Legal Status - MAY 2025
Tax: Corporate Income Tax- Progressive Reduction
Employment: Protection Against Dismissal: The End of Objective Nullity in Cases of Fraud of Law
COMMERCIAL
The Supreme Court Establishes Doctrine on the Requirements for Issuing E-Invoices to Customers
ALBERTO CHENLO
Associate
The Administrative Section of the Spanish Supreme Court upheld, in its judgment STS 2247/2024, dated April 29, 2024, a fine of EUR 765,001 imposed by the Regional Government of Andalusia on one of the major telecommunications players because its terms and conditions of contract included a clause restricting the right of consumers to receive paper invoices (the "Judgment").
I. Background
In 2021, the Administrative Section of the High Court of Justice of Andalusia ("TSJA") issued a judgment dismissing the appeal filed by Telefónica Móviles España, S.A.U. ("Telefónica") against the resolution of the Government Council of the Regional Government of Andalusia dated December 18, 2018 that resolved the sanctioning file on customer matters in which Telefónica was imposed a sanction in the amount of EUR 765.001 as the author responsible for the commission of a very serious infringement for introducing abusive clauses in its terms and conditions of mobile services consisting of the imposition of the sending of e-invoices.
According to the Regional Government of Andalusia, the clause in question violated the right of customers to receive paper invoices in the terms established in article 63.3 of Royal Legislative Decree 1/2007, of November 16, which approves the revised text of the General Law for the Defense of Customers and Users and other complementary laws ("LGDCU") and in article 9.2 of Royal Decree 1619/2012, of November 30, which approves the regulation regulating invoicing obligations ("RD 1619/2012").
Specifically, the clause stated the following: "In the case of choosing direct debit as the method of payment, the contracting of this service entails the acceptance by the customer to receive the corresponding invoice in electronic format, notwithstanding its right to opt for the paper invoice in the contracting".
Although Telefónica offered customers the possibility of requesting paper invoices free of charge, the Regional Government of Andalusia considered that the inclusion of the aforementioned clause predetermined e-invoicing over paper invoicing for customers who chose direct debit, thus depriving them of their right to receive paper invoices.
For its part, Telefónica argued that the invoicing clause did not oblige customers to receive e-invoices, since they could request a paper invoice free of charge at the time of contracting or at any time thereafter through the website, by telephone or in stores.
Telefónica also argued that the requirements to consider the clause in question as abusive were not met, since it did not generate a significant imbalance between the parties to the detriment of customers, stating that customers gave their express consent to receive the e-invoice by accepting the general terms and conditions of the contract in force at the time of the contract.
Therefore, the clause, considered abusive, complied with the requirements of good faith and balance.
Telefónica filed an appeal in cassation before the Supreme Court against the judgment of the TSJA. Subsequently, in March 2022, the Supreme Court admitted the aforementioned cassation appeal, indicating that the issue raised was of interest for the formation of case law in order to determine whether the specific and independent consent of customers was necessary to receive e-invoices or whether their acceptance was valid through one of the clauses of the general terms and conditions of the contract.
II. Considerations of the Judgment
The Judgment focuses its analysis on whether consent to receive e-invoices may be considered valid when it is included in general terms and conditions of contract (which customers accept without reservations) or whether, on the contrary, separate and explicit consent by customers is required.
Firstly, the Supreme Court indicates that the receipt of the paper invoice is an inalienable right of customers. Secondly, the waiver of this right must be not only explicit but also carried out through the procedure contemplated in the LGDCU.
In this regard, the right to receive the invoice on paper, as established by the LGDCU, is hardly compatible with its inclusion in the general terms and conditions of a contract of adhesion, given that this type of contract requires an initial forced and unconditional acceptance, although, as in Telefónica's offer, it is possible to opt for a different solution after signing.
Additionally, the waiver of this right, accepting the issuance of e-invoices, must be explicit and obtained previously through a specific procedure. In this sense, the LGDCU and RD 1619/2012 require that the company issuing the e-invoice request such consent and that the request specifies both the form of receipt of the e-invoice and the possibility and procedure to revoke such consent, thus allowing to receive the invoice on paper again.
The waiver of the right to receive the paper invoice and the acceptance of the e-invoice by customers must be explicitly requested by companies, together with the collection of certain information on the receipt of the e-invoice. This process excludes the possibility of including the e-invoice in a general terms and conditions of contract, which require a necessary and unconditional prior acceptance before any subsequent modification or option.
