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GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES

Peer Review Report Combined: Phase 1 + Phase 2, incorporating Phase 2 ratings


SPAIN

Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Spain 2013
COMBINED: PHASE 1 + PHASE 2, INCORPORATING PHASE 2 RATINGS

November 2013 (reflecting the legal and regulatory framework as at July 2011)

This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the Global Forum on Transparency and Exchange of Information for Tax Purposes. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Please cite this publication as: OECD (2013), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Spain 2013: Combined: Phase 1 + Phase 2, incorporating Phase 2 ratings, OECD Publishing. http://dx.doi.org/10.1787/9789264205925-en

ISBN 978-92-64-20591-8 (print) ISBN 978-92-64-20592-5 (PDF)

Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews ISSN 2219-4681 (print) ISSN 2219-469X (online)

Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.

OECD 2013

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TABLE OF CONTENTS 3

Table of Contents

About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Information and methodology used for the peer review of Spain . . . . . . . . . . . . . 9 Overview of Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 A. Availability of information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 B. Access to information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 B.1. Competent Authoritys ability to obtain and provide information . . . . . . . . 42 B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 48 C. Exchanging information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.2. Exchange of information mechanisms with all relevant partners . . . . . . . . C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 51 52 61 63 67 68

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4 TABLE OF CONTENTS Summary of Determinations and Factors Underlying Recommendations . . . 73 Annex 1: Jurisdictions Response to the Review Report . . . . . . . . . . . . . . . . . . 77 Annex 2: List of all Exchange-of-Information Mechanisms in Force . . . . . . . . 79 Annex 3: List of all Laws, Regulations and Other Relevant Material . . . . . . . 85 Annex 4: Persons Interviewed During the On-Site Visit . . . . . . . . . . . . . . . . . . 86

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ABOUT THE GLOBAL FORUM 5

About the Global Forum


The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 120 jurisdictions, which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004. The standards have also been incorporated into the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase 1 and Phase 2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once adopted by the Global Forum. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.

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EXECUTIVE SUMMARY 7

Executive Summary
1. This report summarises the legal and regulatory framework for transparency and exchange of information in Spain as well as the practical implementation of that framework. The international standard, which is set out in the Global Forums Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information, is concerned with the availability of relevant information within a jurisdiction, the competent authoritys ability to gain access to that information, and in turn, whether that information can be effectively and timely exchanged with its exchange of information partners. The Kingdom of Spain is a Member State of the European Union and 2. of the Economic and Monetary Union formed by the Euro-zone countries. It is one of the largest economies in Europe, driven by tourism and the automotive industry. It is also a popular destination for retirement and secondary homes, which triggers some exchange of information for tax purposes. 3. The legal and regulatory framework for the availability of information in Spain is in place. Ownership and identity information as well as accounting information is maintained by relevant entities and arrangements. In addition, much information is filed with governmental authorities, in particular the tax authorities and the Commercial Register. Full bank information is available in Spain, and the tax authorities also collect certain bank data every year, such as the identity of all bank account holders. The Spanish competent authority replies directly to almost 40% of the requests for information it receives thanks to the large databases of the tax administration, mainly requests on the ownership of commercial entities active in Spain, but also, to a lesser extent, accounting and banking information. 4. The gathering of data not already contained in the tax databases is performed by the tax departments responsible for the persons concerned by the request, e.g. the Large Taxpayers Department. Banking information is collected directly from the banks by a centralised tax office dedicated to this task. The Spanish tax authorities have the power to obtain and provide information that is the subject of a request from any person within their jurisdiction who is in possession or control of such information.

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8 EXECUTIVE SUMMARY
5. Spain communicates a large volume of information every year. Over the last three years Spain has received 1 371 exchange of information requests from 39 of its 99 treaty partners, with the majority being from France, the United Kingdom, Germany and Portugal. The EU countries together represent almost 92% of the exchange of information requests received by Spain, mainly on the basis of the EU directive 77/799/EEC on exchange of tax information, and from 1 January 2013 on the basis of the new directive 2011/16/EU. 6. Spain continues to expand its network of exchange of information instruments. It recently joined the Council of Europe/OECD Convention on mutual administrative assistance in tax matters and is negotiating a dozen new double tax conventions and tax information exchange agreements. Some Global Forum members reported that the negotiation of some exchange of information agreements has been stalled for reasons not linked to exchange of information for tax purposes. 7. Ultimately, Spains regular partners praised the way in which Spain replies to their requests, in term of both timing and quality of communications. The competent authority should nonetheless inform the requesting jurisdictions on the progress of requests being processed, once a period of 90 days has elapsed, on a systematic basis, and not only when reminded. 8. Spain has been assigned a rating1 for each of the 10 essential elements as well as an overall rating. The ratings for the essential elements are based on the analysis in the text of the report, taking into account the Phase 1 determinations and any recommendations made in respect of Spains legal and regulatory framework and the effectiveness of its exchange of information in practice. On this basis, Spain has been assigned the following ratings: Compliant for elements A.1, A.2, A.3, B.1, B.2, C.1, C.3, C.4 and C.5, Largely Compliant for element C.2. In view of the ratings for each of the essential elements taken in their entirety, the overall rating for Spain is Compliant.

1..

This report reflects the legal and regulatory framework as at the date indicated on page 1 of this publication. Any material changes to the circumstances affecting the ratings may be included in Annex 1 to this report.

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INTRODUCTION 9

Introduction

Information and methodology used for the peer review of Spain


9. The assessment of the legal and regulatory framework of Spain and the practical implementation and effectiveness of this framework was based on the international standards for transparency and exchange of information as described in the Global Forums Terms of Reference, and was prepared using the Global Forums Methodology for Peer Reviews and Non-Member Reviews. The assessment was based on the laws, regulations, and exchange of information mechanisms in force or effect as at July 2011, other information, explanations and materials supplied by Spain during the on-site visit that took place on 4-6 April 2011, and information supplied by partner jurisdictions. During the on-site visit, the assessment team met with officials and representatives of the relevant Spanish public agencies, including the Spanish Tax Administration and the Ministry of Economy and Finance (see Annex 4). 10. The Terms of Reference break down the standards of transparency and exchange of information into 10 essential elements and 31 enumerated aspects under three broad categories: (A) availability of information; (B) access to information; and (C) exchanging information. This review assesses Spains legal and regulatory framework and the implementation and effectiveness of this framework against these elements and each of the enumerated aspects. In respect of each essential element a determination is made regarding Spains legal and regulatory framework that either: (i) the element is in place, (ii) the element is in place but certain aspects of the legal implementation of the element need improvement, or (iii) the element is not in place. These determinations are accompanied by recommendations for improvement where relevant. In addition, to reflect the Phase 2 component, recommendations are made concerning Spains practical application of each of the essential elements and a rating of either: (i) compliant, (ii) largely compliant, (iii) partially compliant, or (iv) non-compliant is assigned to each element. An overall rating is also assigned to reflect Spains overall level of compliance with the standards.

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10 INTRODUCTION
11. The assessment was conducted by an assessment team composed of two expert assessors and a representative of the Global Forum Secretariat: Mr. Malcolm Campbell, Comptroller of Taxes, Jersey; Ms. Maria Soledad Salman, Legal Adviser, International Taxation Department, Servicio de Impuestos Internos, Chile; and Ms. Gwenalle Le Coustumer from the Global Forum Secretariat. The ratings assigned in this report were adopted by the Global Forum 12. in November 2013 as part of a comparative exercise designed to ensure the consistency of the results. An expert team of assessors was selected to propose ratings for a representative subset of 50 jurisdictions. Consequently, the assessment teams that carried out the Phase 1 and Phase 2 reviews were not involved in the assignment of ratings. These ratings have been compared with the ratings assigned to other jurisdictions for each of the essential elements to ensure a consistent and comprehensive approach. The assignment of ratings was also conducted at a different time from those reviews, and the circumstances may have changed in the meantime. Readers should consult Annex 1 for information on changes that have occurred.

Overview of Spain
13. The Kingdom of Spain is a Member State of the European Union and of the Economic and Monetary Union formed by the Euro-zone countries. The national territory consists of the 17 autonomous regions including the Balearic and the Canary Islands, as well as two autonomous cities (Ceuta and Melilla) in the North of Africa. Spain has a population of about 46 million. The nations capital, Madrid, is its largest city with more than 3.2 million inhabitants. Other large cities include Barcelona, Valencia and Seville. 14. Spain is one of the largest economies in Europe and one of the top fifteen in the world with a GDP of EUR 1 054 billion and GDP per capita of EUR 22 900. The economy is largely dominated by the service sector tourism in particular which accounts for around 71.8% of the total GDP. Industry contributes 24% to the GDP, driven by the automotive sector, and the construction sector which alone has been a leading factor for Spains economic growth in the last decade. Agriculture accounts for only 4.4% of the total GDP. As a consequence of the international financial crisis of 2008, Spain, after a decade of rapid growth, has entered a recession, from which the economy is slowly recovering. 15. Spain has an open economy where trade in goods and services accounts for 29.5% of the total GDP. Spains main trading partners are the European Union (Germany, France, Italy, Portugal, United Kingdom), China, United States, Algeria, Morocco, Japan, and Mexico. Spains main exports

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INTRODUCTION 11

are machinery, tourism, and foodstuff. Spains main imports are energy and manufactured goods.2 16. Spain is a popular retirement destination for workers from all around Europe, and many foreigners maintain second homes in Spain. The large proportion of foreign residents and landowners accounts for a significant number of exchange of information requests from the foreign resident jurisdictions, in many cases EU Member States. Most of these exchanges take place through automatic exchange, but a number of exchanges on request also take place every year.

