The National Court has definitively ruled on one of the most unusual corporate transactions in the water sector in southern Gran Canaria. In the judgment, to which Maspalomas24H has had access, the Administrative Chamber fully upholds the tax adjustment applied to Aguas de Tirajana, a company linked to the Santana Cazorla Group, concluding that the merger by absorption of several subsidiaries lacked genuine economic justification and its primary objective was to transfer unproductive tax credits to a company capable of generating profits.
The most striking element of the ruling is not so much the outcome—predictable from a tax perspective—as the court's portrayal of the corporate structure: two of the companies involved were completely inactive at the time of the merger. With no employees, no registration with the Spanish Tax Agency (IAE), no turnover, and no significant transactions with third parties, the court accepts the Tax Inspectorate's account and emphasizes a devastating statement: "It would be absurd to regularize a company that has already been dissolved." The merger, carried out during the Christmas season of 2009, is thus described as a legal structure designed to recover negative tax bases of more than €1,37 million that, otherwise, would never have been usable.
Another unusual aspect of this type of litigation is the weight given to the taxpayer's own statements. The ruling cites tax audit reports and accounting records that expressly acknowledge the inactivity of both the acquiring and acquired companies. Even a restructuring report prepared by an international consulting firm ultimately undermines the company's argument. According to the presiding judge, Francisco Gerardo Martínez Tristán, the circumstantial evidence is "compelling" and sufficient to trigger the anti-abuse clause of the FEAC regime, without requiring a sophisticated interpretive debate.
The ruling also dismantles two classic lines of defense. On the one hand, it rejects the statute of limitations claim despite the inspection proceedings lasting more than a year, counting the postponements requested by the company itself as delays. On the other hand, it denies any claim of procedural unfairness for not having individually inspected one of the now-dissolved companies: the inspection was correctly directed against the sole successor. The ruling fully supports the decision of the Central Economic-Administrative Court and the Tax Agency, including the imposition of costs.
More broadly, the ruling sends a clear message to the Canary Islands' business community: simply invoking "synergies," "simplification," or "better management" is insufficient to shield restructuring operations when the determining factor is the capture of tax advantages. In southern Gran Canaria, where the water business coexists with significant tourism and real estate interests, the National Court reiterates that tax credits are not an asset available at the whim of the group, however large or influential it may be.
