Spain has implemented new country by country (CbC) reporting obligations that are in line with the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Project.
These changes are part of a wider reform on transfer pricing requirements that enhance transparency as a result of good governance demanded to multinationals while a considerable reduction in transfer pricing documentation required to small and medium sized companies is implemented.
✔The new CbC regulations apply to fiscal years starting as of Jan. 01, 2016.
The entities subject to these compliance requirements are:
- Spanish tax resident entities that are dominant of a group and that are not dependent from any other entity, either resident or non – resident; and,
- Spanish resident entities dependent from another non-resident entity (not dependent from any other) as well as Spanish permanent establishments of non-resident entities, providing one of the following circumstances occur:
- The Spanish entity has been designated by the non-resident parent company to prepare such information.
- No similar CbC obligation applies in the country of residence of the non-resident parent company.
- There is no agreement of exchange of information in relation to such obligation with the country of residence of the non-resident parent company.
✔ This obligation only applies to the group of entities whose turnover in the 12 months preceding to the beginning of the fiscal years exceeds 750 million €.
Information per country on an aggregate basis shall include group’s revenues, profits before taxes, Corporate income tax, share capital and equity, average number of employees, tangible assets and real estate investments, list of resident entities and their main activities.
Fling of this information shall be required within 12 months as from the end of the first fiscal year of application, (companies having a fiscal year in 2016 coinciding with the calendar year will have as a deadline for reporting up to Dec. 31, 2017).
✔ All in all, compliance of these measures shall become an important part of multinationals to do lists as they have been passed to prevent their tax evasion practices, and to force that they are ultimately taxed in countries where their activities generate added value.