Recent Decision of the Spanish Supreme Court on the Elimination of Double Taxation under the Spanish Corporate Income Tax Act

Abstract

In this note, the author comments on the recent Supreme Court decision in Case 7910/2020 (14 November 2022), which addresses the elimination of double taxation under the Spanish Corporate Income Tax Law. Specifically, the case, which concerns the interpretation of the tax credit method for the elimination of double taxation, addresses (i) the determination of the deduction base and how expenses are computed in determining net income and (ii) the deductibility of foreign tax expenses from the tax base. The author analyses the application of the Supreme Court thesis to the exemption method, concluding that even though the decision clarifies the treatment of foreign taxes in the context of the rules for the elimination of double taxation, it is not clear whether this decision supports the deduction of foreign tax expenses in the context of the exemption method.