Earlier this month, the Spanish Government approved the regulations setting forth the Mandatory Disclosure Rules (‘MDR’) in Spain. The final MDR regulations in Spain are mostly in line with the European Directive on mandatory disclosure and exchange of cross-border tax arrangements (‘DAC6’).
The general rule constitutes reporting obligation within 30-calendar days following a triggering event. As the Ministerial Order HAC/342/2021 entered into force on April 14, 2021, the first reporting deadline for historical arrangements is May 13, 2021, including arrangements with a trigger event during:
(i) the first transitional period (June 25, 2018 – June 30, 2020),
(ii) the second transitional period (on or after July 1 1, 2020), and
(iii) for reportable marketable arrangements: between July 1, 2020, and March 31, 2021.
With the first DAC6 reports to be submitted before May 14, 2021, we will set out three notable considerations applicable to the Spanish DAC6 environment.
The Spanish mandatory disclosure regime is generally consistent with EU DAC6:
- Tax authority: Agencia Estatal de AdministraciÃ³n Tributaria (‘AEAT‘)
- Reporting deadline ‘historical period‘: before May 14th, 2021
- Reporting format: in XML Schema file or electronic web-based form
- Penalties: EUR 3,000 per failure, with a maximum of the fee amount (for intermediary submissions) or the value of the fiscal effect derived from the arrangement (relevant taxpayer)
- Reporting language: English or Spanish, although the eOffice/interface will be in Spanish
- Country specifics: it is our understanding that there are no significant deviations from EU:
- Taxes covered: Corporate Income Tax, Income Tax, Trade Tax, Real Estate Transfer Tax, Inheritance and Gift Tax
- Taxes excluded: indirect taxes (VAT & Excise Duties)
- Domestic transactions: No
- Additional hallmarks: No
1. Legal professional privilege (‘LPP’) fully exempts intermediaries from DAC6 obligations
Intermediaries may be exempt from filing under DAC6 regulations if they can claim a waiver from having to report information to obtain an exemption based on professional secrecy. However, this is not applicable based on a category service provider (in most countries, lawyers can always maintain their LPP). Under special rules in Spain, the LPP only applies to ‘secondary’ intermediaries that have provided neutral assistance, e.g., neutral analysis of tax implications.
Notification within five days
Intermediaries invoking the LPP will still be required to notify other involved intermediaries and the relevant taxpayers of applying their professional secrecy. This notification must be sent to other involved intermediaries and relevant taxpayers within five days after the reporting requirement is triggered.
2. Continuous engagement with tax advisors subject to a primary reporting obligation
Although the reporting obligations primarily affect intermediaries – relevant taxpayers only have a reporting obligation if no other disclosing party can be recognized – this does not discharge the responsibility to have a sufficient level of control over your DAC6 compliance. Some taxpayers may outsource their DAC6 compliance to service providers, usually a combination of advisory and reporting services. However, even under an explicitly agreed upon DAC6 service agreement, the ultimate legal responsibility and liability remain with the relevant taxpayer (including potential exposure to penalties consequently).
Notification within five days
The relevant taxpayer that has the capacity of disclosing party for DAC6 purposes must notify other relevant taxpayers regarding its reporting efforts. This notification must be sent to other relevant taxpayers within five days after the disclosure was submitted.
The Spanish MDR regulations require any taxpayer to file an annual report detailing all reportable cross-border arrangements that have been reported to any local tax administration throughout Europe.
Please note that the Spanish local tax authorities have introduced the eOffice portal for the manual filing of reports. However, this is only the final step of the entire reporting journey that a reportable arrangement makes and merely involves filling out the information, which by then is assumed to be accurate for DAC6 filing. A structured process will ensure that arrangements that may be reportable will include accurate and collected information consistently.
Top 3 considerations of (non-)applicability of DAC6 obligations
- The LPP does not always apply to a certain type of intermediary based on its professional status. Under special rules in Spain, the LPP only applies to ‘secondary’ intermediaries that have provided neutral assistance, neutral analysis of tax implications.
- Intermediaries bound by professional secrecy and invoking their LPP are not discharged from any filing obligations. Although they do not disclose the reportable arrangement due to being exempt from filing, they must timely send notifications to other involved intermediaries and relevant taxpayers and administer an overview of arrangements for which the LPP was invoked.
- Engaging an intermediary subject to the primary reporting obligations does not discharge you from the administrative burden of keeping track of your DAC6 reportable arrangements. Relevant taxpayers need to file an annual declaration regarding arrangements utilized in Spain.
How DAC6pro provides swift compliancy
With the official support of XML-reporting in Spain and given the highly time-sensitive notification timeframes applicable for both relevant taxpayers and intermediaries, disclosers in Spain will significantly benefit from not only the XML-reporting function in DAC6pro but also from the PDF export function for summary reports (as both can be shared with other stakeholders).
DAC6pro is ready! Our software engineers have already implemented the Spanish XML reporting schemas in DAC6pro. Request your 7-day free trial via this link and start today!