NON RESIDENTS NON RESIDENTS TAXATIONTAXATION

Carolina del Campo AzpiazuCarolina del Campo AzpiazuDeputy Director General for Non Residents TaxationDeputy Director General for Non Residents Taxation

EU: DIRECT TAXATION EU: DIRECT TAXATION

Directives:Directives: Parent-subsidiaryParent-subsidiary Interests and Royalties: transitional periodInterests and Royalties: transitional period Mergers, SavingsMergers, Savings

Joint Transfer Pricing Forum (JTPF)Joint Transfer Pricing Forum (JTPF) MAPMAP ArbitrationArbitration DocumentationDocumentation APAAPA

INTERNAL LEGISLATION INTERNAL LEGISLATION (I)(I)

Recent changes: corporation taxRecent changes: corporation tax Transfer pricing rulesTransfer pricing rules

New regulations on transfer pricing: New regulations on transfer pricing: methods and methods and ALP principlesALP principles

PenaltiesPenalties DocumentationDocumentation

limitations for SME: limitations for SME: transactions with associated enterprises, less than 100.000€transactions with associated enterprises, less than 100.000€ Penalties: a maximum is establishedPenalties: a maximum is established

APAAPA

INTERNAL LEGISLATION INTERNAL LEGISLATION (II)(II)

Recent changes: Non residents taxationRecent changes: Non residents taxation

Taxable base: net vs grossTaxable base: net vs gross

MAP regulationMAP regulation

Exemptions:Exemptions: CIV resident in EU (Directive)CIV resident in EU (Directive) Pension funds resident in EUPension funds resident in EU Royalties: finalisation of transitional periodRoyalties: finalisation of transitional period Public (and Private) debtPublic (and Private) debt

OECD: RECENT WORKS (I)OECD: RECENT WORKS (I)

Global ForumGlobal Forum Exchange of information AgreementsExchange of information Agreements At least 12At least 12 White/grey listWhite/grey list MonitoringMonitoring

OECD: RECENT WORKS OECD: RECENT WORKS (II)(II)

2008 Update2008 Update Arbitration clauseArbitration clause

New paragraph 5 to Article 25: very similar New paragraph 5 to Article 25: very similar to Arbitration Conventionto Arbitration Convention Two yearsTwo years Arbitration comissionArbitration comission Does not need to waive its rights before CourtsDoes not need to waive its rights before Courts Different content for the ACDifferent content for the AC

DTA?DTA?

OECD: RECENT WORKS OECD: RECENT WORKS (III)(III)

2008 Update2008 Update Article 7: Report on the attribution of Article 7: Report on the attribution of

profits to permanent establishmentprofits to permanent establishment Attribution of free capitalAttribution of free capital SymmetrySymmetry Existing DTA?Existing DTA?

REIT: new proposal for future DTAREIT: new proposal for future DTA

OECD: RECENT WORKS OECD: RECENT WORKS (IV)(IV)

2010 Update2010 Update New Article 7:New Article 7:

ALP principle: only in relation to the ALP principle: only in relation to the attribution of profits to the permanent attribution of profits to the permanent establishmentestablishment

Notional incomeNotional income Elimination of double taxation: similar to 9.2Elimination of double taxation: similar to 9.2 DTA?DTA?

OECD: RECENT WORKS OECD: RECENT WORKS (V)(V)

2010 Update2010 Update CIVCIV

Persons, residents, beneficial ownerPersons, residents, beneficial owner Entitlement to Treaty benefitsEntitlement to Treaty benefits Different ways: Different ways:

DirectlyDirectly Equivalent beneficiaries Equivalent beneficiaries In the name ofIn the name of

Pilot/TracePilot/Trace

DTA POLICY (I)DTA POLICY (I)

Spanish Tax havens listSpanish Tax havens list DTA with tax havensDTA with tax havens

Exchange of information ArticleExchange of information Article Very important ProtocolVery important Protocol Antiabuse rulesAntiabuse rules

Rest of the Treaties: Comprehensive EOI Rest of the Treaties: Comprehensive EOI ArticleArticle

Renegotiations: necessaryRenegotiations: necessary

DTA POLICY (II)DTA POLICY (II)

73 in force (Colombia, Moldavia, El Salvador, 73 in force (Colombia, Moldavia, El Salvador, JamaicaJamaica, Serbia y , Serbia y Trinidad y Trinidad y TobagoTobago, ...)     , ...)     

