Several Spanish Courts are already ahead of the game on using contractual artifices to evade taxes, pretty much what the Equity Release was all about. The chief difference between both setups is that whilst the ones already set aside were mutually agreed on the understanding that it was illegal to do so, on the Equity Release banks lied as to the legality of the matter and misrepresented the truth.
As Nordea put it
We offered you advice which we thought was correct at the time of publication. It was however your prerrogative to go elsewhere to obtain correct advice…(!)
In contrast to Nordea’s clever plan, Madrid-based National Audience said the following about contracts used to avoid Capital Gains Tax:
It is reasonable to presume that the profuse and complex series of contracts carried out by the parties answered to a fiscal strategy and, in reality, had no other purpose than to evade taxes…In summary, the object of each of the contracts agreed to was unconnected from the real economical nature that they are intended for, and were rather used seek tax avoidance, once the contracts were succesfully implemented, on the gains derived from the main agreement.
The Superior Court in Navarra established that:
No juridical contract can enjoy this status if it is intended to attain a tax advantage, because no tax advantage can be transferred between the parties, and thus such contract produces no effect in respect of third parties…what has been confirmed is a surreptitious avoidance of taxes which none of that parties were entited, directly or indirectly, to legally avoid.
And more recently, on the 2nd of February 2012, th Supreme Court in Madrid endorsed all prior judicial opinion on the matter by ratifying that:
We must conclude ¬†by asserting the illicit nature of the object of the contract insofar as the aim pursued by the parties was an illegal and immoral business common to both…exemption and tax advatange…without any of the parties being entitled to it.
If the contracts are not valid, there is no question of them being set aside and damages being awarded…for they never existed.