General information on the legal system


17. Spain is a parliamentary monarchy whose 1978 Constitution provides for the administrative and political system as well as the fundamental rights of Spaniards. The Constitution is the supreme law against which the validity of all laws and regulations may be measured. Spain has a civil law system. 18. While the King is the head of State and the symbol of its unity, the division of powers is at the core of the Spanish political system. The government is comprised of the President of the Government (the head of government) and the Council of Ministers designated by the President. The legislative power lies with the Parliament (Las Cortes Generales), composed of the Senate and the Congress of Deputies. Parliamentarians are elected by universal suffrage; they choose the President of the Government and control the action of the executive, thus making Spain a parliamentary political system. Judges and courts are independent of the legislative and executive branches. The Constitutional Court ensures that the laws and the regulations of the government are in line with the Constitution. 19. Spain is administratively composed of 17 Autonomous Communities that can each levy taxes, and the two Autonomous Cities of Ceuta and Melilla. The Constitution sets the organisational framework of the States. Autonomous Communities are further regulated through an autonomy statute (estatuto de autonoma), which sets out the distribution of powers and responsibilities between the State and each Community. Each has wide legislative and executive autonomy, with their own parliaments and regional governments. The central government of Spain retains exclusive responsibility for nationality, international relations, external trade, defence, justice, criminal and
2. Economic and geographical data in this section are taken from: OECD (2010), OECD Economic Surveys: Spain 2010, OECD Publishing; The Ministry of Industry, Tourism and Trade at www.investinspain.org; Instituto Nacional de Estadstica at www.ine.es; and the WTO at http://stat.wto.org/CountryProfile/ WSDBCountryPFView.aspx?Language=E&Country=ES.

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12 INTRODUCTION
commercial law, etc. Autonomous Communities may assume competencies over matters like the organisation of their institutions of self/government, health, social assistance. The Spanish Constitutional Court is the body responsible for resolving conflicts between the State and the Autonomous Communities regarding their powers.

Spanish general tax system


20. There are three tax subsystems in Spain: the state, regional and local systems. Taxes are accordingly levied by the central Government, the Autonomous Community governments, and local authorities. There are special regimes applicable in the Basque Country and Navarra, which are two Autonomous Communities with special rights recognised in the Spanish Constitution, but these special regimes have no impact on the availability and access to tax information. 21. The main state taxes are the corporate income tax, personal income tax, non-residents income tax, inheritance and gift tax (direct taxes), value added tax (VAT), transfer tax, stamp duty, excise taxes, and customs duties (indirect taxes). 22. The Spanish Tax Agency (AEAT) is the relevant public body at the Ministry of Economy and Finance, responsible for the management, tax auditing and collection of national taxes. The Spanish system is predominantly one of self-assessment, with the taxpayer completing a tax return and making the appropriate payment or receiving the appropriate refund, subject to review by the tax authorities. 23. Resident individuals are liable to personal income tax in respect of their worldwide income. 24. Resident companies (except civil companies) and other entities without legal personality such as pension funds are subject to corporate income tax. The general rate of corporate income tax is 30%, but there are other rates applicable, e.g. according to section 28 of the Corporate Enterprises Act, investment funds (with at least 100 investors) are subject to 1% tax rate and pension funds are taxed at a rate of 0%. Resident companies are companies incorporated under Spanish law, companies domiciled in Spain and companies whose place of effective management is located in Spain. The Corporate income tax is levied on the net aggregate taxable income from all sources of the entities. However, income from permanent establishments located abroad is exempt, provided that certain conditions are met. Foreign source dividends are exempt according to participation exemption provisions. There is a classic double taxation system, under which corporate income is first taxed in the hands of the company and dividends are subsequently taxed in the hands of the shareholders at the appropriate rates. Distributions by resident holding

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INTRODUCTION 13

companies Entidades de Tenencia de Valores Extranjeros to non-resident persons, which are attributable to income obtained by such companies from sources outside Spain (exempt from tax in Spain), are deemed to be foreign source income and are also exempt from tax. 25. Domestic or foreign source income derived by non-residents that is attributable to a permanent establishment situated in Spain is subject to nonresident income tax. Such income is computed according to the rules of the Corporate Income Tax Act. A non-resident is deemed to have a permanent establishment in Spain if, either directly or through a representative with power of attorney, it maintains premises or places of work where the enterprise, either wholly or partly, carries on its business. Non-residents deriving income that is not attributable to a permanent establishment in Spain are subject to non-resident income tax on their Spanish-source income.

Spain and the standards


26. A member of the OECD and the FATF, Spain has also been part of the Global Forum since its inception.3 Spain has bilateral or multilateral exchange of information relationships with 99 jurisdictions (see Annex 2). Spain is currently negotiating new DTCs and TIEAs. 27. Over the last three years Spain has received 1 371 exchange of information (EOI) requests from 39 of its treaty partners, with the majority being from France, the United Kingdom, Germany and Portugal.

Overview of the financial sector and relevant professions


28. The Spanish financial system is primarily a bank-based system, with 87% of assets kept in credit institutions. There are three types of credit institutions, namely private commercial banks, savings banks, and credit unions, which act in accordance with the European Communitys legal framework concerning Credit Institutions.4 In 2009, the total assets of credit institutions were about EUR 3.7 trillion, of which around 60% and 35% are held by commercial banks and saving banks respectively.5 The supervising authority of credit institutions is the Bank of Spain. Newly created credit institutions require authorisation by the Ministry of Finance. Credit institutions authorised abroad belonging to the European Economic Area (EEA) must notify the Bank of Spain when they have intention to offer services or to open a
3. 4. 5. Spain has notably been a member of the Joint Ad Hoc Group on Accounts (JAHGA) that produced the JAHGA report and standard. Article 1, Legislative RD 1298/1986 of 28 June See Financial Stability Board, IMF, and Banco de Espaa for more information and statistical data on the financial sector in Spain.

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14 INTRODUCTION
branch in Spain; those institutions based outside the EEA need authorisation by the Ministry of Finance. There are over 400 credit institutions currently registered in Spain. 29. Investment institutions operating in Spain are investment companies and investment funds. While their business aims are the same, investment companies and investment funds have different legal forms: funds are separated assets without legal personality belonging to a number of investors; investment companies take the form of a public limited company. According to the Spanish Securities and Exchange Commission, there are about 5 725 investment institutions registered in Spain as at 31 December 2010. The bodies responsible for the management of the investment institutions are the CIS Management Companies. In addition, these institutions must have a depository, responsible for the custody of the assets and the supervision of the management company. The Spanish Securities and Exchange Commission (CNMV) oversees the Spanish investment sector. 30. Spains capital markets are deep and well-developed, with financial instruments traded in a variety of platforms and settlement infrastructures. Spains stock exchange market capitalization reached almost EUR 1 trillion at end of 2009, though the size of the debt securities markets remains relatively small (perhaps because domestic corporations have preferred to seek financing through bank loans and internally-generated funds). The Spanish insurance market is the eleventh largest in the world and 31. the sixth largest in Europe by net premium income. The assets managed by the insurance sector were EUR 243 billion at the end of March 2010, and is largely dominated by life insurance. The Directorate General for Insurance and Pension Funds is the body which supervises insurance companies. Before they can begin to operate, insurance companies must obtain the authorisation of the Ministry of Finance.

Recent developments
32. The most recent DTCs incorporating EOI articles are those signed in April 2011 with Singapore and Hong Kong, China. Spain signed 22 DTCs or protocols over the last three years, as well as TIEAs with 7 jurisdictions. Spain has also recently signed the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters, which came into force in 2010, and its protocol. 33. The Directive 77/799/EEC was recently repealed and replaced by the Council Directive 2011/16/EU on administrative cooperation in the field of taxation. This Directive sets forth provisions for the exchange of information by electronic means, as well as rules and procedures under which Member

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INTRODUCTION 15

States and the Commission are to cooperate on matters concerning coordination and evaluation. The Directive conforms to the international standard on transparency and exchange of information as contained in the Terms of Reference, and in particular implies the end of bank secrecy within the EU. 34. The Spanish authorities indicated that the General Tax Law will soon be amended in order to transpose the latest EU directive on mutual assistance and other EU instruments that affect international mutual assistance. The Bill was not ready at the time of drafting the present report. Finally, recent legislative developments occurred that improve trans35. parency, such as the entry into force on 30 April 2010 of the Act 10/2010 on the Prevention of Money Laundering and Terrorist Financing, which transposes the European Directive 2005/60/EC (the Third Money Laundering Directive).

