The Constitutional Court thus concludes in relation to the application of the reduced rate of the tax on documented legal acts that Galician legislation regulates for mutual guarantee companies with registered office in the territory of the autonomous community of Galicia, but its conclusions (supported by the jurisprudence of the CJEU) are undoubtedly projected on other tax benefits that are made dependent on tax residence.
In its judgment 20/2026, issued on 25 February 2026, the Constitutional Court once again has ruled on an issue whose relevance may have been underestimated. The judgment is the result of a question of unconstitutionality raised by the Contentious-Administrative Chamber of the High Court of Justice of Galicia, in relation to a regional precept whose content was very simple. In accordance with Article 15.6 of the consolidated text of the legal provisions of the autonomous community of Galicia on taxes assigned by the State, the tax on documented legal acts would be charged at a reduced rate, of 0.1%, when the taxable person was a mutual guarantee company with its registered office in the territory of the autonomous community of Galicia.
As we can see, the law introduced a double differentiation. On the one hand, the reduced rate would only be applicable when the taxable person was a mutual guarantee company, a difference in treatment that has not been discussed since its justification has been assumed by the role that the legislator itself attributes to those entities. On the other hand, this reduced rate was only applied if the entity had its registered office in Galicia. And it is this other differentiation, depending on the residence of the entity, that is discussed and, above all, frequently occurs in numerous regional regulations in which, in one way or another, access to certain benefits is conditioned to a certain tax residence.
In its judgment, the Constitutional Court places the issue in the field of equality and, more specifically, in that of tax equality, in accordance with Articles 14, 31 and 149.1. 1 of the Spanish Constitution, in relation to Articles 157.2 of the Constitution itself and 9 of the Organic Law on the Financing of the Autonomous Communities.
When addressing the lawfulness of a rule from the point of view of the right to equality, it should be remembered that this constitutional right requires first that we are faced with two comparable (not equal) situations, and, secondly, that we identify the differentiation criterion chosen by the legislator. The core of any debate on the right to equality will be the lawfulness of that criterion, which will be valid when it is based on an objective and reasonable justification of that unequal treatment. And this justification must also be based on objectives or reasons of general interest that are constitutionally relevant, without violating the principle of proportionality, that is, without going beyond what is necessary to achieve that end.
As is well known, for many years there has been a debate about whether tax residence is a differentiation criterion that justifies a disparity in treatment in the tax field. And the debate arises because historically an affirmative answer was given to this question, even based on the idea that the situation of a resident and a non-resident are not comparable situations or that they are only comparable in those circumstances in which other reasons, such as the protection of certain investments, require such equal treatment. But for years the debate, even in the field of international taxation, has been conditioned by the jurisprudence of the Court of Justice of the European Union (CJEU). The doctrine of the CJEU assumes a priori that, in terms of direct taxation, residents and non-residents are not, as a general rule, in comparable situations. But this general rule then gives way, in the doctrine of the CJEU, to a practice in favour of that same comparability, when the unequal treatment is based only on mere tax residence, which would entail a restriction of a fundamental freedom that, moreover, would not be justified by overriding reasons of general interest.
In its recent judgment 20/2026, the Constitutional Court expressly alludes to the doctrine of the CJEU to justify the need to interpret tax equality in constitutional terms in the light of said doctrine, when the differentiation criterion is related to tax residence. The court follows the line initiated with its judgment 60/2015, of March 18, 2015, in which it already understood that a difference in treatment in Inheritance and Gift Tax that took into account only the tax residence of the taxpayer was contrary to Article 14 of the Constitution. This criterion was already supported by the doctrine of the CJEU, which, in its judgment of 3 September 2014 (in case C-127/12), already considered contrary to the free movement of capital the differences arising from not applying to non-residents the tax benefits that the autonomous communities had established in that transferred tax and that could only be applied to residents within the scope of that transfer. Years later, the Constitutional Court would issue judgment 20/2022, of February 9, 2022, in which, linking with judgment 60/2015, it would declare it contrary to the Constitution to link a tax benefit in the Bank Deposit Tax to the presence of the registered office of a credit institution in a certain autonomous community. The Supreme Court, for its part, would issue judgment 3567/2023, of July 20, 2023, collecting the same doctrine in the field of local entities, which could not link a tax regime with the mere circumstance of the taxpayer’s neighborhood in a municipality.
In short, the situation of a resident and a non-resident are comparable when the only differentiating criterion is that condition, which is to say, if the difference in treatment cannot be based on other reasons of public interest.
The above has nothing to do with an alleged equality of the tax system of all the autonomous communities. Although the doctrine of the CJEU sometimes seems to yearn for greater harmonization, it rests on the competence of each State to establish its own system of direct taxation. And, in the Spanish constitutional framework, the basic equality demanded by article 149.1. 1 of the Constitution must be reconciled with the constitutional autonomy of the autonomous communities, as the Constitutional Court accepted since judgment 247/2007, of December 12, 2007. Therefore, prohibited discrimination does not appear when two autonomous communities treat two comparable situations differently, but when the legal system of the same autonomous community makes such a differentiation, without an objective and reasonable justification.
And, at this point, a question arises that leaves this judgment open and that, in reality, has been open since judgment 20/2022. Despite this doctrine, which is clear in principle, the tax system of the autonomous communities today offers a multitude of cases, some of them recent, of rules that condition access to a tax benefit to the residence of the taxpayer or a certain entity. And this situation raises the big question: are these conditions of residence or neighborhood contrary to tax equality? Or put another way, when could they find a valid justification?
Perhaps this question needs to be answered on a case-by-case basis. But if the constitutional doctrine is to be combined with that of the CJEU, it seems prudent to think that a tax benefit or regime cannot be made to depend only on the tax residence of the taxpayer or the entity subject to an investment. Such a difference in treatment could possibly apply to investments that were to be located in a territory for objective reasons of promotion or protection of certain general interests. But such reasons can hardly be found in the mere tax residence or in the registered office of an entity.
