SPAIN Law and Practice Contributed by: Carolina del Campo, Joan Hortalà, Jaime Collado and Pablo Álvarez, Cuatrecasas
6.4 International Compliance Assessment Programme (ICAP) Spain participated in the pilot of the International Compliance Assessment Program (ICAP), and in subsequent versions. The benefits for both the Tax Administration and companies remains to be proven, as the compliance costs are still quite high. 7. Advance Pricing Agreements (APAs) 7.1 Programmes Allowing for Rulings Regarding Transfer Pricing The APA has been available in Spain for many years. In Spain, an APA covers only TP issues and is avail - able in unilateral, bilateral and multilateral versions. 7.2 Administration of Programmes Some years ago, the Spanish Tax Administration cre - ated a specific unit within the AEAT to deal with TP issues: the International Tax Office ( Oficina Nacional de Fiscalidad Internacional , or ONFI). This unit handles the APA and MAP procedures and has been reinforced in recent years to ensure the increasing demand for experimentation can be met. 7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures ONFI has two separate teams, one for MAPs and another for APAs, but they both report to the head of ONFI. This guarantees optimal co-ordination between both procedures when required. 7.4 Limits on Taxpayers/Transactions Eligible for an APA No specific limits are established in the legislation for the initiation of an APA, be it unilateral, bilateral or multilateral. The only formal requirement, apart from the necessary documentation, is that the matter must concern TP, and not the definition of a permanent establishment or the application of treaties. 7.5 APA Application Deadlines In terms of procedure, there are few requirements for an APA. It can be initiated any time before a transac - tion takes place; if the negotiation takes longer than expected, a roll-back application is available under certain circumstances.
Practically, it is useful to document the restitution pay - ment (or accounting entry) with: • a precise calculation of the primary adjustment; • board approvals and intercompany invoices/ receipts; • withholding tax analysis where relevant; and • alignment of books and tax returns in both entities. Where bilateral alignment is needed, one should co- ordinate with the counterparty’s jurisdiction early to avoid mismatches (eg, dividend versus price adjust - ment), which complicate treaty relief. 6. Cross-Border Information Sharing 6.1 Sharing Taxpayer Information It is very common during a tax audit for an interna - tional exchange of information procedure to be initi - ated to gather information additional to that already provided by the taxpayer. The Tax Administration has different tools to do so, such as a remarkable network of double tax treaties that all include an exchange of information-related article. From a multilateral per - spective, Spain, as a member of the EU, can apply all the Directives related to administrative co-operation, and it has also signed the Multilateral Conventions of the OECD pertaining to this issue. This is an area where the Spanish Tax Administration has developed dramatically in the last few years. 6.2 Joint Audits Joint audits have been somewhat controversial, but as they were imposed by an EU Directive, Spain is obliged to apply them. This legislation is incorporat - ed into the General Tax Code. Although implemented quite recently, the joint audit might be useful in the future. 6.3 Simultaneous Controls Unlike joint audits, simultaneous controls have been regulated in the General Tax Code for many years and have become standard practice within the Spanish Tax Administration. In these kinds of procedures, although a tax audit may be initiated, the level of transparency of the related discussions is quite limited.
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