SUBHEADING LORUM IPSUM APA & MAP CountryBooklet Guide 2019 Title – CONNECTING THELorum DOTS OF INTERNATIONAL Ipsum CONTROVERSY

EMODIO TENTIAT. NEQUO OCCATECTIA APA & MAP COUNTRY GUIDE 2019

Spain

APA Program

KEY FEATURES

Competent authority

Relevant provisions Article 18(9) of the Corporate Law

Types of APAs available Unilateral, bilateral, and multilateral APAs are available.

Acceptance criteria Both resident and non-resident Taxpayers may submit APA applications with proposals regarding the valuation of future related transactions carried out by individuals and associated entities.

Applications from non-resident individuals and legal entities are required to be or plan to be carrying out business transactions in Spain through either:

• a PE located in Spain; or

• a resident legal entity.

Key timing requests, There is no specific guidance on timing for Taxpayers; deadlines however, the Spanish Tax Agency has a statutory six-month period to complete an APA application.

APA term limits There is a four-year maximum term for an APA, calculated from the date the agreement is reached. Additionally, the APA may also be applicable for previous periods, so long as these are not statute- barred and there is not a final assessment in place.

Filing fee There is no filing fee.

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Rollback availability Rollback is available provided there is not a final settlement of the transaction(s).

Collateral issues No specific guidance.

PRE-FILING REQUIREMENTS

Overview Taxpayers are allowed to submit a preliminary application with information including:

• identification of the parties;

• a brief description of the transaction(s) covered; and

• the basic elements of the intended pricing proposal.

Anonymous pre-filing Anonymous pre-filing is not available. availability

APPLICATION REQUIREMENTS

Content of application The APA application must contain:

• an arm's length pricing proposal, including a description of the TP method and the analysis followed to determine the market value;

• a confirmation that the related-parties know and accept the pricing proposal; and

• transfer pricing documentation that complies with Spanish regulations, as relevant to the APA.

Language The documentation should be submitted in Spanish. Translations may be requested for non-Spanish language submissions.

SME provisions No specific guidance.

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OTHER PROCEDURAL CONSIDERATIONS

General The Spanish Tax Agency follows a standard pre-filing, application and monitoring process. There are no unique procedural aspects.

Monitoring & compliance The Taxpayer is required to report any significant changes in the circumstances on which the APA is based. Taxpayers must annually file together with their tax return a statement describing:

• related party transaction(s) carried out during the fiscal year applying the APA;

• prices agreed in the related party transaction(s);

• description of variations on the economic circumstances, if any;

• similar transactions to those described in the APA, prices and description of the differences between them; and

• other information as required by the Spanish Tax Agency.

Renewal procedure An APA may be renewed through application of an extension six months before expiry of the existing APA.

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MAP Program

KEY FEATURES

Competent authority Spanish Tax Agency, for procedures related to transfer pricing and attribution of profits to PEs; and

General Directorate for Taxation, for all other cases.

Relevant provisions Regulation on the Mutual Agreement Procedures Concerning Direct Taxation, approved by Royal Decree 1794/2008, of November 3, 2008, and amended by Royal Decree 1558/2012, of November 15, 2012;

• Royal Decree 634/2015, of July 10, 2015; and

• Royal Decree 1021/2015, of November 13, 2015.

Acceptance criteria Taxpayers may request MAP if taxation has or is likely to occur that is not in accordance with the provisions of a DTT to which Spain is signatory. The Spanish regulations also provide that MAP requests may be refused in the following circumstances:

• when there is no applicable DTT with an article related to the MAP;

• when the application has been submitted outside the term established in the agreement or presented by a taxpayer without standing;

• when initiating a MAP is inappropriate as it is a matter of domestic law and not a divergence or discrepancy in the application of a DTT;

• when there is evidence that the actions of the Taxpayer were intended to avoid in one of the relevant jurisdictions;

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• when the request refers to the opening of a new procedure on an issue that has already been subject to another MAP raised previously by the same Taxpayer and on which an agreement between both tax authorities had been reached or on which the Taxpayer had desisted; and

• when the request for correction has been answered within the deadline but the responses are not completed.

Key timing requests, If requested under a Spanish DTT, Taxpayers must deadlines make a MAP request before the deadline stipulated established under the relevant DTT, from the date of the notification which leads or may lead to double taxation. If requested under the EU Arbitration Convention (90/436/EEC), Taxpayers have three years to present a case to the tax authorities.

