye on any new legal developments that may imply a change in the criteria maintained by the Tax Administration and that may be beneficial to our clients.
In any case, from our area we seek to visualize the future and anticipate change and work with enthusiasm on the new opportunities that are approaching
What is the added value provided by AddVANTE’s Tax Planning area?
Taxation is an aspect that must be analysed in all types of operations and, on many occasions, is a determining factor in their success. AddVANTE, as an interdisciplinary firm, allows the client to receive comprehensive advice at all levels and in the areas required.
Our training and constant legal and technological updating allow us to transmit total confidence to our clients, which is our reason for being. We are very clear that our mission is to understand what the client’s real needs are and to provide them with an appropriate solution.
Arantxa has participated as a speaker in various conferences and seminars related to fiscal, tax and regulatory aspects of family businesses, the real estate market, Inheritance and Gift Tax and public procurement and non-profit organizations, among others.