The dispute arose when the educational institution refused to pay the Tax on Constructions, Installations, and Works (ICIO) for the expansion of its facilities in 2018. The religious school claimed exemption from this payment, citing agreements signed between the Holy See and the Spanish Government in 1979.
Initially, a first-instance judge had sided with the school, annulling the tax assessment. However, the High Court of the Basque Country has now overturned that decision, ruling that the 48,111 euros must be paid to the municipal coffers.
It has not been proven that the school engaged in economic activities, as the City Council should have provided sufficient probative activity, with its offer of activities, to demonstrate that it could be competing with some company in the market.
The core of the lawsuit revolved around whether the expansion had an educational or a lucrative purpose. That is, whether the new facilities that incurred the construction tax were used for teaching or for private (non-subsidized) gain, such as extracurricular activities, a cafeteria, or other economic or lucrative uses.
The High Court of the Basque Country has determined that the burden of proof lies with the school, which must demonstrate that the expansion is used for educational activities. In this regard, it concluded that the documentation provided by the center does not prove the use given to the space enabled by the works to determine if it implied an economic activity different from the subsidized one.
Consequently, the court has ruled in favor of the City Council, ordering the payment of the disputed 48,111 euros. The judgment from the High Court of the Basque Country became final last week, as neither party appealed the decision.
