Country-by-country tax reporting and closing provisions
Ley 28/2022, sixth to thirteenth final provisions: the public report on corporate income tax added to the Audit Act for groups and companies with turnover above 750 million euros, two unrelated budget amendments, the rule that this Act displaces conflicting provisions for startups, the mandate for startup model articles, and entry into force.
Two provisions that matter beyond large groups
Most of this page concerns groups far larger than any startup: the sixth final provision transposes into the Audit Act the EU requirement for public country-by-country reporting of corporate income tax, which starts at 750 million euros of turnover. But it also reaches the Spanish subsidiary or branch of a non-EU group of that size, unless the subsidiary is small. And the ninth final provision, two sentences long, is the rule that gives this Act its force: where the Act regulates a matter differently for startups, it displaces the general rule.
Final provisions
Sixth final provision. Amendment of Law 22/2015 of 20 July on the Audit of Accounts
One. Paragraph 1 of article 5 is amended, giving new wording to letter g) and introducing a new letter h), with the content of the current letter g):
«g) A statement of whether the audited entity was obliged to submit, in the financial year preceding the one audited, the report on corporate income tax or taxes of an identical or similar nature referred to in the eleventh additional provision of this Act. If it was so obliged, a statement that the entity published the report at the Commercial Registry and on the corresponding website, in accordance with that provision.
h) Date and signature of the person or persons who carried it out. The date of the audit report shall be that on which the auditor and the audit firm have completed the audit procedures necessary to form an opinion on the annual accounts.»
Two. An eleventh additional provision is introduced with the following content:
«Eleventh additional provision. Obligation to report on corporate income tax or taxes of an identical or similar nature on the part of certain undertakings and branches.
First. Undertakings and branches obliged to report.
1. The ultimate parent company of a group subject to Spanish law that draws up consolidated annual accounts and whose consolidated net annual turnover at the balance sheet date has exceeded, in each of the last two consecutive financial years, a total of 750,000,000 euros, must prepare, publish, file and make accessible a report on corporate income tax or taxes of an identical or similar nature relating to the last of those two consecutive financial years.
For these purposes, the ultimate parent company means the undertaking that draws up the consolidated financial statements of the largest group of undertakings in accordance with article 42 of the Commercial Code.
The ultimate parent company shall cease to be obliged to prepare a consolidated report on corporate income tax or taxes of an identical or similar nature when its consolidated net annual turnover at the balance sheet date is below 750,000,000 euros in each of the last two consecutive financial years according to its consolidated financial statements.
A company that does not form part of a group and whose net annual turnover at the balance sheet date has exceeded, in each of the last two consecutive financial years, a total of 750,000,000 euros according to its annual financial statements must prepare, publish, file and make accessible a report on corporate income tax or taxes of an identical or similar nature relating to the last of those two consecutive financial years.
That company shall cease to be subject to the reporting obligation referred to in the preceding paragraph when its net annual turnover at the balance sheet date is below 750,000,000 euros in each of the last two consecutive financial years according to its annual financial statements.
2. The provisions of the preceding paragraph shall not apply to companies that do not form part of a group, nor to ultimate parent companies and their subsidiaries, where those companies, including their branches, are established, or have their registered office or permanent business activity, in the territory of a single Member State and in no other tax jurisdiction.
For these purposes, a tax jurisdiction means a State, or a non-State country or territory, that enjoys fiscal autonomy as regards corporate income tax.
3. The provisions of paragraph 1 shall not apply either to undertakings that do not form part of a group, nor to ultimate parent companies, where they themselves or their subsidiaries publish a report in accordance with article 87 of Law 10/2014 of 26 June on the organisation, supervision and solvency of credit institutions, which includes information on all their activities and, in the case of ultimate parent companies, on all the activities of all the subsidiaries included in the consolidated financial statements.
4. Subsidiary undertakings subject to Spanish law that are controlled by an ultimate parent company not subject to the law of a Member State, whose consolidated net annual turnover at the balance sheet date has exceeded, in each of the last two consecutive financial years, a total of 750,000,000 euros according to its consolidated financial statements, shall be obliged to publish and make accessible a report on corporate income tax or taxes of an identical or similar nature at the consolidated level of that ultimate parent company relating to the more recent of the two consecutive financial years, provided that those subsidiary undertakings do not qualify as a small entity in accordance with the thresholds established in article 3 of this Act.