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COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 17

Compliance with the Standards

A. Availability of information

Overview
36. Effective exchange of information requires the availability of reliable information. In particular, it requires information on the identity of owners and other stakeholders as well as information on the transactions carried out by entities and other organisational structures. Such information may be kept for tax, regulatory, commercial or other reasons. If such information is not kept or the information is not maintained for a reasonable period of time, a jurisdictions competent authority6 may not be able to obtain and provide it when requested. This section of the report describes and assesses Spains legal and regulatory framework on availability of information. It also assesses the implementation and effectiveness of this framework. 37. In general, information about the owners and other stakeholders of an entity or arrangement and information on the transactions carried out by any entity or arrangement subject to registration and tax obligations in Spain is available at any time either from the public authorities (e.g. tax administration, Commercial Register) or directly from the entities (register of shareholders) or regulated third parties (banks, public notaries), and some information is also publicly available.
6. The term competent authority means the person or government authority designated by a jurisdiction as being competent to exchange information pursuant to a double tax convention or tax information exchange agreement.

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18 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION


38. The Spanish tax administration possesses a very comprehensive database that contains extensive information on taxpayers, thanks to the annual tax returns filed by the taxpayers themselves, but also periodic tax information returns sent by third parties like the Commercial Register, public notaries and banks. The tax administration knows the identity of the founding partners of 39. commercial companies and it annually receives information on the identity of shareholders holding 5% or more of shares in the capital of commercial companies (1% for listed companies). It may also obtain the identity of all the shareholders of a SA (public limited companies) either from the company itself (registry of shareholders) or from the financial institution that manages its shares. Companies, like all other commercial entities, must keep their accounting documents and underlying documentation for at least four years under tax law and six years under the Commercial Code. 40. Spanish law allows public limited companies to issue bearer shares. There may be a few cases in which the tax administration may not be aware of the owners of these shares, but their issuance and transfer has been strictly regulated for more than 75 years (except from the period 1989-1998), and currently no one can derive income or capital gains from bearer shares without being identified by the tax administration. 41. The most common entities in Spain are by far limited liability companies (SRL), followed by public limited companies (SA). The other types of commercial entities are less commonly used (e.g. partnerships). It is not possible to establish a trust or a private foundation under Spanish law. A trust cannot be regarded as the owner of assets and if a trustee of a foreign trust invests or wishes to acquire assets in Spain for the trust, the trustee will be in Spain the exclusive owner of the assets and taxed accordingly. The trustee resident in Spain must declare and is taxable on all Spanish source income as well as foreign source income obtained by the trusts for which he/she acts as trustee. Foundations must pursue a public interest purpose and are strictly regulated by the authorities. 42. Banks and other financial institutions have know-your-customer obligations and must keep information about transactions carried out by their customers for at least ten years. 43. In practice, Spains partners are satisfied with the Spanish responses to their information requests and no partner noted that a particular type of information was unavailable in Spain.

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COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 19

A.1. Ownership and identity information


Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.

44. The following section will consider the legal and regulatory framework relating to companies, bearer shares in joint-stock companies, partnerships and other legal entities (trusts, foundations, etc.), as well as enforcement provisions to ensure compliance with the laws on the ownership of relevant entities. 45. Under article 116 of the Commercial Code, a commercial company or partnership is established by two or more individuals or legal persons who agree by contract to appropriate property or their industry to a common undertaking with a view to sharing the benefit which may result therefrom. In certain cases provided for by statute, the company or partnership may be established by only one person. 46. The commercial nature of an entity is determined by its purpose (commercial activity) or by the statute pursuant to which the entity is incorporated (the Commercial Code and the Corporate Enterprises Act govern general partnerships, limited partnerships, limited liability companies, public limited companies). In addition, the Commercial Code defines as businesspersons or traders the persons carrying on commercial activities on a regular basis. Trader (comerciante) is a key notion in Spanish commercial law. A trader is any person having a commercial activity and hence governed by the Commercial Code from a grocer to a bank. Under the Commercial Code and the Corporate Enterprises Act, commercial companies and merchants (together businesspersons) are bound by a number of obligations, including registration in the Commercial Register and the requirement to keep accounting records for a minimum of six years. 47. Spanish companies and partnerships are both legal persons and the distinction between them is based on the deciding factor in the creation of the entity: either the members capital contribution (in companies), or the personality of the members, in which case the management falls to the members and equity in the entity cannot be passed freely to third parties (in partnerships). Sociedades civiles (civil companies/partnerships) are entities incorporated pursuant to the Civil Code and that do not trade on a regular basis. 48. The tax administration maintains an important amount of identity and ownership information in its database, through a network of information

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20 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION


returns that taxpayers and third parties must file periodically,7 the complete structure of all companies being maintained by the companies themselves. 49. The Spanish authorities indicate that most requests concern companies and individuals. They are not able to provide statistics though, because the IT application by which EOI requests are managed does not specify the type of entity concerned by the requests. No EOI partner of Spain indicated that they had not received the information requested because this type of information was not available.

Companies (ToR8 A.1.1)


50. Companies (compaas or sociedades de capital ) are incorporated pursuant to the Commercial Code and the Corporate Enterprises Act. There are three types of companies (article 1 of the Corporate Enterprises Act): the sociedad de responsabilidad limitada (SRL or SL for sociedad limitada, Limited Liability Company) is a commercial company formed by one or several members not personally liable for the companys debts; they only bear losses up to the amount of their contribution. The personality of the members matters (intuitu personae) in that the transfer of the shares is not done freely. The minimum capital is of EUR 3 000 (articles 1, 4 and 12 of the Corporate Enterprises Act). This is the most common type of entity in Spain; the sociedad annima (SA, Joint Stock Company or Public Limited Company) is constituted between one or more shareholders not personally liable for the companys debts; they only bear losses up to the amount of their contribution. Shares are represented by certificates or book entries, and where share certificates are issued, by-laws must specify whether they represent registered or bearer shares and whether the issue of multiple share certificates is envisaged (see Section A.1.2 below). The minimum capital is EUR 60 100 (articles 1, 4, 12 and 23 of the Corporate Enterprises Act). The shares of an SA can be listed on an official securities market (section 495); and the sociedad comanditaria por acciones (S.Com. por A. or SCA, Partnership Limited by Shares) is formed by one or more general partners, who are traders and are indefinitely and jointly liable for

7.

8.

Every tax form has to be passed by a ministerial order and therefore signed by the Spanish Economy and Finance Minister and then published in the Official State Gazette (BOE). See section 30 of the General Regulation on Tax Auditing. Any modification of the tax form must follow the same procedure. Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information

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the partnerships debts, and limited partners, who are shareholders and bear losses only up to the amount of their contributions (article 1 of the Corporate Enterprises Act). This type of company is scarcely used (none have been created over the last four years). In addition, European companies are governed by Council Regulation 51. (EC) No 2157/2001 of 8 October 2001 on the Statute for a European Company, transposed into Spanish law in the Corporate Enterprises Act (sections 455 to 494). A European company can operate in all EU Member States in a single legal form common to all Member States and defined in EU law. Under article 10 of the Regulation, the rules that apply to European companies are those for public limited-liability companies, and the registration rules applicable to Spanish SA are thus applicable to European companies (section 457). A European companys head offices must correspond to the place where it has its central administration, i.e. its real headquarters. 52. Most companies incorporated in Spain are limited liability companies (mainly small and medium-size enterprises). In 2008, the Commercial Register of Spain counted around 83% of SRLs and 16.8% of SAs. The 0.2% remaining represents SCAs and partnerships. The tax administration counted almost 2.16 million registered SRLs and 437 675 registered SAs. In 2010, there were 2.29 million SRLs and 412 203 SAs. 53. All companies domiciled in Spain are considered Spanish entities subject to the Corporate Enterprises Act, notwithstanding their place of incorporation (section 8 of the Corporate Enterprises Act). A company whose principal place of business is situated in Spain shall be domiciled in Spain. Foreigners and companies incorporated abroad may engage in business in Spain (section 15 of the Commercial Code). In 2008, 12 000 permanent establishments of foreign companies and other foreign entities were registered in Spain. 54. The incorporation of a company entails some registration and publication requirements, and companies hold up-to-date information identifying their owners.

