SPAIN Trends and Developments Contributed by: Raúl Salas, Elena Ferrer-Sama and Cristina Cavero, RocaJunyent
all reorganisations in which companies have opted for the Neutrality Regime. Of greater concern, however, is the technical posi - tion adopted by the Tax Inspectorate when challeng - ing the Neutrality Regime’s application, since it not only taxes the capital gain that a reorganisation may trigger but also rejects any future tax credit or relief that may result from the ex post situation, sometimes ignoring that the same tax credit or relief would have been applicable even if the Neutrality Regime had not been applied. The position that the Tax Inspectorate is taking, together with the lack of certainty resulting from the reluctance of the DGT to provide an ex ante criterion (even when asked), has led to an official claim being filed before the European Commission arguing that the Spanish tax authorities are in breach of EU law. Imposed Limits on Deduction of Interest Spain imposes limits on the deduction of interest expenses based on 30% of the EBITDA of compa - nies or tax groups. As of 2024, when calculating EBITDA, non-taxable income or expenses should be considered, respec - tively reducing or increasing EBITDA (the “EBITDA exclusion rule”). This rule is aimed at avoiding a non- taxable income that allows a higher interest deduc - tion and preventing a non-deductible expense from limiting the interest allowance. However, in a binding ruling, the Spanish tax authorities have interpreted the EBITDA exclusion rule as applying only to non-taxable income or costs that generate a permanent difference, though this will not apply to timing differences. On this basis, it is possible that a non-taxable income (timing difference) would allow a higher interest despite the income itself not being taxable. Obligation for Spanish Companies to Publish CbC Information Spain implemented EU Directive 2021/2101 obliging MNEs to publicly disclose CbC reporting information. Unlike all other EU member states, Spain requires that such information be published within six months of the end of the financial year – this creates consider - able disruption for Spanish companies since part of
the information to be provided could not be available to them. The Spanish Institute of Accountants has recently published a technical criterion stating that, in the case of a European ultimate parent holding company, the deadline approved in the parent company’s jurisdic - tion applies. However, in the case of a non-Europe - an holding company, the Spanish subsidiary is still required to comply with the reporting obligation within six months, using the available information. Tax Group Regime for Corporate Income Tax Spain has a very interesting tax consolidation regime for both corporate income tax (CIT) and VAT. Most MNE groups operating in Spain apply the Tax Group Regime for CIT, while the VAT Group regime is usually applied by groups acting in certain specific sectors such as insurance, finance, health, etc. The Tax Group Regime allows investors to optimise their tax burden. Tax consolidation groups are formed by Spanish tax-resident companies with a common ownership, and entail the entire group being taxed as a single taxpayer. To apply the Tax Group Regime, the following require - ments should be met: • the parent company must hold at least 75% of the shares, or 70% in the case of listed companies; • this minimum percentage of shares must be main - tained during the complete tax period; • the parent company must be subject to CIT; and • the parent company must hold the majority of the voting rights. The group CIT taxable income is determined by aggregating the standalone taxable income of each group entity; the resulting aggregation would then be reduced or increased in the profits and/or losses obtained in “internal” operations carried out between entities belonging to the group (“eliminated result”). These “eliminated” results are reverted and become taxable as soon as the results are realised in an oper - ation with a third party, outside the group or where either the transferring entity or the acquiring entity left
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