On March 23, 2021, the Supreme Court issued two judgments (appeals numbers 3688/2019 and 5270/2019), in which it concluded that the verification of the requirements for the application of special tax regimes must necessarily be carried out by the competent bodies, through the inspection procedure.

This conclusion was reached by the High Court by understanding that article 141 e) of the General Tax Law (LGT), dedicated to the functions of tax inspection, made a legal reservation for the verification of special tax regimes, thus preventing such verification from being carried out through a management procedure.

However, the Supreme Court also pointed out that the arguments of the State Attorney's Office, referring to the convenience and need to follow management procedures for the verification of special regimes, could be reasonable, "in principle, in general or theoretical terms, de lege ferenda, as confirmation that the law requires corrections" .

In this regard, in 2022, by Royal Decree-Law 13/2022, of July 26, a modification of article 117.1 c) of the LGT is produced, to recognize the verification of special tax regimes within the tax management functions, so that, from January 1, 2023, the date of entry into force of the legal modification, the verification of special regimes is possible through management procedures.

Two recent Supreme Court rulings complete the legal framework on this matter.

Firstly, the judgment of 5 February 2024 (appeal 6559/2022) concludes that within the framework of a limited verification procedure in which it is detected, using the data available to the Administration and without examining the taxpayer's accounting, the inadmissibility of applying the objective estimation method to determine the personal income tax base, the management bodies are empowered to establish this element by direct estimation and issue the resulting tax settlement, since we are not dealing with a special tax regime.

Secondly, the judgment of March 21, 2024 (appeal 373/2023) deals with a case in which the appellant commercial company maintained the impossibility of verifying tax benefits or incentives through a management procedure, taking into account the jurisprudence of the Supreme Court of 2021 and that such a function is also provided for in article 141 e) of the LGT.

The Supreme Court dismissed the appeal, highlighting that the recognition and verification of the origin of tax benefits and incentives was also recognized among the management functions in article 117.1 c) of the LGT, even before its modification by Royal Decree-Law 13/2022, so that legally there is compatibility between management and inspection actions for carrying out this type of verification.

Although these two rulings analyse checks carried out prior to 1 January 2023, they help to clarify the joint interpretation of the current articles 117 and 141 of the LGT.

On the one hand, the judgment of February 5, 2024 indicates that the provisions of such precepts must be applied strictly, without extending them to concepts or elements not mentioned therein.

On the other hand, the judgment of March 21, 2024 indicates that a function included in the two precepts implies a compatibility between management and inspection actions for the performance of such function.