United States

1. For the purposes of this Administrative Agreement, the following terms are defined as follows:

(a) ‘Group’ means a group of undertakings with such a link for reasons of ownership or control that obliges it to draw up consolidated financial statements for the purpose of reporting financial information in accordance with the applicable accounting principles, or that it would be obliged to draw up them in the event that the shares in the share capital of any of those undertakings were traded on a public securities market;

(b) ‘Multinational Enterprise Group’ or ‘EMN Group’ means a group which (i) comprises two or more companies with tax residence in different countries or territories, or an undertaking resident for tax purposes in one country or territory and subject to taxation in another country or territory in respect of the economic activity there carried out through a permanent establishment, and (ii) is not an excluded multinational group;

(c) ‘Excluded MNE Group’ means a group that is not required to submit the country-by-country report because its annual volume of consolidated revenue for the year immediately preceding the reporting period, as reflected in the consolidated financial statements for that year, does not reach the threshold defined by the domestic legislation in the reporting entity's country or territory of fiscal residence, according to the 2015 Report (for the purposes of the above, the threshold includes any changes resulting from the 2020 review referred to in the said Report);

(d) ‘Constitutive entity’ means:

(i) in respect of an EMP group with an Entity that communicates information resident for tax purposes in Spain, any Entity defined as ‘constitutional’ in the corresponding Spanish legislation; and

(ii) in respect of an EMN group with an Entity reporting information resident for tax purposes in the United States, any Entity defined as ‘constitutional’ in the corresponding US Treasury regulations;

(e) ‘Information reporting entity’ means the constituent entity which, under the domestic law of its country or territory of fiscal residence, submits the Country-by-Country Report, having the capacity to do so on behalf of the Multinational Enterprises Group;

(f) ‘Country-by-country report’ means the report which the reporting entity is obliged to submit annually under the legislation of its country or territory of fiscal residence, which contains the information required to be communicated under such legislation, with the content and form set out in the 2015 report (for the purposes of the above, the information and format shall take into account any changes that may be made following the 2020 review provided for in that report);

(g) ‘tax year’ means:

(i) for an NTE group with an Entity reporting information resident for tax purposes in Spain, the annual accounting period for which the Entity prepares its financial statements; and

(ii) in respect of an EMN group with an Entity reporting information resident for tax purposes in the United States, the ‘declaration period’ as defined in the relevant US Treasury regulations; and

(h) ‘2015 report’ means the consolidated report entitled ‘Transfer pricing and information documentation country by country, in relation to Action 13 of the OECD/G20 Action Plan against erosion of the tax base and transfer of profits’.

2. The terms ‘Spain’, ‘the United States’, ‘competent authority’ and ‘contracting State’ have the meaning attributed to them by the Convention.

3. With regard to the application of this Administrative Agreement at any time by a competent authority, it is envisaged that the terms not defined therein shall have, unless their context is different or the competent authorities agree on a common meaning (to the extent permitted by domestic law), the meaning attributed to them at that time by the law of the Contracting State applying it, the meaning attributed by the applicable tax law of that Contracting State to which it would result from other branches of the law of that Contracting State prevails.

In accordance with Article 27 of the Convention, each Competent Authority intends to exchange with the other Competent Authority annually and automatically the Country Report transmitted by each Reporting Entity that is resident for tax purposes in its country or territory, provided that, on the basis of the information provided in the Country-by-Country Report, one or more Entities constituting the Multinational Enterprise Group to which the Reporting Entity belongs are resident for tax purposes in the country or territory of the other Competent Authority or are subject to taxation on the basis of the activity they carry out through a permanent establishment located in the country or territory of that other Competent Authority.

1. For the purposes of the exchange of information provided for in Article 2, the amounts set out in each Country Report are expected to be expressed in a single currency and specified in the Report.

2. The first country-by-country exchange of reports is expected to be that for the fiscal years of the EMP Groups beginning on 1 January 2016. The Country-by-Country Report is expected to be exchanged as soon as possible and, in any event, within 18 months of the last day of the fiscal year of the NTE Group to which it relates. Country-by-country reports for the fiscal years of MNC Groups starting from 1 January 2017 are expected to be exchanged as soon as possible and in any case within 15 months of the last day of the fiscal year of the MNC Group referred to in the Country-by-Country Report. Notwithstanding the above, the exchange of country-by-country reports is expected to commence only after this Administrative Agreement has effect, and each Competent Authority is expected to have the deadline to exchange country-by-country reports until the expiry of the periods set out in this paragraph or until three months after this Administrative Agreement takes effect, depending on the time thereafter.

3. The competent authorities plan to automatically exchange country-by-country reports using a common XML (Extensible Trademark Language) scheme.

4. The competent authorities express their intention to endeavour to agree on one or more methods for electronic data transmission, including encryption standards.

1. Each competent authority intends to notify the other when one of them has reason to conclude, in respect of an Entity that communicates information resident for tax purposes in the country or territory of the other competent Authority, that an error may have led to incorrect or incomplete communication of information, or that an Entity that communicates information has breached its obligation to submit a Country-by-Country Report in accordance with the domestic law of the country or territory of that other competent Authority. The competent authority to which the notification is addressed is expected to apply the appropriate measures provided for in its domestic legislation to remedy the error or non-compliance with its legislation to which the notification relates.

