New formal tax obligations in Spain

24.09.2017

After the summer break, Spanish companies have returned to their usual functioning. Tax authorities seem to be back too, through the implementation of two new informational requirements: Tax model no 232 and LEI (Legal Entity Identifier) obligation.

1. Tax model 232
On the recent years, the OECD has released several basic guidelines for related transactions among associated companies, in order to prevent the BEPS (base erosion and profit shifting). The OECD guidelines, commonly named “Transfer pricing regulation”, have been incorporated in the Spanish Corporate Income Law (CIT Law).

In relation with formal obligations, the Spanish transfer pricing regulation establishes: Documentation requirements and Informational requirements. Focusing on the second requirement, the obligation to inform involves the following transactions:

Sum of transactions > 250.000€ (between two related entities/individuals) If exceeds the limit, all the transactions must be informed.
Transactions > 100.000€ made between two related entities/individuals, same sort and valuation method. If the sum < 250.000€, but there are transactions > 100.000€ among the two companies, those must be informed.
Specific transactions (regulated in Spanish CIT Law) If the sum of transactions (same sort) > 100.000€, must be informed.
Same sort of operation, same valuation method (no matter the amount) Must be informed if those transactions represent >50% of annual revenue.
Intangible assets If income reduction is applied, those transactions must be informed.

It should also be mentioned that entities which operate or maintain assets in tax havens, are equally subject to informational requirements of the present tax model.

This information, if applicable, must be submitted to the Spanish Tax Agency before the following deadlines:
  • Tax period begun in 2016: From November 1st to November 30th 2017.
  • Tax period 2017 and on: From May 1st to May 31th of next period.

2. LEI obligations in Spain
Due to the perceived problems on identifying the actors on financial transactions, noticed on Lehman Brothers crisis, the G20 started the LEI project with the aim of deliver a higher grade of transparency on these markets.

LEI code will be used worldwide for entity identification, indicating who is responsible for a determined financial transaction, especially on OTC derivatives. This 20-alphanumeric-position code will individually assigned to an entity, adopted by all countries, will contribute to improve risk management on financial institutions.

Related to LEI regulation procedure in Spain, the Commercial Registry has been designated as the vehicular institution for administrative formalities. Each entity has to submit its filled request along with the fee payment receipt before the following deadlines:
  • Before November 1st 2017: In case the entity operates with derivatives.
  • Before January 3rd 2018: In the remaining cases.

For further information: https://www.justicia.lei.registradores.org/