500 claims a day. Why are there so many lawsuits against the tax authorities?

BarcelonaAn average of more than 500 complaints per day. This is the volume of grievances handled by the economic-administrative courts—bodies attached to the Ministry of Finance—an essential avenue for challenging tax assessments before resorting to the courts, according to regulations. It represents a veritable avalanche of work for these entities. However, in 2024—according to the latest available data—complaints decreased by 17.87% compared to the previous year, reaching 196,442. Conversely, the number of cases resolved, which reached 222,737, increased by 14.20%. The economic-administrative courts in Madrid lead the way in complaints, with more than 33,000; followed by those in Andalusia, with 31,000, and those in Catalonia, with 30,395—the three most populous autonomous communities.

This trend, in terms of complaints handled and resolved related to discrepancies in the interpretation of regulations, reveals some improvement. According to Valentí Pich, president of the economics and taxation committee of Foment del Treball, these agencies are "resolving more cases," and a series of implemented measures are beginning to yield results. The proportion of taxpayers who successfully resolve their cases exceeds 40% of those resolved since 2016 and has remained consistent in recent years. This is a very high level compared to other European countries. In Italy, France, and the United Kingdom, for example, they have found ways to reduce conflict and share the absence of prior administrative appeals before resorting to the courts, unlike Spanish regulations, which require this route to be used first. In these countries, tax disputes are reduced through this dispute resolution mechanism. Those cases that cannot be resolved through this system are submitted directly to the ordinary courts, which speeds up the resolution process, experts point out.

The number of appeals is unlikely to decrease much further from the current level reached by the economic-administrative courts because, on average, 40% of the cases resolved end up ruling in favor of the taxpayer, either partially or completely. Given this success rate, which was lower in previous years, "access to appeals is almost mandatory," according to Bernardo Soto, head of the tax department at the CEOE (Spanish Confederation of Employers' Organizations). "It's not worthwhile for small amounts like 100 or 200 euros, but it is when the sums are larger," and even more so, given the results each year regarding the number of cases decided in favor of the appellant, adds Leopoldo Gandarias, professor of financial and tax law at the Complutense University of Madrid (UCM) and a partner at the same institution.

Salvador Guillermo, Director of Studies and Economics at Fomento del Trabajo, who also participated in this session, compared the rejection rates of tax interpretations issued by the Tax Agency to those of a company's quality control after they reach the economic-administrative courts. The fact is that, in recent years, tax regulations have grown increasingly complex, with constant reforms, divergent interpretations, and a growing bureaucratic burden for businesses, experts warn. As a result, the level of conflict has skyrocketed, contributing to the accumulation of outstanding debt. by the Tax Agency exceeds 43 billion eurosAccording to the latest data corresponding to 2024. In short, it is a problem that generates a high degree of uncertainty and an overload in the economic-administrative and contentious-administrative courts, with "excessively long" resolution periods, that is, it affects individual taxpayers, companies and also the public administration.

Foment del Treball has maintained a very active stance in criticizing tax matters. In 2024 it presented the Green Book on Taxation in Catalonia, Prepared by 48 experts, the plan included measures aimed at preventing the autonomous community from becoming "a tax hell," in the words of the president of this employers' association, Josep Sánchez Llibre. Among the proposals, the elimination of the wealth tax stood out, a constant demand of this organization, which points out that it is a tax only levied in countries like Norway and Switzerland, among others. According to the reports of the economic-administrative courts, of the total number of claims, almost 60,000 correspond to personal income tax (IRPF), which is the tax with the most taxpayers, followed closely by administrative procedural acts and, further behind, by VAT.

Given the concern about this conflict in the interpretation of regulations, Foment del Treball organized a session this week with experts to analyze the impact of tax litigation on business competitiveness. In fact, it is "a structural problem" that affects legal certainty, "essential for business investment," which requires stability, states Ramón María Calduch, president of the Spanish Association of Advanced Business Services (Aesae). According to Calduch, who participated in the study The problem of tax litigation in Spain, from the Institute of Economic Studies (IEE) –the think tank According to a report from the CEOE (Spanish Confederation of Employers' Organizations), which serves as a framework for discussion, such a high level of discrepancies between the Treasury and taxpayers "not only impacts the stability of companies, but also undermines the competitiveness of the national productive fabric, in a global context where tax certainty is key to attracting investment and generating employment."

So what explains the conflict that, in Gandarias' words, stems more from "the misuse of tax regulations" than from abuse? Experts attribute this problem more to a culture that prioritizes distrust of taxpayers over cooperation between them and the tax administration. Scholars in the field have a fairly thorough understanding of the issue, and according to Soto, there are some defining characteristics:

1. A "deficient" legislative technique, closely linked to a lack of parliamentary stability, Soto states. According to Calduch, the regulations are the product of a highly fragmented Parliament with representatives—members of parliament, for example—"out of touch with reality," according to Valentí Pich. Gandarias adds that the sheer volume of legislation is also a contributing factor. The official state and regional gazettes published a total of 1,298,086 pages in 2024, according to the latest report. Normative production According to Gandarias, the CEOE (Spanish Confederation of Employers' Organizations) warns that this enormous volume of legal texts and regulations, coupled with the increasing reliance on Royal Decree-Laws due to the lack of parliamentary majorities, "makes it impossible to uphold the principle that ignorance of the law is no excuse." This often leads to regulations that allow for broad interpretation, they warn.
2. Complicated or ambiguous regulations make interpretation difficult. Analysts warn of significant regulatory fragmentation, the overuse of vague legal concepts, and special tax regimes. Taxpayers must apply the rules immediately, while tax authorities have more time to decide how to implement them. Changes are constant, sometimes even with legal modifications or shifts in interpretation that have been in effect for months. One of the essential elements of a good tax system should be its long-term sustainability, which is crucial for making investment decisions. "The tax system cannot be patched together; it should be built with thoughtful and well-calculated planning," says Soto. Regarding interpretation, Soto adds, "It's of little use if it's applied or interpreted inconsistently or based on distrust of the taxpayer."

Experts and employers' associations not only criticize the situation but also offer a series of proposals—a kind of catalog of ideas to reduce conflict, which will always exist but, in their opinion, could be lowered to levels more similar to those in other European countries. Calduch summarizes them as follows: simplify regulations; promote alternatives to administrative channels or the courts, such as mediation or arbitration to resolve differences in the interpretation of tax rules; foster a more transparent and open relationship between the tax authorities and taxpayers; expedite litigation procedures; and review the penalty system, which imposes high fines for discrepancies that are often due to errors.