The Supreme Court concludes that the clause included in Telefónica's terms and conditions of contract on invoicing directly infringes the aforementioned legal precepts by significantly restricting the customers' right to receive a paper invoice. Consequently, it must be considered an abusive clause according to the terms indicated in article 86.7 of the LGDCU, which classifies as such any "waiver or limitation of the rights of the consumer and user".
III. Conclusions
(i) The Judgment has a significant impact on the way in which companies currently seek the consent of customers to issue e-invoices, establishing a precedent that strengthens the protection of customers’ rights against contracting practices that may be considered abusive.
(ii) The Judgement clarifies that the right to receive paper invoices is an inalienable prerogative of customers and, therefore, companies may not condition this right or use strategies that limit it.
(iii) The Supreme Court emphasizes that in order to issue e-invoices, the express and separate consent of customers must be obtained in order to protect them from practices that may go unnoticed in adhesion contracts or that require additional efforts for the exercise of basic rights.
(iv) It highlights the need for companies to review their general terms and conditions of contract to ensure that customers' right to receive paper invoices is fully respected.
(v) The use of new technologies should not become a barrier so that customers with less access to them see their rights limited.
(vi) Finally, it shall be necessary to be attentive to the practical application of the Judgment by the different Spanish consumer bodies.
May 2025
M&A
The Importance of Defining the Object of the Sale and Incorporating Representations and Warranties in M&A Transactions
GERARD LLEBOT
Senior Associate
A basic distinction when structuring an M&A transaction is whether it involves the sale of the shares representing the share capital of the company through which the business to be acquired is conducted (“share deal”), or whether the acquisition involves all or part of the assets and liabilities that constitute the business (“asset deal”). Thus, in a share deal, the shareholders of the company are the sellers and the purpose of the acquisition are the shares representing its share capital, while in an asset deal, the seller is the company itself and what is acquired is either a specific branch of activity or all of its assets and liabilities.
Without prejudice to the many other implications of structuring an acquisition transaction via a share deal or asset deal, we now wish to focus on the object of the acquisition when the transaction is structured through a sale of shares.
Let's proceed: It seems clear that for any buyer who acquires a company through which a specific business is operated, the purchase of its shares is not an end in itself, but merely a means to acquire the underlying business, which is the real purpose of the acquisition and, as such, should deserve the corresponding legal protection.
The above, which might seem obvious to any potential buyer, is not clear at all in terms of the legal and jurisprudential treatment of the sale and purchase of companies, especially when the transaction is structured as a share deal.
Proof of this is Supreme Court ruling number 8109/2009. These ruling analyses a dispute arising from a contract of sale (the “Contract” or the “SPA”) for the shares representing the entire share capital of the company SASOTOVI, S.A., which was also the owner of a real estate property in which the Hotel Bel-Air in Castelldefels was operated. The dispute arose after the completion of the transaction, due to the presence of aluminosis in the property, a serious defect that was not specifically treated in the Contract.
Thus, the judgment at hand analyses whether the purpose of the SPA was the hotel itself or the shares of the company to which the hotel belongs. It should be noted that the distinction is critical in terms of its consequences: should the acquisition of the Hotel be the purpose of the SPA, the possibilities of claiming liability from the seller for the structural defects it suffered are clear, whereas should the acquisition of the shares be the purpose of the SPA (and without further contractual development and regulation, as was the case), the legal liability regime would be limited to any encumbrances, liens or lack of ownership of the shares in question, but not to the condition of the assets underlying them.
This was precisely the ruling of the Supreme Court, which concluded that the purpose of the SPA was the acquisition of the company’s shares, and the structural defects of the underlying property could not give rise to a claim by the purchaser.
In this regard, it is particularly interesting that the Supreme Court accepts and assumes that the motive and finality of the SPA was the acquisition of the Hotel, although, relying on its own case law, the Supreme Court establishes that “the motive is irrelevant to the law, unless it is included as a condition or becomes part of the cause, as a causal motive’. It also cites the Supreme Court ruling of 1 April 1998 in this matter: ‘The subjective motive is, in principle, a reality outside the contract, unless the parties incorporate it into the contract as a clause or condition”
Three (3) crucial lessons should be noted from the above:
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The legal protection regime for M&A transactions, especially should the acquired assets be shares, is not extended in principle to the underlying business, assets and liabilities. Hence, it is critical to properly articulate an ad hoc contractual protection regime to such purpose.
