Tax Treaty Case Law around the Globe 2023

1. Introduction

In the judgment number 840/2022, dated 24 June 2022 (hereinafter Nintendo), the Spanish Supreme Court (Tribunal Supremo, TS) qualified the transfer of customer data and operational data relevant to distributing Nintendo products in Portugal as royalty (know-how) subject to withholding tax in Spain. The TS confirmed the outcome of the previous judgment of the Spanish National Court (Audiencia Nacional, AN). Accordingly, the TS rejected the interpretation supported by the taxpayer who labeled this transfer of data as a sale triggering a capital gain only taxable in Germany within the scope of Article 13 of the former double tax treaty (DTC) on income and capital between Spain-Germany (1966).

Nintendo has triggered many reactions in the Spanish scholarship. Carmona has praised the didactic tone in which the judgment is drafted. Sanchez de Castro has stressed the message launched by the TS that confidential undivulged commercial data of clients (know-how) do not have the legal features of a sale and thus the payment falls within the scope of royalty under Article 12 OECD MC. Other S. 216commentators appraised a clear continuation of the previous restrictive case law of the TS t...