Information held by the Spanish authorities


55. The identity of all the founding members of a company is disclosed in the deed of incorporation it submits to the Commercial Register (Registro Mercantil ) within two months of its creation (the company is considered to be a general partnership until it is registered).9 The deed must also include the
9. Sections 19 and 20 of the Corporate Enterprises Act and section 19 of the Commercial Code. See also the Commercial Register Regulation, section 114 for SA, section 175 for SRL, and section 213 for SCA, which require that the Register

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contributions made by each of the founders (whether individuals or corporations), and their respective number of shares.10 The company must provide the Register with its tax identification number, after having provisionally registered with the tax administration (see below).11 56. The deed needs not to be amended on a change of shareholders except in the case of a SCA, whose managing partners, as members indefinitely and jointly liable for the SCAs debts, must always be identified (section 23 of the Corporate Enterprises Act). This information is maintained by the company itself, and the tax administration also maintains ownership information (see below). 57. A key element of the Spanish tax system is the tax identification number (TIN, Spanish acronym NIF ) that all legal entities, unincorporated entities and individuals must have in order to undertake professional or business activities or activities involving withholding taxes.12 The TIN is mandatory for all persons above 14 years old, or before when special events occur, such as opening a bank account. It is also the national identity number of natural persons. The TIN is used for different purposes. For instance it is mandatory for corporations and businesspersons to put this number on all their business correspondence. 58. All natural and legal persons that plan to engage in an activity which has tax implications must have a TIN and be registered in the Tax Registry of Entrepreneurs, Professionals and Withholders, which form part of the Tax Registry of Taxpayers. SRL, SA and SCA are therefore required to register with the tax administration to obtain a TIN, and to declare any changes to
receives the name of all the founders, together with the deed of incorporation. The Registry is a public office supervised by the Ministry of Justice and controlled by the courts. It is regulated by articles 16 to 24 of the Commercial Code, and the Royal Decree 1784/1996, of 19 July, leading to approval of the Commercial Register Regulation. Information is centralised with the Central Commercial Register in Madrid. Section 32 of the Corporate Enterprises Act. The corporate by-laws must indicate the registered office of the company, which must be the location of their actual administrative and management activities or their main business establishment or operation. Those of SCA must also include the identity of the general partners (sections 22 and 23). The promoters of publicly subscribed joint stock companies must also submit the name, nationality and address of all the promoters to the National Securities Market Commission (section 42). The Commercial Register may be consulted at www.rmc.es/. Sections 84 and 86 of the Business Registry Regulations. Additional Provision Six to the General Tax Law and sections 18 ff of the General Regulation on Tax Auditing.

10.

11. 12.

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their fundamental corporate arrangements, i.e. their company name, legal form, principal activity, registered office and principal place of business. The name and TIN of all the founders must also be provided.13 59. There is no obligation for companies to declare a change of shareholder, but they are required to identify by name and TIN all persons owning at least 5% of their capital in their annual Corporate Income Tax return (form n200). The threshold is 1% if the company is listed.14 60. In addition, the transfer of shares is reported to the tax administration by the person having facilitated this transfer (e.g. bank or other member of the secondary market, public notary) in an annual information tax return (return n198), regardless of the percentage of shares transferred.15 This covers the transfer of all shares of SRL and listed companies, as well as the transfer of shares of all general partners of SCA. For the registered shares of non listed companies, the certificates of which have been printed, the involvement of these intermediaries is not mandatory and the Spanish authorities may not obtain ownership information through this way (but can access the share register in any event; see the subsection on Information held by companies below). 61. In practice, the Spanish competent authority exchanges ownership and identity information, such as information on shareholding (composition and evolution), transmissions of shares, directorship and deed of incorporation of companies, but also information such as the existence of a permanent establishment and the substance of the undertaking. 62. It can happen that the competent authority requests information of a Commercial Registry but ownership information is mostly contained in the tax database, which allows the competent authority to trace a chain of owners. First the database contains the name of owners holding at least 5% of the shares (1% if companies are listed), provided that the company, the ownership of which is sought, is Spanish or otherwise resident in Spain. In addition, companies must report the identity of the shareholders to which they paid dividends (in relation to the corresponding withholding tax). The database contains hyperlinks: clicking on them takes the person consulting the database from the file on the company to the file on the company that owns the shares. As a result, the competent authority does not usually need to request the information from companies.
13. The taxpayer (individual or entity) must file a census statement pursuant to section 29(2) and Additional Provision Five to the General Tax Law; sections 7 to 17 of the General Regulation on Tax Auditing. The corresponding tax returns n036 and 037 are regulated by Order EHA/1274/2007 of 27 April, as subsequently amended. Order EHA/1338/2010, of 13 May These operations are taxed pursuant to section 108 of Act 28/1988 on the Securities Market.

14. 15.

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Foreign companies
63. As indicated above, all natural and legal persons must have a TIN for any activity in which they engage that has tax implications. Therefore, a foreign company that operates in Spain must apply for a TIN and registration in the Tax Register for Entrepreneurs, Professionals and Withholders. In addition, when a non-resident legal person or entity operates in Spain, using permanent establishments that each undertakes a distinct activity and which is each managed separately, each permanent establishment must apply for a different TIN than that assigned to the non-resident entity. They must nominate a tax representative who is resident in Spain and submit a document that proves the existence of the entity. It can be the deed of creation of the company registered with an official registry in its jurisdiction of origin, or the certification from a public notary or tax authority. 64. The Spanish tax register of entrepreneurs indicates the jurisdiction of residence of the foreign entity, its nationality and legal status (section 8 of the General Regulation on Tax Auditing). Foreign companies must fill in the same tax return as domestic companies, i.e. form 200, and therefore provide information on all persons owning at least 5% of their capital (1% if companies are listed).

Information held by companies


65. SCA. The rules are different for shares of SRLs, and shares of SA and

66. SRLs must keep a shareholders ledger that contains records of the original shareholders and subsequent share transfers, as well as the creation of rights ad rem or other encumbrances thereon. Only the parties entered in such ledger are acknowledged by the company to be shareholders. The ledger must indicate their identity and address (section 104 of the Corporate Enterprises Act). Unless otherwise provided in the companys by-laws, shares are freely transferable between company members and between them and members of their families or companies of the same group as the transferor, but they cannot be freely transferred to other persons. Rules of transfers are governed by the bylaws of the company and the Corporate Enterprises Act. For instance a member wishing to transfer some shares must inform the managers of the company in writing and obtain the authorisation of the general assembly. Members of a SRL are therefore aware of any transfer of shares. The ledger must be kept throughout the lifetime of the company, and the ledger of liquidated companies is sent to the Commercial Register. SRLs cannot issue bearer shares. Shares of SA (joint-stock companies) and SCA (partnerships limited 67. by shares) are represented by certificates of title or book entries (i.e. dematerialised or immobilised), and where share certificates are issued, by-laws

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must specify whether they represent registered or bearer shares and whether several share certificates may be issued. 68. Registered shares must be entered in a ledger, which records subsequent share transfers, including the name, surname, company name, nationality and address of subsequent holders (section 116 of the Corporate Enterprises Act). The managers of the company must enter the transfer of shares in the ledger immediately (section 120). 69. Shares of SA and SCA can also be represented in the form of book entries (i.e. dematerialised) maintained by financial intermediaries, in which case they are governed by the provisions of the securities market regulations. The financial intermediary must maintain the identity of the account owners (sections 118 and 497 of the Corporate Enterprises Act).16 In addition, shareholders of SA and SCA that are listed on the Stock Exchange are obliged to communicate the acquisition or transfer of significant amounts of shares to the issuer and the National Securities Market Commission (CNMV ), i.e. when the percentage of shares reaches, exceeds or goes below certain thresholds, starting from 3%.17 70. All members of a SRL and shareholders of a SA or SCA can consult the ledger of shareholders or registered shares (sections 105 and 116 of the Corporate Enterprises Act).

Nominees
71. The concept of nominee that exists in some jurisdictions, in particular common law jurisdictions, does not exist in Spanish law. Where a person purports to hold property for the benefit of a third person, that third person
16. The institution charged with the maintenance of the book entries is designated in the Commercial Register (section 94(8) of the Commercial Register Regulation). It must provide the central depository (Iberclear) with the identity of the holders of the accounts in order to be submitted to the issuers that have asked for such information with the aim of drawing up the list of natural person or legal entities authorised to participate in the shareholders general meetings. The information to be provided shall include the addresses and any contact details at the avail of the institution enabling the issuer to correspond with its shareholders. No regulation has yet laid down technical and formal arrangements through which the issuer may exercise this right. Other thresholds are 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 60%, 70%, 75%, 80% and 90%. See section 23 of Royal Decree 1362/2007, dated 19 October, in which section 53 of the Law on Securities Market, on the requisites for transparency relative to information about shares from issuers that are being traded on an official secondary market or another market regulated by the EU.

17.

