Guillermo Maruri
TAX LAW DIVISION
Judgment 320/2025, dated 1 September, of the High Court of Justice of the Basque Country (TSJPV) constitutes a particularly significant ruling on the limits applicable to the use of tax credits by groups subject to the tax consolidation regime under Corporate Income Tax (CIT).
The tax consolidation regime is one of the areas in which the Historical Territories (HTs) hold limited regulatory powers, pursuant to Article 20 of Law 12/2002, which approves the Economic Agreement of the Autonomous Community of the Basque Country. Among the matters open to specific regulation within this regime is the application of tax credits within the tax group. At present, however, the regional (foral) and Common Territory regulations are substantially aligned on this issue.
In situations of regulatory alignment, taxpayers consider not only the interpretative criteria of the Administration before which they file their returns, but also those adopted by other tax authorities. In this regard, the Spanish State Tax Agency (AEAT) published two information notes in 2022 and 2023 setting out its position on the offsetting, by tax groups, of tax loss carryforwards (NOLs) and deductions generated in prior tax years.
The administrative position introduced through these notes significantly restricted the use of tax credits by groups and increased the complexity involved in determining the applicable limits. It is therefore essential to summarise its key elements in order to understand the scope of the judgment.
First, the AEAT maintains that the offsetting of credits within the group must comply with a proportionality rule linked to each entity’s contribution to their generation. This requirement was based on extending the rule applicable to situations involving the departure of an entity from the group or the group’s dissolution—contained in Article 66 of Law 27/2014 (Corporate Income Tax Act) and Article 99 of the Regional Corporate Income Tax Regulations—to tax years in which the consolidation regime remained fully in force. According to this interpretation, proportionality must be preserved at all times, even when there are no changes in the group’s composition.
Secondly, the application of this rule affects tax credits generated by entities prior to their entry into the group. Under the administrative approach, NOLs generated under the consolidation regime and attributed to the entities that contributed to their formation consume the individual limit applicable to the offsetting of pre-existing credits, thereby restricting their future use.
In light of this interpretation, the question arises as to whether this criterion is transferable to the Historical Territories, given that the regional legislation is drafted in similar terms to the state legislation. Of the three Regional Tax Authorities, only the Gipuzkoa Regional Tax Authority (HFG) has expressly chosen to apply the proportionality criterion, while Álava and Bizkaia have not taken a formal position.
It was precisely this application that was examined by the TSJPV in its Judgment, which considers whether the proportionality rule designed for situations of group dissolution or the exit of entities may be extended to ordinary tax years in which none of those circumstances occur.
The Gipuzkoa Regional Tax Authority itself acknowledges that Article 99 of the regional legislation provides for proportionality exclusively in cases of exit or dissolution of the group, but nonetheless defends its application during the life of the regime on the grounds that it is logical and appropriate.
However, the Court rejects this argument, holding that mere membership of a tax consolidation group does not constitute the factual situation envisaged by the rule. Consequently, it finds that there is no legal basis for limiting the use of tax credits through a proportionality rule outside the cases expressly regulated. Through this interpretation, the Court reaffirms the principle of statutory (or Regional Law) reservation in tax matters and closes the door, within the Historical Territories, to extending the proportionality criterion in the use of tax credits by consolidated tax groups beyond the expressly provided cases.
In conclusion, the Judgment analysed here significantly strengthens legal certainty for regional taxpayers subject to the tax consolidation regime. At the same time, it opens a possible avenue for taxpayers in the Common Territory by calling into question the criterion upheld by the AEAT, without prejudice to any future ruling by the Supreme Court.