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The importance of defining the purpose of the transaction, extending it to the final finality of the acquisition and providing it with the corresponding contractual protection;
- Develop in detail the treatment of any contingencies that may arise after the closing of the transaction and that may have an impact on the business to be acquired underlying the acquired shares. At this point, the representations and warranties clauses or, where applicable, the special indemnities provisions and their corresponding liability regimes play a crucial role, which will be analyzed and developed in detail in an upcoming newsletter of our firm.
May 2025
TAX
Corporate Income Tax- Progressive Reduction
ALEJANDRO PUYO
Partner
If your company is a small entity or a micro-entity, in the coming tax years you will benefit from a progressive reduction in the corporate income tax rate.
New Corporate Income Tax rates
Small companies: Those whose annual turnover does not exceed ten million euros will be taxed at a decreasing tax rate according to the following scheme:
Micro-entities: If the annual turnover is less than one million euros, the tax rates will be even lower. From 2025, a progressive rate is introduced in which the first 50,000 euros of taxable base will be taxed at a reduced rate:
Exclusions: Holding companies will not be able to benefit from these new reduced rates and will continue to be taxed at 25%. Equity companies are considered to be those whose assets are mainly made up of securities or assets not used for an economic activity.
Special cases: Micro-SMEs with tax years of less than one year If your company is a micro-SME and its tax year is less than one year, the part of the tax base that benefits from the lower rate will be calculated according to the lower of these two options:
Multiply 50,000 euros by the percentage of days in the year compared to a full year.
The total taxable base for the year.
Example
Let's say in July 2025 your company changes its fiscal year to run from September 1 to August 31, giving a fiscal year of 243 days. Depending on the taxable base, taxation will be calculated as follows:
If the taxable base is 70,000 euros:
33,288 euros are taxed at 21%.
The rest (36,712 euros) is taxed at 22%.
If the taxable base is 40,000 euros:
33,288 euros are taxed at 21%.
6,712 euros are taxed at 22%.
If the taxable base is 20,000 euros:
The entire amount is taxed at 21%.
In summary, in 2025 small companies will be taxed at 24%, while micro-SMEs will pay 21% for the first 50,000 euros and 22% for the rest. In the following years, these rates will continue to be progressively reduced.
May 2025
EMPLOYMENT
Protection Against Dismissal: The End of Objective Nullity in Cases of Fraud of Law
JUAN CARLOS LOMBARDIA
Partner
The High Court of Justice of Madrid, in its recent decision No. 624/2024, has determined that, in cases of fraudulent acts, the rule of objective nullity that protects the employee against dismissal under Article 55.5 of the Workers' Statute is broken.
In this sense, the Court analyzes the dismissal of a Manager who, after being informed of the restructuring that the Company was going to carry out and the possible impact on his job, after being summoned to a meeting with his hierarchical superior in which he was going to be dismissed for objective causes, requested a reduction in working hours to take care of the children.
Notwithstanding the foregoing, the Company proceeded with the corresponding objective dismissal, which was challenged by the Manager claiming the dismissal as null and void, as well as claiming damages for violation of fundamental rights. In this sense, the Labour Court of Madrid declared the dismissal as null and void and, therefore, the compensation for violation of damages requested by the plaintiff.
However, this decision was challenged by the High Court of Justice of Madrid, which determined that the Manager requested the reduction of working hours for the sole purpose of seeking protection against dismissal, and that his behavior constituted fraudulent misconduct. In this case, the High Court of Justice stated that it was not possible to automatically apply the classification of the dismissal as null and void, due to the fraudulent behavior of the plaintiff, which is an abusive or abnormal exercise with the purpose of obtaining favorable consequences in the face of a possible termination decision that the Company had previously announced.
The Court refers to the Supreme Court Ruling of December 11, 2009, in which the requirements for the existence of an abuse of rights are specified, being these:
a) The use of an objective right.
b) Damage to an interest that is not specifically protected by a legal rule and that could not have been avoided by the Company through an action also protected by law.
c) The immorality or antisociality of such damage, manifested in subjective form (exercise of the right with intent to harm, or without true interest in exercising it, "absence of legitimate interest") or in objective form (abnormal exercise of the right, in a manner contrary to the economic labour purposes of the right).