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would have no rights under Spanish law to claim the property. Consequently, shares issued by companies registered in Spain are in principle held by their beneficial owner, whose identity is known (or accessible) to the issuer, with the exception of some bearer shares (see below).

Service providers
72. The formation of SRL, SA and SCA requires a public deed registered in the Commercial Register. It therefore requires the intervention of a public notary, who usually takes care of registering the company with the Commercial Register and the tax administration, even though that obligations remains on the founders and managers who are jointly liable for damages caused by them for breach of this obligation. 73. Public notaries must periodically (monthly and annually) inform the tax administration when new companies register, and each time the deed of incorporation of a company changes or a general partner of a SCA or a member of an SRL changes. Indeed, section 42(1) of the General Regulation on Tax Auditing requires that public notaries report annually the transfer of SRL shares, specifying the full name, domicile and TIN of buyers and sellers, shares involved in the transaction, date and amount of the transaction and income derived.18 74. In addition, public notaries and Commercial Registries are subject to the Anti-Money Laundering Act 10/2010 and are therefore subject to its provision on beneficial ownership. Indeed, the scope of persons subject to know-your-customer and data conservation requirements for their usual customers, and in some cases occasional customers, covers all persons engaged in a financial activity, plus a number of non-financial professions such as the legal professions (except in the case of court proceedings or legal advice), accountants and auditors. Notaries are required to identify the beneficial owner (above 25% of the capital), whenever a legal person is constituted. In addition, public notaries should not intervene in any act when they are not able to ascertain the ownership and control structure of the legal person.19 75. Overall, the very comprehensive obligations in company and tax law ensure the availability of ownership information for companies, and the know-your-customer obligations imposed by the anti-money laundering act

18. 19.

Forms 036, 038 (section 50 General Regulation on Tax Auditing) and 197. The tax administration also signed a tax information exchange agreement with the Notary Council in 2007. Section 4 of Act 10/2010. See also FATF Mutual Evaluation of Spain Follow-Up Report, October 2010.

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have only a theoretical impact on information exchange for tax purposes, since the competent authority has never used this source of information.

Bearer shares (ToR A.1.2)


76. Shares of SA (joint-stock companies) and SCA may be represented by bearer shares (sections 23 and 113 of the Corporate Enterprises Act).20 Although bearer shares might be issued according to the 2010 Corporate Enterprise Act, and there is no amendments envisaged in this regard, since 1936 their issuance and transfer is strictly regulated (except during the period 1989-1998).21 First, the names of all founders of companies must be included in the deed of the company, even in the case of bearer shares. Second, the subscription or transfer of bearer shares cannot be made by the mere transfer of the paper-share but requires the intervention of a public notary. Finally, if a company distributes dividends to the shareholder, it must identify its shareholders and inform the tax administration on an annual basis, in the same way as for registered shares. 77. Since 1998, the transfer of bearer shares of unlisted company has to be performed through (1) a notary, (2) a securities company, or (3) a credit institution, for the ownership transfer to be valid (Additional Provision Three of Act 24/1988 on the Securities Market). Notaries, securities companies and credit institutions must keep records of the transaction and supply this information annually to the tax administration. They must supply the complete identification of the buyers and sellers (their name or business name, address and tax identification number), as well as the type and number of shares, and the amount, date and, if any, earnings for each transaction (section 42 of the General Regulation on Tax Auditing). Notaries also send this information to a centralised database of the Council of Public Notaries every month. If a transfer is not valid, then the purported transferee would have no rights as a shareholder, e.g. to receive dividends or vote. 78. Similarly, since 1998, the transfer of bearer shares of a listed company is possible only after they have been dematerialised in book entries
20. 21. SRL cannot issue bearer shares because their shares ( participaciones sociales) may not take the form of bonds or accounting entries. Therefore, the statutory provisions governing bearer shares cannot be applied to shares in a SRL. A Decree of 1936 prohibits the transfer of securities without the mediation of a stock market trader, stock broker or notary. The enforceability of this decree was confirmed by the Law of 23 February 1940, which in turn was repealed with the entry into force of the Law 24/1988 on the Securities Market that introduced some measures of liberalisation. An amendment to this law passed in 1998 reintroduced the intervention of third parties in the transfer of bearer shares.

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(as they cannot be traded on the stock market, section 496 of the Corporate Enterprises Act). 79. In addition, the AML law prohibits the institutions and persons covered by this Act to enter into, or continue, business relations with companies whose shares are represented by bearer securities, unless they determine by other means their structure of ownership and control. This prohibition does not apply to the conversion of bearer shares into registered securities or bookentry securities (section 4(4) of Act 10/2010). 80. In conclusion, the issuance and transfer of bearer shares has been strictly regulated for 75 years (except the period 1989-1998), and currently no one can derive income or capital gains from bearer shares without being identified by the tax administration. The only legacy issue relates to bearer shares issued before 1936 or from 1989 to 1998, that have not been transferred or for which the owners have not received any dividends since then. In practice, bearer shares are extremely rarely used and limited to small entities, considering the existing constraints. The Spanish competent authority does not recall having ever answered an EOI request related to bearer shares. Spain should take necessary measures to ensure that appropriate mechanisms are in place to identify the owners of bearer shares in all instances.

Partnerships (ToR A.1.3)


81. A Spanish partnership is a legal person to which each member agrees to participate taking into consideration each other member in their personal capacity (intuitu personae). As a result, each members shares can be transferred only with the other members consent, and the articles of association must be amended when a transfer occurs. There are two types of commercial partnerships in Spanish law (section 122 of the Commercial Code), as well as sociedades civiles. a compaa colectiva (general partnership) is a commercial entity with at least two members (who are traders) who are jointly, personally and severally liable for the partnerships debts (sections 125-144 of the Commercial Code); a compaa en comandita simple (limited partnership) is a commercial entity that only partly fulfils the criteria for unlimited liability entities since it comprises two classes of members: general partners, who are jointly and severally liable for the partnerships debts, and limited partners, who incur no liability for the partnerships debts and whose risk is limited to the amount of their contribution (they are essentially financial backers). Limited partners may not carry out any external act of management, even by virtue of a power of attorney (sections 145-150 of the Commercial Code); and

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all entities not otherwise defined are sociedaded civiles (sections 16651708 of the Civil Code) except for joint ventures (comunidad de bienes).22 There are 231 322 sociedades civiles in Spain. (They are considered below in the subsection on other entities).

82. Partnerships are seldom used in Spain. 2 877 general partnerships and 490 limited partnerships (both simple and by shares) are registered with the tax administration, representing less than 0.2% of the entities registered by the tax administration.

Information held by the Spanish authorities


83. The Commercial Register and tax administration have in their files the names of all the partners of general and limited partnerships. 84. The names of all the partners of a general partnership and limited partnership must appear in the deed of incorporation of partnerships, which must be amended every time a partner changes. The deed must also include the contributions made by each of the founding partners (whether individuals or corporations), and their respective interests in the partnership (sections 125 and 145 of the Commercial Code). 85. All commercial entities, including general and limited partnerships, must register with the Commercial Register and provide their deeds of incorporation within a month of their creation and once they have been allocated a tax identification number. The same rules applicable to companies apply to partnerships.23 The tax obligations of commercial partnerships are the same as those of companies (see above).

Information held by the partnership and service providers


86. In the case of limited and general partnerships, all the partners must be identified in the deed of incorporation, as noted above. It is impossible to transfer stakes without the consent of all the partners (section 143 of the Commercial Code). As a result, all partners know the identity of the other partners.

22. 23.

Tax transparent entities without legal personality; sections 392-406 of the Civil Code. Sections 210 and 213 of the Commercial Register Regulation. See also article 119 of the Commercial Code and articles 81 to 86 of Royal Decree 1784/1996, dated 19 July, leading to approval of the Commercial Register Regulation.

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Trusts (ToR A.1.4)


87. The concept of trust does not exist under Spanish Law, and Spain has not signed The Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition. There is, however, no obstacle in Spanish domestic law that prevents a Spanish resident from acting as a trustee, or for a trustee of a foreign trust to invest or acquire assets in Spain. 88. As regards the availability of information on settlors, trustees and beneficiaries of trusts, the Spanish law does not require the registration of foreign trusts or to inform the tax administration before starting operating in Spain. However, if real estate property is involved, the previous and new legal owners must be disclosed in front of a notary public.

