SPAIN Law and Practice Contributed by: Raúl Salas and Elena Ferrer-Sama, RocaJunyent
transfer pricing guidelines and principles approved by the OECD. • BEPS Action 12 – as an EU member state, Spain implemented DAC6 (Council Directive (EU) 2018/822), which introduced aggressive tax- planning reporting obligations for EU member states and third parties. In 2023 the Supreme Court approved a precautionary measure whereby tax advisers and lawyers will not be subject to DAC6 while the court is analysing whether DAC6 violates professional secret duty. • BEPS Action 13 – Spain has applied Country-by- Country (CbC) reporting. • BEPS Action 14 – Spain is committed to making alternative dispute resolution (ADR) mechanisms more effective, not only because (as an EU mem - ber state) it is obliged to apply arbitration mecha - nisms within EU territory, but also because (as a signatory of the MLI) any EU member state may find that most DTAs end up featuring alternative mechanisms to correct double-taxation scenarios. • BEPS Action 15 – Spain has ratified the MLI, which entered into force during 2023 and may affect 88 of the nearly 103 DTAs signed by Spain. Spain also participates in the work resulting from the OECD Inclusive Framework, which aimed to establish Global Anti-Base Erosion (GloBE) rules and an Under - taxed Payments Rule (UTPR). In December 2024, Law number 7/2024 approved the GloBE and the Top-Up Tax as of 2024. 9.2 Government Policy and Objectives Approach Overall, Spanish tax authorities are extremely sup - portive of the OECD’s tax-related works where there is a large consensus. This has been the case for the OECD-BEPS outcome as well as for the launch of Pillar 2 of the OECD Inclusive Framework. It is worth mentioning that, as a member state of the EU, Spain has a legal obligation to implement EU Directives that are fully aligned with OECD initiatives. 9.3 International Tax Recent economic geopolitical and pandemic crises have resulted in a public deficit increase, which has drawn special attention to MNE taxation and harm - ful profit-shifting practices. Consequently, Spanish
authorities have become more committed to tackling tax avoidance. This situation is boosting the imple - mentation of BEPS and similar international recom - mendations. 9.4 Competitive Tax Policy Objectives Spain’s current administration places greater empha - sis on combating profit-shifting practices than on attracting investment through tax competition. Spain relies on the premise that a common approach to taxation (across Europe and beyond) would lead to a more accurate allocation of profits and taxes, based Legal uncertainty has usually been the Achilles heel of the Spanish tax system, given that special tax regimes have frequently been frustrated owing to aggressive interpretation by tax-inspector bodies. Achieving legal certainty is therefore essential when it comes to tax- planning investment in Spain. 9.6 Hybrid Instruments and BEPS Implementation on economic factors other than taxes. 9.5 The Competitive Tax System The Spanish CIT regime has implemented the EU Directive preventing hybrid mismatches. As such, the new Spanish tax system is a perfect implementation of Council Directive (EU) 2017/952 (ATAD II). 9.7 Interest Deductibility and Territorial Tax Regime Spain does not have a territorial tax regime. Only Spanish branches of foreign companies are taxed exclusively for Spanish-sourced income. 9.8 Controlled Foreign Corporation Reform As mentioned in 9.7 Interest Deductibility and Territo- rial Tax Regime , Spain does not have a territorial tax system. However, as of 1995, it does have CFC rules. These have been modified slightly to adapt them to OECD-BEPS outcomes and to ATAD II. There is a high consensus on CFC rules resulting from the OECD. However, based on a recent cut to the participation exemption, CFC rules in Spain could cre - ate unwanted double taxation if a Spanish company controls another foreign holding company whose par -
568 CHAMBERS.COM
Powered by FlippingBook