An analysis by Garrigues, Taxand Spain
The Spanish Supreme Court has ruled that EU law requires adhering to the principle of proportionality in sanctions. Specifically, the court concluded that a penalty based on a percentage of non-self-assessed Value Added Tax (VAT) cannot be imposed when there is no economic harm to the Public Treasury or signs of fraud. This ruling challenges the imposition of a 10% proportional fine on unrecorded VAT amounts in certain cases, even when no economic damage or fraud is involved.
The rulings suggest that EU law takes precedence over national law in matters of proportionality, but they do not address alternative sanctions or differences in interpretation between EU and national courts.
Abelardo Delgado Pacheco and Jose Vicente Iglesias of our Spanish partner firm, Garrigues, analyse these rulings and their implications in their blog here.
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