The Superior Court of Justice of Madrid (TSJM) has ruled in favor of a taxpayer for claiming inheritance tax on an inheritance. After the court ruling, is free from paying 139,683.29 euros demanded by the General Directorate of Taxes of the Community of Madrid (DGTCAM). Justice considers that the administration had exceeded the legal deadlines to settle the tax, violating article 66 of the General Tax Law (LGT), and, therefore, the debt is statute-barred.
According to the details of the November 2024 ruling, the conflict begins when receiving the inheritance due to the death of a close relative. In 2009, the heir presented the self-assessment of this tax before the Community of Madrid, depositing the corresponding amount. Years later, the General Directorate of Taxes of the Community issued an additional settlement considering that the value of the assets that had been declared was lower than the corresponding amount, and claimed an additional 139,683.29 euros from the heir.
This, not satisfied with the new settlement issued, filed a claim before the Regional Economic Administrative Court (TEAR), in which it alleged that lThe verification of the values of the assets carried out by the DGTCAM lacked sufficient motivation.
Justice considers that the amounts claimed by the administration are time-barred and the heir is freed from paying almost 140,000 euros in tax
This first claim to the TEAR was partially upheld, so that the liquidation of the General Directorate of Taxes was annulled, considering that indeed “the verification of value lacked sufficient motivation.” This decision was years later after a claim from the administration ratified by the Superior Court of Justice of Madrid, which declared it null and void, allowing the Administration to correct the defects detected.
After this process, In 2019 a new settlement was issuedcomplying with the ruling of the TSJM, but the heir once again filed a claim with the court, this time alleging that the General Directorate of Taxes had failed to comply with the legal deadlines. It was again the TEAR which considered the process expired and left this new settlement void.
Despite the judicial resolutions, the tax administration initiated a new process of verification of values, this time in 2021, and issued a third settlement which was again claimed by the heir. In it, he once again argued that the administration’s right to liquidate had expired, since more than 4 years had passed since the self-assessment of the inheritance tax was made upon receipt of the inheritance, in 2009.
Finally, in this ruling of November 2024, the TSJM has agreed with the heir, and has declared null and void the issued settlement by the Madrid tax administration in 2021, and all its related actions.
To do this, he bases his decision on the fact that the right of administration is prescribed, and according to article 66.a of the LGT, the right to determine the tax debt expires four years from the presentation of the self-assessment. The ruling also clarifies that “the acts of the expired procedures lack the capacity to interrupt the prescription, as established in article 104.5 LGT.”
On the other hand, the ineffectiveness of the retroactive procedures is pointed out and the court refers to the fact that “any action after the expiration of the legal period of six months to resolve the initial procedure is void of legal content.” The performances of 2021 They are considered a continuation of previous processes that had already expired and, therefore, are ineffective to interrupt the prescription.
It is also highlighted that The legal deadlines established in article 104.1 of the same law were not met, which cannot exceed 6 months, including review procedures or retroactive settlements.
Based on all thisthe heir will not have to pay to the General Directorate of Taxes of the Community of Madrid, the almost 140,000 euros in inheritance tax that they claimed, and the administration will also have to face the costs of the judicial process.