For this reason, the High Court of Justice of Madrid rejected the declaration of the dismissal as null and void and declared it to be as unfair because it did not consider the causes alleged in the dismissal letter to be proven, rejecting the employee's claims and understanding that the automatic application of the objective nullity ex article 55.5 of the Workers' Statute is not applicable due to the existence of an abusive exercise of the right and, therefore, of a fraud of law.
In this sense, and although the labour regulations in relation to cases of nullity of dismissals are becoming more and more extensive and specific, the Judges do not always automatically rule the dismissal as null and void. The judgment of the Superior Court of Justice of Madrid shows that the classification of nullity in dismissals is not automatic, especially when there are indications of fraud of law or abuse of rights. This ruling underlines the need to analyze each case in depth to determine whether the dismissal should be considered as null and void, as well as the possible additional compensation for damages caused, taking into account both the applicable regulations in force and the case law. In a constantly evolving labour context, understanding these criteria is essential for companies and employees who wish to protect their interests and act in accordance with the law.
May 2025
DATA PROTECTION
The European Data Protection Board Publishes Guidelines on the Processing of Personal Data Based on Legitimate Interest
FLORENCIA ARRÉBOLA
Senior Associate
On October 08, 2024, the European Data Protection Board ("EDPB") published guidelines on processing personal data based on legitimate interest ("Guidelines").
The Guidelines examine the criteria established in Article 6.1(f) of the General Data Protection Regulation (“GDPR”) that data controllers must meet to process personal data when such processing is “necessary for the purposes of the legitimate interests pursued by the controller or by a third party.”
Article 6.1(f) of the GDPR is one of six legal bases provided for the lawful processing of personal data.
Therefore, legitimate interest should not be considered as a last resort for exceptional or unforeseen situations where other legal bases (e.g., consent) do not apply, nor should it be automatically selected or its use improperly expanded under the notion that it is less restrictive than other legal bases since it is based on a unilateral decision of the data controller.
In this regard, the EDPB states that for personal data processing to be based on Article 6.1(f) of the GDPR, three cumulative conditions must be met:
i. The existence of a legitimate interest by the data controller or a third party.
ii. The necessity of processing personal data for the purposes of that legitimate interest.
iii. The interests, fundamental rights or freedoms of data subjects do not override the legitimate interests of the data controller or a third party.
To determine whether personal data processing may be based on Article 6.1(f) of the GDPR, data controllers must carry out a detailed assessment and record whether the three cumulative conditions are met. This assessment must be completed before carrying out the relevant processing operations.
I. Existence
Not all interests of the data controller or a third party may be considered legitimate. Only those interests that are legal, clearly defined and current may be invoked as a legal basis.
Additionally, it is the data controller's obligation to inform the data subject about the legitimate interests underlying the processing.
II. Necessity
It should be assessed whether the legitimate interest may not be reasonably and effectively achieved through alternative means that are less restrictive of the fundamental rights and freedoms of data subjects, considering the principle of data minimization established in Article 5.1 of the GDPR.
Consequently, if there are less restrictive means available, the processing may not be based on Article 6.1(f).
III. Prevalence
The interests, fundamental rights or freedoms of the data subject should not prevail over the legitimate interests of the data controller or of a third party (related to the data controller), which implies finding a balance between conflicting rights and interests that depends primarily on the specific circumstances of the processing in question.
Processing will only be possible if the result of this analysis shows that the legitimate interests of the data controller or a third party are not overridden by the rights and freedoms of the data subject.
Conclusions
i. When the processing is intended to be based on legitimate interest, the data controller must carry out an appropriate assessment under Article 6.1.(f) of the GDPR.
ii. The assessment to determine the suitability of processing based on legitimate interest is not a simple task, since it requires detailed consideration of several factors that allow a balancing between the rights of data subjects and the legitimate interest of the data controller or a third party.
iii. Factors to consider include:
• The nature and origin of the legitimate interest,
• the impact of the processing on the data subject's fundamental rights and freedoms,
• the data subject's reasonable expectations regarding the processing, and
• the existence of additional safeguards to limit undue impacts on the data subjects' rights.
iv. The Guidelines provide guidance on conducting an assessment that enables data controllers to base processing on legitimate interest, including examples in specific contexts (e.g., fraud prevention or marketing).
v. The Guidelines explain the relationship between Article 6.1(f) of the GDPR and various rights of the data subjects under the regulation.
vi. Finally, it is important to mention that the Guidelines have gone through a public consultation process, allowing interested parties to submit their opinions or comments until November 20, 2024, and, therefore, they may still be modified.
May 2025