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Purpose tests in anti-abuse or anti-avoidance provisions in Spain

The Spanish tax authorities can challenge transactions under purposes tests in the two different general anti-abuse rules (GAARs) as well as specific anti-abuse rules (SAARs) targeted at a provision or regime.


Spain has two GAARs: conflict in the application of law, on the one hand, and simulation on the other.

Under the conflict in the application of law rule, the tax treatment of a transaction may be challenged where the transaction is artificial or improper and it does not achieve any material effect other than to obtain a tax advantage. But in order to challenge a transaction on this basis, the Spanish tax authorities must first obtain a favourable report from an advisory committee. Penalties may be imposed only if the relevant case is substantially similar to a previous case where a report declaring the existence of a conflict in the application of law has been made public.

The simulation rule applies where the taxpayer hides an actual transaction (or its true purpose) by formally executing a different transaction. Penalties may be imposed and there is no special procedure to be followed by the Spanish tax authorities. Therefore, tax inspectors tend to rely on the simulation rule to challenge abusive schemes. It is possible that a tax offence may have been committed in circumstances where the simulation rule applies.


Spanish tax law also provides expressly for the substance-over-form principle. Accordingly, any obligation must be enforced following the legal nature of the act or business carried out, regardless of the form or denomination that the interested parties have used, and disregarding any defects that may affect its validity.


Examples of the SAARs in Spanish tax law include those in relation to the withholding exemption on dividends paid to EU residents or to reorganisations.

The exemption from Spanish withholding tax does not apply where the ultimate parent of the company to which the dividend is paid is resident outside the EU, i.e. where the majority of the voting rights in the EU parent company is directly or indirectly held by individuals or companies not resident in any EU Member State, unless it can be established that the constitution and operation of the parent company are based on valid economic and substantial business reasons.

In respect of the SAAR in reorganisations, the purpose test is also applied in specific regulations such as the neutrality regime for restructuring operations, as the tax regime cannot be applied if the operation is not carried out for valid economic/ business reasons.

Enforcement trends

The annual control plan for 2023 envisages that the Spanish tax authorities will specially focus on transfer pricing and payments of dividends, interest, and royalties to non-residents.

In respect of transfer pricing, the authorities have intensified their review of corporate restructurings, intra-group transfers of intangibles, intra-group royalties and payments for services, amongst others. This higher level of scrutiny can be linked to the availability of additional data, for instance as a result of DAC6 reporting and country-by-country reports. In this context, joint audits as well as bilateral and multilateral MAPs and APAs will be particularly important.

Where dividend, interest or royalty payments to non-residents are concerned, the Spanish tax authorities are actively challenging international structures that do not meet the substance, business purpose or beneficial ownership tests.


uria menendez, spanish tax, purpose test, gaar, saar