Venire contra factum doctrine, inspection of previous tax periods and fraus legis

A Commentary on Supreme Court Judgement of November 4, 2013, Appeal no. 3262/2012

Abstract

The case law doctrine generally expressed with the Latin phrase venire contra factum proprium no valet, according to which a party of a legal relationship cannot assert against the other party a claim contrary to the confidence originated by his previous juridically relevant conduct, is frequently alleged against the Public Administration, included the Tax Administration. However, the courts have accepted this argument only in very few cases; with good reason, for the «own facts» doctrine, born and developed in the field of private law, fits only with difficulty into the field of administrative law. The Supreme Court ruling of November 4, 2013, which confirms the ruling of the Audiencia Nacional of July 24, 2012, is one of the rare cases in which the high court has applied the venire contra factum doctrine in the context of a tax relationship. Therefore it provides a good opportunity for reviewing the application of that doctrine in the field of administrative law in general and particularly in tax law matters. In those rulings the «own facts» doctrine appears intricately mixed with the limits of the faculty of the Tax Administration to examine operations performed in previous tax periods, not necessarily those for which the time limits of inspection have elapsed. The rulings state a doctrine with weighty consequences concerning the limits of the review faculty when the Administration intends to qualify the operations as fraus legis. In the author’s opinion, the venire contra factum doctrine was not correctly applied in the case of the examined rulings. Nor does the author share the courts’ thesis regarding the possibility of characterizing as fraudulent (in fraudem legis) operations performed in previous periods in the terms, too rigid in his view, in which it is worded.