In accordance with the conclusions adopted by The “BEPS” Action Plan (which stands for “Base Erosion and Profit Shifting”), headed by the OECD (Organisation for Economic Co-operation and Development) and, more precisely, with reference to “Action 13: Guidance on Transfer Pricing Documentation and Country-by-Country Reporting” (regarding information and documentation of related-party transactions), as a novelty, the country-by-country information has been introduced as an instrument which will make it possible to evaluate risks of the transfer pricing policy of a group of entities.
As a result, Spanish Order HFP/1978/2016, of 28 December, has approved Form 231, regarding Country-By-Country Information. Consequently, any entity residing in Spain who takes part in a group with a turnover amount of over 750 million Euros and who is controlled by a non-resident parent-company shall be required (for tax periods beginning 01-01-2016) to file a communication addressed to the Spanish Tax Administration (AEAT) identifying the entity of the group which will submit the related-party transactions country-by-country information and the country or territory of residence of said entity.
In order to elaborate said communication to the Spanish Tax Administration (AEAT) regarding all entities residing in Spain who take part in a group we shall need the following information:
Identification of the international group:
* Business name of the international group.
* Country of residence of the parent-company.
* Tax Identification Number of the parent-company.
* Tax Identification Number of the parent-company in its country of residence.
* Business name of the parent-company.
Identification of the entity required to file the country-by-country information.
* Country of residence of said entity.
* Tax Identification Number.
* Tax Identification Number in its country of residence.
* Business name of the entity.
* Reason why the country-by-country information is submitted.
Order HFP/227/2017 of 13 March has approved form 202 for making interim payments on account for Corporate Tax and Non-Resident Income Tax by permanent establishments and entities constituted abroad and operating in Spain that are subject to the income allocation system and form 222 for making interim payments on account for Corporate Tax using the consolidated tax scheme. The Order also establishes the general conditions and procedure for electronic filing.
Currently, certain dividends paid by a Subsidiary company to its Parent company are exempted from withholding tax in Spain when the two companies are located in different Member States.
The exemption is subject to the following conditions:
1. The Parent company must own at least 5% of the shares of the Subsidiary.
2. Both companies must be one of the types listed in Annex I Part A of the Directive 2011/96/UE.
3. Shares must have been held for a minimum of 12 months.
4. Both companies must be subject to income tax in their own countries (according to the list of Annex I Part B of the indicated Directive).
These are the general conditions for the exemption but it would be necessary to know all the circumstances of the case to give our advice about this matter.