NEWS ABOUT CORPORATION TAX

NEWS ABOUT CORPORATION TAX IN SPAIN

In this post you will find a summary of the main news, if you need to update information or clarify a question, we are at your service.

* Extension of application of approved special repayment plans Article 1.1.1 adds a new section 9 to Article 5 of the Regulations on Corporation Tax, according to which repayment plans which have been approved can be applied to other capital assets of a similar nature when the repayment begins within three years counted from the date of notification of the agreement approving the repayment plan, provided that the physical, technological, legal and economic circumstances governing the approved repayment method are substantially unchanged.. The application of such plans must be reported to the Tax Agency before the end of the tax period in which they are to take effect.

* Prior measurement or classification and measurement agreements concerning earnings generated from certain intangible assets. Article 1.1.2 adds Chapter IX to Part I of the Regulations on Corporation Tax, detailing the procedure for the application of prior agreements on the measurement of revenues, expenses and earnings generated on the transfer of assets referred to in Article 23.1 and for requests for prior agreements on classification and measurement that will treat the assets as belonging to one of the categories mentioned in said Article. Briefly the procedure is as follows:

- The application will be presented in writing, before the transactions justifying the application of the reduction envisaged in Article 23 of the Corporation Tax Act take place. The competent authority is the Department of Finance and Tax Inspection of the Tax Agency. The written application will contain the following, at least: o Identification details of applicant and assignee. o Description of the asset. o Description of the right of use or exploitation specified in the contract and its duration. o In the rating and assessment agreement, a justified rating of the assets. o Proposed assessment of the items for which the agreement is requested. - In the procedure for agreements on rating and assessment, the competent body is obliged to request a binding report from the Directorate General for Taxation, regarding the rating of the assets.

- The procedure must be completed within six months. At the end of that period, if no express resolution has been issued, it will be understood that the application has been rejected. No appeal can be made against the final resolution or the implicit rejection of the application in the absence of a resolution.

* Deduction for investment of profits: Special investment plans. Article 1.1.3 adds a Chapter III to Part II of the Regulations on Corporation Tax, regulating the special investment plans which taxpayers may submit when, due to its technical nature, an investment in a fixed asset or real estate asset, or the bringing into operation thereof, must necessarily be made over a longer period than that allowed in article 37.2 of the Corporation Tax Act. Briefly the procedure is as follows:

- Applications for approval of such plans must be presented in writing, before the end of the last tax period referred to in Article 37.2 of the Corporation Tax Act. They must contain at least the following information: o Description of the items in which the investment will be made. o Amount of the investment. o Timescale of the investment. o Circumstances that justify the special plan. - The body authorised to approve the plan will be the Tax Agency body with the appropriate powers according to the rules governing its organic structure.

- Final decisions on applications must be made within three months. At the end of that period, if no express resolution has been issued, it will be understood that the special investment plan has been approved.

* Financial leases Article 1.1.4 adds an Article 49 to the Regulations on Corporation Tax, establishing the period in which the application must be presented and the minimum content of the new submission established under the special tax regime for financial leases regulated by Article 115 of the Revised Text of the Corporation Tax Act in accordance with the interpretation of said article in Act 16/2012, of 27 December, introducing various tax measures aimed at consolidating public finances and driving economic activity.

* Modifications regarding the system of withholding tax Article 1.2 introduces the following modifications with effect from 1 January 2014:

- Section 6 of Article 60 of the Corporation Tax Act is modified to establish that in the event of the reimbursement of shares in investment funds, the managing companies must make withholdings or payments on account unless the shares are registered in the name of marketing companies on behalf of the unitholder, in which case said marketing companies are required to make the withholdings or payments on account.

- Section 4 of article 62 of the Regulations on Corporation Tax is modified to additionally establish that in the event of the reimbursement of shares in collective investment institutions regulated under Act 35/2003, of 4 November, on collective investment institutions, for which, in accordance with the provisions of Article 40.3 of said Law, there is more than one record of the unit holder, or of the transfer or reimbursement of shares in collective investment institutions with registered address abroad, which are sold, placed or distributed in Spain, the age rule (the securities transferred or reimbursed by the taxpayer will be those acquired first) will be applied to the securities listed in its register of unit holders or shareholders by the managing or marketing institution with which the reimbursement or transfer was carried out.

- Section 1 of Article 66 of the Regulations on Corporation Tax is modified to eliminate the exceptional payment period in place for returns and payments for the month of July for persons or entities required to present monthly returns and make the corresponding withholdings or payments on account.