Where that information or report is not accessible, the subsidiary undertaking shall request its ultimate parent company to provide it with all the information required so that it can comply with the obligations established in paragraph 1. If the ultimate parent company does not provide all the information required, the subsidiary undertaking shall prepare, publish, file and make accessible a report on corporate income tax containing all the information in its possession, obtained or acquired, together with a statement indicating that its ultimate parent company has not made the necessary information available.
The subsidiary undertakings mentioned shall cease to be subject to the reporting obligations of this paragraph when the consolidated net annual turnover of the ultimate parent company at the balance sheet date is below 750,000,000 euros in each of the last two consecutive financial years according to its consolidated financial statements.
5. Branches established in Spanish territory by undertakings that are not subject to the law of a Member State shall be obliged to publish and make accessible a consolidated report on corporate income tax or taxes of an identical or similar nature of the ultimate parent company, or of the company that does not form part of a group, relating to the more recent of the last two consecutive financial years, where they meet the following criteria:
a) That the undertaking that established the branch is either a subsidiary undertaking of a group whose ultimate parent company is not subject to the law of a Member State and whose consolidated net annual turnover at the balance sheet date has exceeded, in each of the last two consecutive financial years, a total of 750,000,000 euros according to its consolidated financial statements, or a company that does not belong to a group whose net annual turnover at the balance sheet date has exceeded, in each of the last two consecutive financial years, a total of 750,000,000 euros according to its financial statements.
b) That the ultimate parent company referred to in letter a) does not have a subsidiary undertaking of those mentioned in paragraph 4.
c) That they do not qualify as a small entity in accordance with the thresholds established in article 3 of this Act. Where that information or report is not available, the person or persons designated to carry out the disclosure formalities referred to in paragraph Third shall request the ultimate parent company, or the company that does not form part of a group, to provide them with all the information necessary to enable them to comply with their obligations.
If all the information required is not provided, the branch shall prepare, publish, file and make accessible a report on corporate income tax or taxes of an identical or similar nature containing all the information in its possession, obtained or acquired, together with a statement indicating that the ultimate parent company, or the company that does not form part of a group, has not made the necessary information available.
6. The provisions of paragraphs 4 and 5, in respect of subsidiaries and branches respectively, shall not apply where the report on corporate income tax or taxes of an identical or similar nature has already been prepared by an ultimate parent company, or a company that does not form part of a group, not subject to the law of a Member State, provided that the report has content compatible with that provided for in this provision, so as to be compatible with the content of the report regulated in paragraph Second, and in addition meets the following criteria:
a) It is made accessible to the public free of charge and in a machine-readable electronic format:
i) On the website of that ultimate parent company or of the company that does not form part of a group.
ii) In at least one of the official languages of the Union.
iii) Within a maximum of six months from the balance sheet date of the financial year for which the report is prepared, and
b) It indicates the name and registered office of a single subsidiary undertaking, or the name and address of a single branch, subject to the law of a Member State, which publishes the report in accordance with the provisions of paragraph Third.1 of this additional provision.
7. Subsidiary undertakings and branches not subject to the provisions of paragraphs 4 and 5 must publish and make accessible a report on corporate income tax or taxes of an identical or similar nature where those subsidiary undertakings and branches have as their sole purpose the avoidance of the reporting obligations established in this provision.
Second. Content of the report on corporate income tax or taxes of an identical or similar nature.
1. The report on corporate income tax or taxes of an identical or similar nature shall include information on all the activities of the company that does not form part of a group or of the ultimate parent company, including the activities of all the subsidiary undertakings included in the consolidated financial statements for the financial year concerned.
2. The information referred to in the preceding paragraph shall consist of:
a) The name of the ultimate parent company or of the company that does not form part of a group, the financial year concerned, the currency used for the presentation of the report and, where applicable, a list of all the subsidiary undertakings included in the consolidated financial statements of the ultimate parent company for the financial year concerned that are established in the European Union or in tax jurisdictions included in annexes I and II of the Council Conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes.
b) A brief description of the nature of their activities.
c) The number of employees on a full-time equivalent basis.
d) Their revenues, calculated as:
i) The sum of the net annual turnover, other operating income, income from shareholdings excluding dividends received from associated undertakings, income from other investments and loans forming part of non-current assets, other interest receivable and other similar income referred to in the profit and loss account of the General Accounting Plan, approved by Royal Decree 1514/2007 of 16 November, and its supplementary provisions.
ii) Revenues as determined under the financial reporting framework on the basis of which the financial statements are prepared, excluding value adjustments and dividends received from associated undertakings.
