THE TAX REGIME OF AGRICULTURAL PROCESSING COMPANIES

Abstract

The aim of this study is to review, through the analysis of their legal regime, the taxation of the Agricultural Processing Companies (hereinafter APCs) both in the common territory and in the regional territories of the Basque Country and Navarra. These questions have had little doctrinal treatment, but their interest is justified in the quantitative and qualitative relevance of this type of companies in commercial traffic, in the flexibility and indeterminacy of their legal regime and in the specialty of their tax system. It is remarkable that the importance attained by some APC in the Spanish agri-food sector contrasts with the little interest that historically has been given to them both by the legislator and by doctrine, especially in the tax field. Regarding its legal regime, the rule that regulates the APCs has only 14 articles and has not been modified since its promulgation more than thirty-five years ago. It was only developed by the brief Order of the Ministry of Agriculture of 1982, to specify the requirements of constitution and registration. The antecedent of the APC is found in the so-called Union Colonization Groups that were created after the Spanish Civil War as intermediaries between farmers and the State. The need to adapt the legal regime in this associative way to the new political, legal and economic reality of the country motivated the reform process and conversion of the Union Colonization Groups into another social type that could more safely undertake the challenges of a more competitive agriculture. Thus, in the late 1970s, APCs were born as a peculiar formula of agrarian associationism to encourage agrarian development through societies that are well adapted to rural areas. The analysis of the SAT regulation shows that it is not a different corporate legal form from the existing ones, but rather that it is a hybrid figure between civil societies, agrarian cooperatives and mercantile companies, whose use in commerce was mainly due to the intention of the legislator to encourage agrarian development. Its legal formulation, therefore, did not satisfy anyone, but in economic terms APCs worked. The key to its success lies precisely in the great flexibility of the social type and the absence of imposition of economic and financial obligations as opposed to those that agricultural cooperatives do have. APCs, consequently, are state regulated-although there are two autonomous Decrees of Aragon and Catalonia that regulate the-, which is taxed in the regional territories according to the tax regulations that rule them. We believe that, in accordance with article 149.3 of the Spanish Constitution, the state norm must prevail, in case of conflict, over that of the Autonomous Community in everything that is not attributed to the exclusive competence of the latter, as is the case. If we delve into this process, when the rest of the Autonomous Communities do the same, we will have a situation similar to that of cooperative legislation. For some, having a law for each Autonomy will not be anything exceptional, but it happens that the necessary unity of the market that our Constitutional Court has spoken of so many times when judging autonomous interventions in economic matters, makes it convenient for economic operators and legal operators (lawyers, judges, public notaries, etc.) to have unique applicable rules for comparable situations. Along with this, there is the economic cost of passing so many laws that turn out to be so similar later, especially when none of these rules addresses the problems that have been denounced regarding the legal regulation of these companies. In the matter of the APCs tax regime, it was plunged for years in a regrettable state of confusion and legal insecurity, completely opposed to the necessary clarity and simplicity required by tax regulations for their correct application. This situation was clarified, to a certain extent, with Law 20/1990 on the Tax Regime of Cooperatives in common territory and with the Regional Regulations on the issue in the Basque Country and Navarra. These rules provide for the application of the general tax regime to these entities, without prejudice to the establishment of certain special rules applicable in Corporation Tax and the recognition of certain benefits in other taxes. There is a break with the traditional assimilation of APCs to agri-food cooperatives from the promulgation of the laws regulating the cooperative tax regime. The tax treatment of the APCs is similar in the general and regional regimes. Only the Navarrese norm contemplates a specific benefit for this social type in the large taxes that levied on income and consumption, specifically the 50% reduction in the Corporation Income Tax liability. So that, in general, they do not have subjective exemptions for being APCs, nor in the main direct tax on their income, the Corporation Tax, nor in the VAT, indirect tax on the economic transactions they carry out. However, they can access both the special regimes and the objective exemptions that are regulated for these taxes to the extent that they meet the appropriate requirements. Where the reduction expressly thought for this social type are regulated, it is the Tax on Capital Transfer and Documented Legal Acts and the local Business Tax, identical in the general regime and in the regional ones, although without too much weight in the system as a whole. The obvious conclusion is that the APCs does not have the specific tax regime that promotes its constitution and operation. Insofar as, on the one hand, these societies are considered to be mutualistic, in recognition of their economic and social purpose, and, on the other hand, this makes them included among the entities of the so-called Social Economy, it would be desirable for the legislator to provide them with their own tax incentives, in compliance with the mandate to promote and disseminate the social economy that contains art. 8 of Law 5/2011 on the Social Economy.