Spanish Supreme Court bans Tax Agency's 'double-track' inspection strategy

The Spanish Supreme Court has prohibited the Tax Agency from utilizing a "double-track" or "conditional" liquidation strategy during tax inspections. This practice involved designing an alternative administrative plan within a single document to ensure a fiscal adjustment remained valid even if the primary legal argument—such as a claim of fraud—was overturned by a court due to procedural or substantive defects.

The ruling stems from a litigation involving a company's subsidiary that conducted complex corporate operations, including a 2004 capital increase involving a Swedish subsidiary valued at 346 million euros. The Tax Agency had initially characterized these transactions as fraud under the 1963 General Tax Law, but had simultaneously included a preventive, alternative legal justification to guarantee debt collection if the primary accusation failed in judicial review.