For the purposes of this letter, revenues shall include transactions with related parties.
e) The amount of profit or loss before corporate income tax.
f) The amount of corporate income tax or taxes of an identical or similar nature accrued during the financial year concerned, calculated as the current tax expense recognised on the taxable profits or losses of the financial year by undertakings and branches in the tax jurisdiction concerned.
For the purposes of this letter, the current tax expense shall reflect only the activities of the undertaking during the financial year concerned and shall not include deferred taxes or provisions for uncertain tax liabilities.
g) The amount of corporate income tax or taxes of an identical or similar nature paid on a cash basis, calculated as the amount of tax paid during the financial year concerned by undertakings and branches in the tax jurisdiction concerned.
For the purposes of this letter, taxes paid shall include withholding taxes paid by other undertakings with respect to payments made to undertakings and branches within a group.
h) The amount of reserves at the end of the financial year concerned.
3. The information listed in the preceding paragraph may be reported on the basis of the reporting instructions referred to in article 14 of the Corporate Income Tax Regulations, approved by Royal Decree 634/2015 of 10 July, and its implementing rules, and regulated by Order HFP/1978/2016 of 28 December approving form 231, the country-by-country reporting return.
4. The report shall present the information referred to in paragraphs 2 and 3 above separately for each Member State. Where a Member State comprises several tax jurisdictions, the information shall be aggregated at Member State level.
The information in paragraphs 2 and 3 shall also be presented separately for each tax jurisdiction which, on 1 March of the financial year for which the report is to be prepared, is included in annex I of the Council Conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, and for each tax jurisdiction which, on 1 March of the financial year for which the report is to be prepared and on 1 March of the previous financial year, was listed in annex II of the Council Conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes.
The information in paragraphs 2 and 3 shall be presented on an aggregated basis for other tax jurisdictions.
The information shall be attributed to the corresponding tax jurisdiction on the basis of establishment, the existence of a registered office or a permanent business activity which, given the activities of the group or of the standalone undertaking, may be subject to corporate income tax in that tax jurisdiction.
Where the activities of several subsidiary undertakings may be subject to corporate income tax in a single tax jurisdiction, the information attributed to that tax jurisdiction shall represent the sum of the information relating to those activities of each subsidiary undertaking and its branches in that tax jurisdiction.
Information on a particular activity shall not be attributed simultaneously to more than one tax jurisdiction.
5. The information referred to in paragraphs 2 and 3 shall be presented using a common template and in machine-readable electronic formats, which shall be established by the European Commission by means of implementing acts.
6. Certain items of information that would have to be made public in accordance with paragraphs 2 or 3 may be temporarily omitted from the report where their disclosure would be seriously prejudicial to the commercial position of the undertakings to which the report relates. Any omission shall be clearly indicated in the report and accompanied by a duly reasoned explanation.
All information omitted under the preceding paragraph shall be made public in a later report on corporate income tax, at the latest five years after its initial omission.
Information relating to the tax jurisdictions included in annexes I and II of the Council Conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, referred to in paragraph 4, may not be omitted.
7. The report on corporate income tax or taxes of an identical or similar nature may include, where applicable at group level, a general explanation of any material discrepancies between the amounts reported under letters f) and g) of paragraph 2, taking into account, where appropriate, the corresponding amounts relating to previous financial years.
8. The currency used in the report on corporate income tax or taxes of an identical or similar nature shall be that in which the consolidated financial statements of the ultimate parent company, or the annual financial statements of the company that does not form part of a group, are presented.
Nevertheless, where the information or report of the subsidiary undertakings referred to in paragraph 4 of paragraph First is not accessible, the currency used in the report on corporate income tax shall be the currency in which the subsidiary undertaking publishes its annual financial statements.
9. The report on corporate income tax or taxes of an identical or similar nature must state whether it has been prepared in accordance with paragraph 2 or 3.
Third. Publication and accessibility.
1. The report on corporate income tax or taxes of an identical or similar nature and, where applicable, the statement referred to in paragraph 4 of paragraph First shall be approved and published within six months from the balance sheet date of the financial year to which they refer. They shall also be filed at the Commercial Registry together with the documents making up the annual accounts.
