Corporate Income Tax Update 2018

MAIN TAX INNOVATIONS INTRODUCED BY ROYAL DECREE 1074/2017 OF 29 DECEMBER IN THE CORPORATE INCOME TAX REGULATIONS

CORPORATION TAX

Modification of the regulation of information and documentation on related-party entities and transactions

With effect for tax periods beginning on or after 1 January 2016, Article 13 (1) of Royal Decree 634/2015 of 10 July 2005 is amended, clarifying the subjective scope of the entities that have to provide information and documentation on related party entities and transactions. In this sense, it is clarified the inclusion of permanent establishments in Spanish territory of non-resident entities in the group of the obligation to provide the documentation set out in Article 14 of the Regulation. The circumstance provided for in Article 13 (1)(a) as regards the obligation to provide information is deleted.

Likewise, the following exception is incorporated, there will be no obligation to provide the information by subsidiaries or permanent establishments in Spanish territory when the multinational group has designated to present the referred information to a subsidiary entity constituting the group that is resident in a Member State of the European Union, or when the information has already been submitted in its territory of tax residence by another non-resident entity named by the group as a subrogated of the parent entity for the purposes of said information. In the case of a subrogated entity resident for tax purposes in a territory outside the European Union, it must fulfil the conditions laid down in Annex III, Section II (2) to Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC.

The following nuance is introduced, in the event that there are several dependent entities resident in Spanish territory, one of them would have been designated or appointed by the multinational group to present the information, it will be only this one that is obliged to present the information.

Finally, it incorporates the consequences of the refusal to provide the information, establishing that if the non-resident entity refuses to supply all or part of the information corresponding to the group to the entity resident in Spanish territory or to the permanent establishment in Spanish territory, they will submit the information available to them and notify this circumstance to the Tax Administration.

Modification of the regulation of country-by-country information

With effect for tax periods beginning on or after 1 January 2016, Article 14 (2)(e) of Royal Decree 634/2015 is amended to include among the information to be provided, in addition to the amount of capital, other results not distributed at the end of the tax period.

Adaptation to the Corporation Tax Act 27/2014

With effect for tax periods commencing on or after 1 January 2018, various sections of Article 69 of Royal Decree 634/2015 are amended in order to adapt them to the Corporation Tax Law and specifically provides, with respect to the procedure for offsetting and crediting receivables from the Inland Revenue, that deferred tax assets corresponding to provisions for impairment of credits or other assets derived from the possible insolvencies of unrelated debtors shall be as follows1. a) of the Tax Law, as well as those deriving from paragraphs 1 and 2 of Article 14 of the Tax Law, corresponding to allocations or contributions to social welfare systems and, where appropriate, early retirement, may be converted into a credit payable to the Tax Administration, under the terms established in paragraphs 1 and 2 of Article 130 of the Tax Law.