APPLICATION REQUIREMENTS

Content of application The MAP request must be made in the form of a letter addressed to the Spanish Tax Agency or the General Directorate for Taxation, and contain the following information/documentation:

• full name, address and tax identification number of the Taxpayer presenting the request, and the other parties involved in the transactions under consideration;

• identification of the relevant foreign tax authority;

• the article of the DTT that the Taxpayer considers has not been applied correctly and the interpretation that the Taxpayer gives to that article;

• identification of the affected tax or settlement periods;

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(cont.) • detailed description of the facts and relevant circumstances related to the case, including the amounts in question, as well as the data corresponding to the relationships, situations or structure of operations between the people affected;

• identification of administrative or judicial appeals lodged by the applicant or by the other parties involved, as well as any resolution that would have fallen on the same question;

• indication of whether the Taxpayer has previously filed a request before any of the tax authorities involved on the same or a similar issue;

• declaration stating whether the request includes any question that may be considered to be part of an APA or of some similar procedure;

• commitment on the part of the Taxpayer requesting the MAP to readily respond to all requests made by the Spanish Tax Agency in order to negotiate the MAP;

• date and signature of the person requesting the MAP, or their representative;

• relevant transfer pricing documentation;

• copies of the settlement, its notification and the reports issued by the tax authorities;

• copies of the resolutions issued by the relevant foreign jurisdictions that affect the procedure; and

• power of attorney, in cases where the Taxpayer acts through an external representative.

Language The documentation should be submitted in Spanish.

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OTHER PROCEDURAL CONSIDERATIONS

Interaction with domestic In cases where the Taxpayer initiates a MAP and proceedings domestic proceedings simultaneously, the latter will be suspended until the MAP negotiations are concluded.

Arbitration As Spain is a member of the EU, Taxpayers may initiate the arbitration procedure under the Tax Dispute Resolution Mechanism Directive on October 10, 2017. The Directive is applicable to matters submitted after July 1, 2019, on issues related to the tax year starting on or after January 1, 2018. The EU Arbitration Convention also imposes a binding obligation on EU member states to eliminate double taxation under DTTs including, if necessary, by reference to the opinion of an independent advisory body.

STATISTICS

APA There were 54 APA application requests in 2016 and 53 active APAs. The Spanish Tax Agency has had an APA program since 1995.

MAP Spain had a total of 275 active MAP applications as of December 31, 2017. The average time needed to close MAP cases is 43 months for transfer pricing cases, and 37 months for other cases.

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Double Taxation Treaty Network The following treaties include MAP provisions which are the basis for bilateral and multilateral APA negotiations:

Albania Croatia Iran Nigeria(IV) Sweden Algeria Cuba Ireland Norway Switzerland(I) Andorra(IV) Cyprus(IV) Israel Oman(IV) Syria(V) Argentina(IV) Czech Republic Italy Pakistan Tajikistan(II) Armenia Denmark Jamaica Panama Thailand Australia Dominican Japan Peru(V) Trinidad and Austria Republic(IV) Kazakhstan Philippines Tobago Azerbaijan(V) East Timor Kuwait Poland Tunisia Bahrein(V) Ecuador Kyrgyzstan(II) Portugal(VI) Turkey Barbados Egypt Latvia Qatar(IV) Turkmenistan(II) Belarus(II)(V) El Salvador Lithuania Romania Ukraine(II)(V) Belgium Estonia Luxemburg Russia United Arab Bolivia Finland Macedonia Saudi Arabia Emirates Bosnia France Malaysia Senegal(IV) United Brazil Georgia Malta Serbia Kingdom(I) Bulgaria Germany Mexico Singapore United States Canada Greece Moldova Slovak Uruguay Cape Verde(V) Hong Kong Montenegro(V) Republic Uzbekistan(IV) Chile Hungary Morocco Slovenia Venezuela China Iceland Namibia(V) South Africa Vietnam Colombia India Netherlands Southern Costa Rica Indonesia New Zealand Korea

Notes i. denotes treaties with MAP arbitration provisions. (I* denotes treaties to which MAP arbitration

provisions under the MLI apply) ii. denotes treaties with the USSR that remain applicable until a separate tax treaty is concluded. iii. denotes treaties between the countries’ representative office in Taipei and the Taipei Economic

and Cultural Office in the relevant country. iv. denotes treaties that became effective within the last five years. v. denotes treaties that are awaiting ratification. vi. denotes MAP provisions identical to para 3, art 25 of the OECD Model Convention with respect to

Taxes on Income and on Capital. vii. arbitration is to be conducted under the statutes of the ECJ. viii. arbitration is to be conducted under the statutes of the ICJ.

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