Tax obligations
89. The Spanish tax laws do not contain specific provisions on the taxation of the assets or income derived from foreign trusts with a link to Spain. These assets and income are subject to tax as any other assets or incomes of the trustee and any benefit distributed to beneficiaries must be declared in their tax returns. 90. The Spanish tax administration maintains some information if the professional trustee is resident in Spain, the trust is administered in Spain or some assets are located in Spain. In particular, a professional trustee is subject to the tax obligations related to his/her main profession, which allow the tax administration to collect all information related to the trust that may be his/her client. 91. The tax administration can use all the procedures at its disposal to seek and request any information not already in its possession. The Spanish authorities may ask the trustee or the beneficiaries for all information necessary to determine the amount of taxable income or assets. 92. Trustees resident in Spain (professional or not) are subject to recordkeeping requirements for the determination of their income, as is any person resident in Spain. Thus, all records that are necessary for determining his/ her income must be kept (section 29 of the General Tax Law). This typically includes the trust deeds and therefore the names of the settlors and named beneficiaries of the trust, and the nature of the assets in the trust that have generated the income. 93. Therefore, because general tax requirements in Spain require that all taxpayers be able to provide information to the tax authorities whenever taxable income must be determined, a trustee resident in Spain must be able to provide the tax authorities with information on the settlors and beneficiaries of trusts that he/she administers.

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Money laundering rules


94. Lawyers and accountants acting as trustee, as well as trust service providers such as financial institutions, are subject to anti-money laundering requirements, whoever their clients are. In particular, any person who operates or manages a trust is subject to the law, pursuant to section 2(1) of Act 10/2010. Section 7(4) provides that the institutions and persons covered by this Act shall apply the due diligence measures set forth in this Chapter [on due diligence] to trusts and other legal arrangements or patrimonies without legal personality which, despite lacking legal personality, may act in the course of trade. In particular, section 3 of Act 10/2010 requires that all the participants be identified. The Spanish authorities indicate that the term participant includes the trust as customer, but also the persons representing it, in this case the trustee.24 95. Subjected persons must also identify the natural person(s) who hold or exercise control over 25% or more of the assets of an instrument, or legal persons who administer or distribute funds, or, if the beneficiaries are yet to be determined, the class of persons in whose benefit the legal person or arrangement has been created or primarily acts. For the purposes of a foreign trust, the beneficial owner of a transaction is the natural person(s) who is the settlor (rights holder) or beneficiary (section 4(2)(c) of Act 10/2010). 96. The anti-money laundering obligations, together with the obligation to maintain and submit information to the tax authorities, ensure that information regarding the settlors, trustees and beneficiaries of trusts is available to Spains tax authorities.

Practical consequences and conclusion


97. In practice, the Spanish authorities indicate that the trustees of foreign trusts are very rarely residents in Spain and foreign trusts are very rarely administered in Spain. Several factors would explain this situation. In particular, the fact that Spain does not recognise the concept of trusts creates a legal risk for the persons involved in a trust. The assets transferred to a trust are considered to be owned by the trustee, and therefore part of his/her assets, for example for income tax purposes; in case of death (for inheritance purposes); concerning potential actions of creditors; or for wealth tax purposes. 98. In addition, Spain has not received any request for information about a foreign trust in the last three years, which appears to confirm that, given the volume of information exchanged by Spain, the presence of trusts is
24. Section 3(2): Before entering into the business relationship or executing any transactions, the institutions and persons covered by this Act shall verify the identity of the participants using documentary evidence.

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insignificant. Comments from Spains peers do not indicate that in any instance the Spanish authorities may not been able to provide information on trusts.

Foundations (ToR A.1.5)


99. There is no provision for private-interest foundations in Spanish law. Foundations are non-profit entities established by individuals, legal entities or State public sector entities, exclusively for listed public-interest purposes. The law expressly prohibits the creation of foundations whose main aim is to provide benefits to the founder, board members, and their relatives down to the fourth degree of kinship (article 3(3)). 100. Foundations are strictly regulated by the Foundations Act 50/2002, of 26 December 2002, registered in a public Registry of Foundations, supervised by a protectorate of the General State Administration, and the assignment of assets to a foundation is irrevocable, i.e. if a foundation is dissolved, the assets are devolved to one or more public or public-interest entities whose purpose is to pursue public benefit purposes (article 33). 101. To constitute a foundation, the deed of constitution must include, among other aspects, the full name, age and marital status of the founder(s), if individuals the business name or title in the case of corporations their nationality, address and TIN (article 10). The deed of constitution must be registered in the Foundations Register, as set out in article 13 of Act, so that it is possible to find out who are its founders. 102. In practice, Spain has not received any information request relating to a Spanish foundation in the last three years.

Other entities Sociedades civiles


103. Non-commercial entities with legal personality are sociedades civiles. They are formed by two or more persons that contribute money, equipment or labour with the goal of sharing the profits amongst themselves. Profits and losses are shared according to the established agreement or proportionally to the contributions made. Members are personally and severally liable for the entitys debts. They are governed by sections 1665 to 1708 of the Civil Code. 104. Sociedades civiles are destined for the operation of a business or profession that does not need to be constituted formally (through a public contract), except in the event of the contribution of real estate, for which a public deed before a public notary is required. They are regulated by what is established in the contract signed by all the parties, and anything that has not

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been agreed is governed by the Civil Code. They are usually used by farmers or professionals (such as lawyers) but their use is decreasing, as most entities are today commercial entities. 105. There is no obligation to register these entities in the Commercial Register, but if they are undertaking any economic activity subject to income tax, they must apply for a TIN. The entity must provide a copy of the public deed or verifiable documentation attesting its constitution. The provisional or definitive TIN is not assigned to entities which do not provide at least a signed document in which the issuers declare their intention to constitute the body, or another document accrediting co-ownership. The issuers must also give information on the variations regarding their partners, participants or shareholders. 106. Sociedades civiles are not liable to taxes. They are transparent, in that their incomes are attributed to their members (section 8(3) of the Law on Corporation Tax, Non-resident Income Tax and Wealth Tax).25 They nonetheless have some tax responsibilities, such as the obligation to fill in an annual tax information return indicating the total income and the income to be attributed to each member, whether or not they are resident in Spain. The return must contain the tax identification number of the members (or representative) and include the variations in the composition of the entity (members) during the year (form 184, section 90 of the Personal Income Tax Act, and section 70 of the Personal Income Tax Regulations of 30 March 2007). Failure to present this return is subject to a fine between EUR 330 and 20 000, depending on the amount of missing data, pursuant to section 198 of the General Tax Law.

Enforcement provisions to ensure availability of information (ToR A.1.6)


107. Spain should have in place effective enforcement provisions to ensure the availability of ownership and identity information, one possibility among others being sufficiently strong compulsory powers to access the information. This section of the report assesses whether the provisions requiring the availability of information with the public authorities or within the corporate entities reviewed in section A.1 are enforceable and failures are punishable. Questions linked to access are dealt with in Part B. 108. All commercial entities must be registered both with the tax administration (and given a tax identification number) and with the Commercial
25. The same applies to jointly owned companies, estates and other entities, which do not have legal personality, but are comprised of an economic entity or a separate asset that is liable to taxation.

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Register, and these registrations cannot be done separately (the entity needs to have a provisional TIN to register with the Commercial Register and be registered there to obtain a definitive TIN). Not being registered implies that the entity has no liability and the persons conducting commercial activities are jointly and personally liable for the debts of the undeclared entity (article 120 of the Commercial Code and section 36 of the Corporate Enterprises Act). 109. If registration has not taken place one year after the creation of the company, it is then considered to be a general partnership or a non-commercial organisation (sociedad civil ). The Spanish Tax Agency can verify the reliability of the data provided by the interested parties in their applications. False or incomplete existence returns are punished by a fine of EUR 250 (article 199 of the Tax Law). 110. Breach of obligations relating to the use of a tax identification number or of other numbers or codes established by tax or customs laws and regulations is a tax offence punishable by a fine of EUR 150 (section 202 of the General Tax Law). 111. As concerns the annual tax returns that companies and partnerships must fill in (and which include some ownership information), section 198 of the General Tax Law provides that failure to file a tax return is a tax offence punishable by a EUR 200 fine. Filling an incomplete or incorrect return is also an offence, the sanction for which depends on the tax consequence of the offence. 112. While the Corporate Enterprises Act does not set any administrative sanctions for the breach of the obligation to maintain a ledger of shareholders, shareholders that are not entered on the ledger are precluded from exercising any of their rights vis--vis the company. In addition, if the companys managers do not keep the shareholders ledger, they may be held liable for any damages (section 236 of the Corporate Enterprises Act). The Spanish authorities report that in practice taxpayers comply with 113. their duties of tax declaration. In addition, the Spanish tax administration has standard proceedings for verifying that taxpayers fill out the tax returns correctly (tax returns for entities included) as well as specific campaigns to verify this information. There are infringement and sanctions in the case of failure to comply with the law in the Taxation Act 2003. It also happens that companies or partnerships are removed from the Registry of Companies because they failed to perform any of the obligations described in part A of that report. 114. In conclusion, there are a variety of penalties under Spains laws to ensure that information required to be maintained is, in fact, maintained. The penalties appear to be proportionate and dissuasive enough to insure compliance. During the onsite visit, the assessment team found that Spains

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competent authority is able to respond to requests for ownership and identity information for all relevant legal entities and arrangements. Information received from partner jurisdictions with an exchange of information relationship with Spain confirms this.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

A.2. Accounting records


Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.