  9  ratified by Spain (Bosnia-Herzegovina, Costa Rica,  Kazajstán, Kuwait, 9  ratified by Spain (Bosnia-Herzegovina, Costa Rica,  Kazajstán, Kuwait, Nigeria, Senegal, Uruguay, Nigeria, Senegal, Uruguay, Luxemburg (Protocol) y Belgium (Protocol)) Luxemburg (Protocol) y Belgium (Protocol))

8 initialled ( Albania, Armenia, Byelorussia, Georgia, Namibia y Syria 8 initialled ( Albania, Armenia, Byelorussia, Georgia, Namibia y Syria Barbados) Barbados)

  14  in negotiation (Azerbaijan, Bahrain, Cabo Verde, Libya, Qatar, 14  in negotiation (Azerbaijan, Bahrain, Cabo Verde, Libya, Qatar, Pakistan, Ukraine, Dominican Republic, Guatemala, Jordan, Panama, Pakistan, Ukraine, Dominican Republic, Guatemala, Jordan, Panama, Cyprus, Hong Kong y Oman) Cyprus, Hong Kong y Oman)

3 Renegociaciones: Germany, Canada, UK 3 Renegociaciones: Germany, Canada, UK

Terminated: Terminated: DinamarcaDinamarca

MAIN DTA PROBLEMSMAIN DTA PROBLEMS

Certificates of residenceCertificates of residence Taxation of services:Taxation of services:

Article 14 vs Article 7Article 14 vs Article 7 Withholding tax on the grossWithholding tax on the gross

CIV, partnerships, trustCIV, partnerships, trust Transfer pricing and Article 9 Transfer pricing and Article 9 Definition of permanent establishmentDefinition of permanent establishment Royalties (software)Royalties (software)

DISPUTE RESOLUTION DISPUTE RESOLUTION MECHANISMS (I)MECHANISMS (I)

Article 25.1: MAP to guarantee the taxation in Article 25.1: MAP to guarantee the taxation in accordance with the Conventionaccordance with the Convention Not obliged to reach an agreement (arbitration)Not obliged to reach an agreement (arbitration) Article 9.2 Article 9.2 All DTAAll DTA Problems with old treatiesProblems with old treaties

Time limits Time limits Three year ruleThree year rule

Article 25.3: exchange of lettersArticle 25.3: exchange of letters

DISPUTE RESOLUTION DISPUTE RESOLUTION MECHANISMS (II)MECHANISMS (II)

New regulationNew regulation in relation to MAP and EU Arbitration in relation to MAP and EU Arbitration

Organizes the internal process for MAP:Organizes the internal process for MAP: Competent AuthorityCompetent Authority Time periodsTime periods Rights and obligations of taxpayers: documentation…Rights and obligations of taxpayers: documentation… Mode of implementationMode of implementation

Guarantees that MAP will reach a solution (when Guarantees that MAP will reach a solution (when possible) within a reasonable period of timepossible) within a reasonable period of time

DISPUTE RESOLUTION DISPUTE RESOLUTION MECHANISMS (III)MECHANISMS (III)

Suspension in the collection of taxesSuspension in the collection of taxes

Before: it could only be suspended under Court Before: it could only be suspended under Court approvalapproval

Now: it can be suspended when an MAP is Now: it can be suspended when an MAP is initiated, but only when the Court cannot do it.initiated, but only when the Court cannot do it.

Other issuesOther issues: interest payments: interest payments