Since 11 July 2015 new Spanish Corporate Income Tax regulations (Royal Decree 634/2015) are aligned with Action 13 of the OECD’s BEPS Project which aims to develop rules regarding transfer pricing documentation to enhance transparency for tax authorities.
The new CbC reporting obligations effective for fiscal years starting as from 1 January 2016 generally apply to Spanish tax resident entities which are the «head» of a group (as defined under the Spanish commercial law rules), and are not at the same time dependent of any other entity, whether Spanish resident or not, to the extent the consolidated group’s net turnover in the immediately preceding fiscal year exceeds €750 million.
In addition, these rules also apply to Spanish entities and permanent establishments (PEs) which are, directly or indirectly, held by a non-Spanish resident head entity when any of the following circumstances is met:
- The Spanish resident entity or PE has been appointed by its nonresident parent entity to prepare the CbC reporting.
- The country in which the head entity is resident has not established CbC reporting obligations in similar terms to Spain.
- The country in which the head entity is resident has not signed an automatic exchange of information agreement with Spain in relation to these obligations.
- The country in which the head entity is resident has systematically failed to comply and this systematic failure has been notified to the Spanish tax resident companies or PEs before the reporting fiscal year end.
In all of the above cases, the CbC report shall be filed within a 12-month period from the close of the reporting fiscal year (i.e., companies subject to these obligations with FYE 31 December 2016 need to file the CbC report by 31 December 2017). Please see the attachment for further details about the information per country to include in the reporting.
However, we should outline the fact that, in addition, the CIT regulations include the obligation for Spanish companies belonging to reporting groups to notify the Spanish tax authorities of the name and tax residence of the company within the group filing the CbC report. Such notification must be made before the reporting fiscal year end (i.e. 31 December 2016); Form 231- prior notification, available at the Spanish Tax Agency (AEAT)
The CbC report (not the prior notification) will have to include the following information per country on an aggregate basis:
- Group’s revenue, distinguishing between that derived from related and unrelated parties.
- Accounting result before CIT or a tax of similar or analogous nature.
- CIT (or tax of similar or analogous nature) effectively paid, including withholding taxesCIT (or tax of similar or analogous nature) accrued, including withholding taxes.
- Share capital and equity at the end of the fiscal year.
- Average number of employees.Tangible assets and real estate investments, different from treasury and receivables.List of resident entities, including permanent establishments, and the main activities these are engaged in.Other information that is considered relevant and, if applicable, an explanation on the data included in such information.
The information to be provided in the CbC report must be denominated in Euro.
And last but not least, for the time being, no specific penalty regime has been included for not filing the CbC report.
In conclusion, multinational groups with a presence in Spain should focus on the actions that may be necessary to ensure their ability to produce the required information, including preparing protocols for gathering the information and developing internal processes and responsibilities with regard to the CbC reporting obligations.
For further information with respect to this post please contact our tax department at XTERNA or myself (firstname.lastname@example.org)