115. A condition for exchange of information for tax purposes to be effective, is that reliable information, foreseeably relevant to the tax requirements of a requesting jurisdiction is available, or can be made available, in a timely manner. This requires clear rules regarding the maintenance of accounting records. The obligation to maintain reliable accounting records are found in most of the laws governing the various types of entities covered by this report, and in the Income Tax Act. The sources of Spanish accounting law are the Commercial Code, the General Accounting Plan26 and the General Tax Law.

General requirements (ToR A.2.1)


116. The Commercial Code requires that all businesses (sole traders and commercial companies) keep orderly accounts, appropriate to the businesss activities, that allow chronological monitoring of all their operations, as well as periodic preparation of balance sheets and inventories. Professional trustees are covered by these obligations including in respect of trust income on which they are taxable. Notwithstanding the terms set forth in the laws or special provisions, a Book of Inventories and Annual Accounts and a Journal must be maintained (sections 25 and 28 of the Commercial Code):
26. The General Accounting Plan is defined by Accounting Regulation RD 1515/2007 of 16 November 2007. It codifies how accounts are to be kept with the aim of setting general rules for all firms or a category of firms.

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the Book of Inventories and Annual Accounts opens with a detailed initial balance for the company. The totals and trial balances are entered at least every three months. The inventory at year-end closing and the annual accounts are also entered in this book. Annual accounts must include the balance sheet, profit and loss account, a statement of changes in equity, a cash-flow statement (unless otherwise regulated), and the notes. These documents form a single unit (sections 34 to 37 of the Commercial Code); and the Journal records on a daily basis all the operations related to the activities of the company. Joint entry of the totals of operations for periods no longer than one month can be recorded, with the condition that the detail appears in other concordant books or registers.

117. All the accounting books and documents must be kept with clarity, by order of dates, without blank spaces, interpolations, crossings out or erasures (section 29 of the Commercial Code). The Book of Inventories and Annual Accounts and the Journal must be submitted to the Commercial Register for certification (section 27). Therefore SA, SRL and SCA must deposit their annual accounts to the Commercial Register, and companies that omit doing so are reminder of their duties and ultimately sanctioned (section 365ff of the Commercial Register Regulation). 118. In addition to the above-mentioned commercial law rules, all taxpayers have a general obligation to keep and maintain books of account and records (section 29 of the General Tax Law).

Underlying documentation (ToR A.2.2)


119. The Commercial Code specifies that businesses must keep not only the books, but also correspondence, documentation and receipts related to their business, duly ordered (section 30). 120. In addition, if tax returns are filed electronically, the taxpayer must keep copies of the original data underlying the accounting statements filed. Taxpayers also have an obligation to preserve invoices, documents and evidence related to tax obligations. Not doing so is an offence punishable by a fine (sections 29 and 200 of the General Tax Law). 121. Finally, Spain being an EU Member State, and hence part of the intracommunity VAT system, Spanish companies must fulfil specific requirements regarding documentary evidence of transactions performed. They must in particular keep all invoices issued and received (section 62 of the Act 37/1992 on Value Added Tax).

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122. These various requirements ensure that the accounting requirements of Spanish companies include the requirement of keeping supporting documentary evidence for the transactions performed.

5-year retention standard (ToR A.2.3)


123. The Commercial Code requires that accounting books and underlying documentation be kept by the business entity itself or with any authorised person for six years (sections 25 and 30 of the Commercial Code). This retention period is not altered with the death of the business person, the cessation of activities or the dissolution of the company (section 30). In practice, the tax administration keeps information indefinitely, and 124. the local Commercial Register keeps all accounting information it receives for longer than the legal 6 years retention period (section 377 of the of the Commercial Register Regulation).

Accounting information exchanged in practice


125. Spain exchange information on contracts and commercial operations among companies, accounting documents such as annual accounts, financial statements and balance sheets, accounting entries such as payments and receipts, bills, analysis of patterns of intra-group financing (tax relevance in relation to interests), and the purchase and rent of moveable and immoveable properties possessed in Spain. Information exchanged also encompasses relevant documentation and information on the methods of payments. 126. No EOI partner of Spain indicated that they had not received the information requested because this type of information was not available.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

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A.3. Banking information


Banking information should be available for all account-holders.

127. Access to banking information is of interest to the tax administration only if the bank has useful and reliable information about its customers identity and the nature and amount of financial transactions. 128. In Spain, financial institutions have full identity information on their clients, as noted above, in application of the anti-money laundering law. They also keep full records of their financial transactions.

Record-keeping requirements (ToR A.3.1)


129. Financial institutions, as any commercial entity, are subject to the accounting requirements of the Commercial Code, including the obligation to keep books, correspondence, documentation and receipts related to their business for six years. 130. In addition, section 25 of Act 10/2010 on Combating Money Laundering and Terrorist Financing imposes know-your-customer obligations on banks and requires them to keep documents relating to the transactions performed by their customers for ten years. 131. The tax administration itself possesses in its central database a certain amount of banking information periodically provided by banks in tax information returns. First, banks and credit institutions must annually provide the tax administration with the list of all the opened bank accounts.27 The information returns also indicate the balance of the account on 31 December and the average balance over the last quarter of the year.28 They must subscribe another annual information return that lists all the loans provided above EUR 6 000 and all cash deposits above EUR 3 000 with details of the dates and bank accounts involved.29 These annual returns must
27. 28. They must also provide information on accounts opened in Spanish banks abroad, except for accounts opened by non Spanish tax residents and without a permanent establishment in Spain. Section 37 of the General Regulation on Tax Auditing; the corresponding tax returns n196 and 291 are regulated by Order EHA/3300/2008 of 7 November (BOE of 18 November) and Order EHA/3202/2008 of 31 October (BOE of 10 November) respectively. Section 38 of the General Regulation on Tax Auditing; the corresponding tax return n181 is regulated by Order EHA/3514/2009 of 29 December (BOE or 31 December). The tax administration also receives annual returns informing them of the use by businesspersons and professionals or a credit or debit card

29.

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include the complete identification of the account holders, authorised persons and beneficiaries, i.e. name and surname of natural persons, full name of legal entities, as well as their tax identification number. 132. In some cases, the information must be provided quarterly. For instance, a person who wishes to open a bank account (or otherwise enter into a relationship with financial institutions in Spain)30 must present a TIN within 15 days of the operation, and no transaction can be carried out until the TIN is provided (or the passport and tax residence certificate for foreigners). Financial institutions are required to report on a quarterly basis to the tax administration the clients that have not provided a TIN, or provided it after 15 days.31 133. In addition, Spanish law requires banks to annually inform the tax authorities of the interests they paid and to whom, any income paid by banks and from any foreign securities when these institutions have received them in deposit or to operate them as account managers, the issuing and transfer of securities including public debt, and the transfer of mortgage securities in which credit institutions intervene. 134. Finally, sections 45 to 49 of the General Regulation on Tax Auditing regulate the obligations on information regarding certain income obtained by individuals resident in other Member States of the European Union, in application of Council Directive 2003/48/EC of 3 June 2003 on taxation of Savings Income in the form of Interest Payments. As a result, Spain automatically exchanges at least once a year information about the income obtained by individuals resident in other Member States. 135. As a result, the tax administration knows to which bank account number a taxpayer relates.32 In practice all those tax returns are filled in and transmitted electronically to the tax administration, which consolidates the information into its database.
for more than EUR 3 000, pursuant to section 38bis and the corresponding form n170 (Order EHA/97/2010 of 25 January (BOE of 30 January). Banks must also annually inform the tax administration of some checks above EUR 3 000 (section 41 General Regulation on Tax Auditing). This obligation applies to Spanish financial institutions as well as foreign institutions operating in Spain through branches or under the freedom to provide services. Additional Provision Six to the General Tax Law and sections 28 and 40 General Regulation on Tax Auditing. The corresponding tax return n195 is regulated by Order of 21 December 2001 (NOE of 29 December). If the information sought refers to a period that has not yet been informed in the tax declarations referred to above, the tax administration can specifically request the information from the bank.

30. 31. 32.