2. The report on corporate income tax or taxes of an identical or similar nature and the statement published by undertakings in accordance with the preceding paragraph must be made accessible to the public free of charge in at least one of the official languages of the European Union, within a maximum of six months from the balance sheet date of the financial year for which the report is prepared, on the website of:
a) The undertaking, where paragraph First.1 applies.
b) The subsidiary undertaking, where paragraph First.4 applies.
c) The branch or the undertaking that established the branch, or a subsidiary undertaking, where paragraph First.5 applies.
3. The report on corporate income tax and, where applicable, the statement mentioned in paragraph First shall remain accessible on the corresponding website for at least five consecutive years.
Fourth. Responsibility for the preparation, publication, filing and accessibility of the report on corporate income tax or taxes of an identical or similar nature.
1. The members of the administrative bodies of the ultimate parent companies, or of the company that does not form part of a group, referred to in paragraph First.1 shall be collectively responsible for ensuring that the report on corporate income tax or taxes of an identical or similar nature is prepared, published, filed and made accessible in accordance with this Act.
2. The members of the administrative bodies of the subsidiary undertakings referred to in paragraph First.4, and the persons designated to carry out the disclosure formalities in relation to the branches referred to in paragraph First.5, shall be collectively responsible for ensuring, to the best of their knowledge and ability, that the report on corporate income tax is prepared so as to be compatible with, or in accordance with, as appropriate, paragraphs First and Second, and is published and made accessible in accordance with paragraph Third.
Fifth. Start date for the presentation of the report on corporate income tax or taxes of an identical or similar nature.
The obligations introduced by this additional provision shall apply to financial years beginning on or after 22 June 2024.»
Seventh final provision. Amendment of Law 6/2018 of 3 July on the General State Budget for 2018
With effect from the entry into force of this Act, paragraph Two of the eighty-eighth additional provision of Law 6/2018 of 3 July on the General State Budget for 2018 is amended in order to extend the duration of the programme “VIII Centenary of Burgos Cathedral 2022”, and is worded as follows:
«Two. The duration of the programme of support for this event shall run from 1 December 2018 to 31 December 2022.»
Eighth final provision. Programme “Alicante 2021. Start of the Round-the-World Sailing Race”
Paragraph 2 of the third additional provision of Royal Decree-law 17/2020 of 5 May, approving measures to support the cultural sector and measures of a tax nature to deal with the economic and social impact of COVID-2019, is amended and worded as follows:
«2. The duration of the programme of support for this event shall be from 1 January 2021 to 31 December 2024.»
Ninth final provision. Special character of this Act
The provisions of this Act shall displace the provisions of the legal order that regulate the same matters differently, in their application to startups.
The provisions of this Act that establish exceptions or special features to the law in force, in their application to startups, shall be integrated with the provisions of those rules and their implementing regulations that do not contravene the provisions of this Act.
Tenth final provision. Safeguarding the regulatory rank of certain regulatory provisions
The regulatory rank of the following rules affected by this Act is maintained:
a) Royal Decree 1426/1989 of 17 November approving the Notarial Fees Schedule.
b) Royal Decree 1427/1989 of 17 November approving the Fees Schedule of Property Registrars.
c) Decree 757/1973 of 29 March approving the attached Fees Schedule of Commercial Registrars.
Eleventh final provision. Empowerment for regulatory development
The Government is empowered to issue the provisions necessary to implement this Act.
The Council of Ministers shall approve, within six months of the publication of this Act in the Official State Gazette, a royal decree regulating the functioning of the National Startups Forum provided for in article 25.
Twelfth final provision. Mandate for the approval of model articles of association adapted to the needs of startups
The Government shall approve by royal decree, within three months of the entry into force of this Act, different models of model articles of association, which shall be incorporated into the public deeds of incorporation, both adapted to the needs of the startups regulated by this Act.
Thirteenth final provision. Entry into force
This Act shall enter into force on the day following its publication in the Official State Gazette.
Therefore,
I order all Spaniards, private individuals and authorities, to observe and enforce this Act.
Madrid, 21 December 2022.
FELIPE R.
The President of the Government,
PEDRO SÁNCHEZ PÉREZ-CASTEJÓN
Where this sits
This is the last of six pages on the Startups Act. The first three translate the Act’s own articles, additional and transitional provisions; the fourth and fifth, the amendments it made to the personal income tax, non-resident income tax and Social Security rules, and to the Entrepreneurs Act; this page, the remainder. The preamble is the only part of the Act not reproduced.
Nothing here is advice on your own position, and this reading is not the official text. Spain publishes no official English version of this Act; where the wording matters to a decision, read it against the Spanish original linked above.