This has been determined by the National audience, which has upheld an appeal by Telefónica against the Treasury, and has declared null the liquidations of the corporation tax for the fiscal years 2009 and 2010. Therefore, it has recognized the right for Telefónica recover more than 1 billion additional to the 903 million already recognized by the courts in this same lawsuit, where 702 million corresponded to the amount paid, and 201 million to the default interest.
Telefónica receives back almost 2,000 million euros
Telefónica overpaid 1,588 million euros to the Treasury. If we remove the 702 million that they have already been granted, there are 886 million euros left, which with interest amounts to more than 1,000 million euros.
The origin of the conflict dates back to year 2000. In that year, Lycos was acquired by Terra for 8,000 million euros, and then sell it for 90 million in 2004. The purchase was made through the exchange of shares. Telefónica made up the losses, and generated a loan in 2004 of 272 million euros, taking as a reference the book value of Terra’s shares issued to make the purchase.
However, in the 2004 memorandum, Terra said that he was evaluating crediting a higher negative tax base of 7,418 million euros, which was equivalent to save about 2,600 million euros in taxes. To do this, they took the market value of the Lycos shares received instead of the book value. For this reason, Telefónica rushed to acquire 75% of Terra in 2004 to integrate the subsidiary and apply the tax credits.
Treasury objected, but will eventually have to pay
Nonetheless, tax authorities opposed in 2006 to recognize those tax credits. For this reason, in 2009, Telefónica went to court, but was rejected. Luckily for the operator, the State Advocacy agreed with the operator in 2012, and the State, with Cristóbal Montoro in Hacienda, gave up litigating the billions in taxes.
Later, Telefónica decided appeal to the Supreme Court in 2015, and again they sided with him. However, the Treasury said that refunds of installment payments could not be requested retroactively, but in 2019 the TEAC gave the reason again to Telefónica and had to pay the 702 million euros. Later, the operator also claimed default interest.
Ultimately, the Lycos purchase may not have been a ruin for the operator. In their day they did not pay anything in cash, since everything was paid in shares, and now they could receive a savings of 2,000 million euros, even 21 years later.