2. It is expected that within 15 days of the correct receipt of the file contained in the Country Report within the period and form set out in Article 3, the competent authority that has received it shall notify the competent authority that has sent it of its correct receipt. It is not necessary to state in the notification the views of the receiving competent authority on the adequacy of the information received or whether that competent authority considers that the sending competent authority should take measures pursuant to paragraph 1 of this Article to address any errors or non-compliance with its domestic law.

3. It is anticipated that within 15 days of receipt of a file containing information that cannot be processed, the receiving competent authority will notify the sending authority that there is no possibility of processing the information.

1. All information exchanged is protected by the rules on confidentiality and other safeguards provided for in the Convention, including provisions limiting the use of information exchanged.

2. To the extent compatible with Article 27 of the Convention, each competent authority intends to limit the use of the information by its tax administration for the purposes set out in this paragraph. In particular, the tax administration may use the information exchanged through the Country-by-Country Reports to assess the main risks associated with the determination of transfer pricing and other risks related to base erosion and profit transfer, as well as for economic and statistical analysis, where appropriate. It is expected that the tax administration will not use such information to replace a detailed analysis of transaction transfer prices and specific prices, based on a comprehensive functional and comparability analysis. Each competent authority acknowledges that the country-by-country reporting data alone does not constitute conclusive evidence of the adequacy of transfer prices and is therefore expected not to be used by the tax administration as a basis for adjustments to these prices. In the course of proceedings between competent authorities pursuant to Article 26 (mutual agreement procedure) of the Convention, they are expected to waive inappropriate adjustments made by a tax administration in contravention of the provisions of this subparagraph. The data contained in the Country-by-Country Reports may be used as a basis for further analysis of the transfer pricing determination of a Group of Multinational Enterprises, or other tax issues during a tax inspection process, and as a result, appropriate adjustments may be made to the taxable income of a Constituent Entity. For the purposes of the foregoing, ‘tax administration’ means the persons or authorities, either of the Internal Revenue Service or of the Spanish Tax Administration, to which they are officially entrusted to settle, collect and administer the taxes referred to in Article 27(1) of the Convention, and to deal with their effective application and the prosecution of their non-compliance, or to hear or supervise the remedies relating thereto.

3. To the extent permitted by applicable law, each competent authority intends to immediately notify the other of all cases of use or disclosure contrary to paragraphs 1 and 2 of this Article, as well as the corrective measures and any other measures taken in respect of such breaches which in turn contravene the provisions of those paragraphs.

1. Where a person considers that an adjustment to the taxable income of a constituent Entity, effected as a result of subsequent verifications based on the country-by-country report data, causes for him an imposition that is not in conformity with the provisions of the Convention and submits the matter to the competent authority specified therein, the competent authorities recognize their obligation to endeavour to resolve the matter in accordance with article 26 of the Convention.

2. In the event of difficulties in the implementation of this Administrative Agreement, any competent authority may request consultations for the adoption of appropriate measures to ensure its full compliance.

3. The competent authorities intend to consult each other before concluding that one of them has incurred a systemic omission in the exchange of country-by-country reports, which, under their domestic legislation, may trigger the obligation of submission of information in their territory by a constituent entity belonging to an NME Group on which a country-by-country exchange of reports is envisaged in accordance with this Administrative Agreement. For the purposes of the foregoing, ‘systemic omission’ means, with respect to the exchange of country-by-country reports by a competent authority, that the competent authority has suspended the automatic exchange provided for in this Administrative Agreement (for reasons other than those which are compatible with the provisions of this Administrative Agreement) or, in some other way, has repeatedly ceased to provide automatically country-by-country reports in its possession which it intends to exchange with the other Competent Authority under Article 2 of this Administrative Agreement.

This Administrative Agreement may be amended by a decision agreed in writing by the competent authorities.

1. This Administrative Agreement shall take effect on the last of the dates of signature specified below.

2. A competent authority may notify in writing the other authority that temporarily suspends the exchange of information provided for in this Administrative Agreement on the grounds that the latter applies or has inconsistently applied Articles 5(1) and 5(2) and 6(1) of this Agreement, or the corresponding provisions of the Convention referred to therein, or that that competent authority has not provided timely or adequate information as provided for in this Administrative Agreement. Before reaching such a conclusion, the first competent authority referred to above intends to consult with the other competent authority. The suspension of the exchange of information under this Administrative Agreement is intended to have immediate effect and to be extended until the competent authority referred to in the second subparagraph demonstrates in a manner acceptable to both competent authorities that it has not inconsistently applied the above paragraphs or that it has taken appropriate measures to remedy it.

3. Any competent authority may terminate its participation in this Administrative Agreement and is expected to do so by written notification addressed to the other competent authority. Such termination shall take place on the first day of the month following the expiry of a period of 12 months from the date of notification. In the event of termination, all information previously received under this Agreement shall remain confidential and shall remain subject to the terms of the Convention.

Signed in duplicate in English and Spanish.–By the competent authority of the Kingdom of Spain, José Enrique Fernández de Moya Romero, President of the State Tax Administration Agency. Madrid, 19-12-2017.–By the competent authority of the United States of America, Deborah Palacheck for Douglas W. O’Donnell, Commissioner, Big Business and International, Internal Revenue Service. San Marino, 13-12-2017.

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This Administrative Agreement has been in effect since 19 December 2017, as set out in Article 8 thereof.

Madrid, December 20, 2017.–The Technical Secretary General, Jose María Muriel Palomino.