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Banking information requests in practice


136. In practice, many of Spains treaty partners have indicated that they have received the banking information requested. These include bank statements and information on interests, transfers, transactions, but also simple questions such as whether an individual holds a bank account in Spain. 137. When the supposed account holder is an individual, Spain has on some occasions been unable to locate the person with the few identification elements provided, especially because many persons in Spain have the same names and surnames. Spains EOI partners have indicated that on those occasions Spains tax authorities asked for more information and tried to locate the person.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

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B. Access to information

Overview
138. A variety of information may be needed in a tax enquiry and jurisdictions should have the authority to obtain all such information. This includes information held by banks and other financial institutions as well as information concerning the ownership of companies or the identity of interest holders in other persons or entities, such as partnerships and trusts, as well as accounting information in respect of all such entities. This section of the report examines whether Spains legal and regulatory framework gives the authorities access powers that cover all relevant persons and information and whether rights and safeguards are compatible with effective exchange of information. It also assesses the effectiveness of this framework in practice. 139. The Spanish authorities have much information for identifying the owners of legal entities in its database, thanks to annual statements filed by taxpayers and periodic declarations from third parties. The competent authority can thus respond to 40% of the requests received without resorting to its information gathering powers. 140. The Spanish authorities make use of their powers available for domestic taxation purposes in order to exchange information. The Spanish tax administration has broad powers of access to accounting and banking information and to data on the ownership of legal entities, pursuant to the General Tax Law and the General Regulation on Tax Auditing. In particular, these powers allow the authorities to request information from any taxpayer and from third parties who may have the information sought. Banking secrecy is lifted in tax matters. There are enforcement measures available to compel the disclosure of information, but they scarcely need to be used. This legal framework allows the Spanish tax authorities to collect the information requested by their partners. 141. There are no rights of appeal against exchange of information per se, although there is a general right of appeal against action of the administration.

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There is no indication that this right is incompatible with effective exchange of information.

B.1. Competent Authoritys ability to obtain and provide information


Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information).

142. The Spanish competent authority, which handles EOI requests, is the head of the Information Office of the Spanish Tax Administration (ECI: Equipo Central de Informacin, see C.5.2 below on resource and organisational process). This office gathers information for both domestic and international tax purposes. 143. In practice, Spain received almost 500 EOI requests in 2010.33 Of those, 41% were answered on the basis of the information contained in the tax database and files; 25% were answered after ECI requested information to a third person (e.g. other public authorities, notaries or banks), and 34% were dealt with by local or national tax offices that required the information from taxpayers. Whether ECI requires information itself or the task is delegated to the tax office that manages the tax situation of the person concerned, they all use the same information gathering powers. 144. The tax administration can ask any person to provide any type of information in connection with the tax obligations of a person or in relation to third person. Section 29 of the General Tax Law gives a broad picture of the obligations of taxpayers, and clearly indicates, inter alia, that taxpayers must fulfil their obligation of providing the tax authorities with such books, records, documents or information as the taxpayer is under a duty to preserve in connection with the performance of his/her own or third parties tax obligations, and any data, report, background particulars or evidence having significance for tax purposes, on demand by the tax authorities or by means of periodic returns. 145. Section 93(1) of the General Tax Law further defines the obligation of information as follows: A natural or legal person, whether public or private, and any entity referred to in article 35(4) of this Act34 is under a duty to provide to the tax authority any type of data, reports, background particulars and evidence having tax significance in connection with the performance of their own tax obligations or linked to their economic, professional or
33. 34. Spain received 465 EOI requests in 2009, 396 in 2008 and 487 in 2007. I.e. any entity without legal personality but subject to tax

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financial relations with others. Section 93 does not set any deadline or limitation period for information requests and officials of different tax offices met during the visit confirmed that they have the ability ask information on the basis of section 93 even though it dates back more than four years (the statute of limitations for domestic tax audits). The general principle of section 93(1) is then developed in section 93 for all persons including banks, and section 94 for public officials,35 to be read in conjunction with sections 55 to 57 of the General Regulation on Tax Auditing, dealing respectively with the general obligation, obligations for public officials and access to bank information, as set below.

Ownership and identity information (ToR B.1.1) and Accounting records (ToR B.1.2) Legal and regulatory framework
146. Information on the ownership of corporations (companies and partnerships) and sociedades civiles (non-commercial entities) are often already in the tax administration database, thanks to the mandatory declarations of information, and annual declarations these entities make, but also to the periodic declarations made by third parties such as public notaries and the Commercial Registry.36 Similarly, the tax administration has a direct access to some accounting information, thanks to its direct access to the Commercial Register, including deposited annual accounts of commercial entities (see Part A above). If more detailed information is requested from the competent author147. ity, it may use the reporting duty of sections 93 and 94 of the General Tax Law that covers all types of information, thus including ownership and accounting information.

35.

36.

Section 94 sets the same principle of general access to information, but dedicated to public authorities. It specifies that the requested public authority does not need to obtain the consent of the person concerned before providing the tax administration with information. In particular, the Spanish FIU must provide the tax administration with any information of tax relevant it may request, provided that the request comes from the director of the concerned tax department (section 94(4) of the General Tax Law and section 56 of the General Regulation on Tax Auditing). For instance section 50 of the General Regulation on Tax Auditing establishes the obligation for the heads of the public registries to present a monthly declaration, which includes information on the entities that have been formed, modified or dissolved during that period (informative tax return form 038).

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148. Section 55 of the General Regulation on Tax Auditing specifies that the tax authorities must indicate the name and tax identification number of the person that is requested to provide information, and the time-period for answering the request. The tax administration provides a deadline for answering the request that cannot be less than 10 working days. Alternatively, tax officials can visit the person, without prior notification, when the officials simply take note of the documents, elements of information and underlying documentation. If, however, these documents are not among those that the person must maintain by law, the person must be given a 10 day notice, to allow him/her to gather the information requested.

Practice
149. In practice, the Spanish competent authority regularly exchanged ownership and identity information, as well as accounting information over the last three years. Ownership information is mostly contained in the tax database, but on some occasions the competent authority obtained the information from the Commercial Register. The competent authority does not usually need to request ownership and identity or accounting information from the entities themselves. 150. Where the information must be obtained from the entity itself, Spanish officials usually make a request in writing and give the person 15 days to answer. Occasionally, Spanish officials will visit companies to obtain accounting information, especially concerning small companies for which this way of action is simpler than requiring them to gather the information. The competent authority indicated that the persons requested generally respect the deadline allocated to provide the information. 151. When the involvement of a local tax office is required, specifically for collecting accounting information, the competent authority generally gives the local tax office a four month deadline to send the information. 152. No EOI partner of Spain indicated that they had not received the information requested because this type of information was not available or not accessible in Spain.

Use of information gathering measures absent domestic tax interest (ToR B.1.3)
153. The concept of domestic tax interest describes a situation where a contracting party can only provide information to another contracting party if it has an interest in the requested information for its own tax purposes. 154. Section 61(3) of the General Regulation on Tax Auditing on the exercise of powers expressly indicates that the Spanish competent authority must

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assist treaty partners and exchange the necessary information. This provision further expressly provides that the enforcement department of the tax administration may carry out actions at the request of the authorities of other states. Gathering information for EOI purposes is therefore part of the duties of the tax administration, and the competent authority (which belongs to an enforcement department) can use all its available powers for EOI purposes.

Enforcement powers (ToR B.1.4)


155. Jurisdictions should have in place effective enforcement provisions to compel the production of information. The General Tax Law and the General Regulation on Tax Auditing provide for compulsory measures.

Sanctions for non-disclosure


156. Not responding to an information request constitutes the serious tax offence of resistance, obstruction, excuse or refusal of the tax authoritys operations (article 203 of the General Tax Law). Providing false or incomplete non monetary information is punished by a fine of EUR 200 per false data. If it relates to monetary information, the minimum fine is EUR 500, plus a percentage of the amount concerned (Section 199 of the General Tax Law). The same penalties apply whether the information is sought for domestic or foreign tax purposes: entities or persons conducting economic activities that do not respond to a request for accounting information are punishable by a EUR 300 fine after the first refusal, EUR 1 500 after the second refusal, and after the third refusal to a fine equivalent to 2% of the sales volume of the previous year, not exceeding the limits of EUR 10 000 to 400 000. For other persons, the sanctions are respectively EUR 150, 300 and 600.

Search and seizure


157. The Spanish authorities can search business premises and seize documents for EOI purposes, in the framework of a domestic tax audit (section 142(2) of the General Tax Law), provided they obtained the consent of the person or a judicial order to enter private premises (section 113). 158. The Spanish authorities can seize documents, pursuant to section 146 of the General Tax Law, together with section 181 of the General Regulation on Tax Auditing. The tax administration can put under seal, deposit or seize documents in the framework of a tax audit, when the measure is necessary to prevent the destruction or alteration of evidence of tax obligations.

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Use of enforcement measures


159. The Spanish authorities indicated that in practice taxpayers do comply with information requests, and they could not remember cases for which fines had to be imposed against persons refusing to provide information.37 They also indicated that it happened once, over the last three years, that they opened a tax audit for EOI purposes. It more frequently happens that a tax audit is already ongoing at the time of receiving an EOI request, in which case the responsible tax officials collect information for both domestic and foreign tax purposes at the same time. This situation occurs generally in relation to large companies, which are more frequently audited than others.

Secrecy provisions (ToR B.1.5)


160. Professional secrecy is protected by the Constitution.38 Professional secrecy and privacy are dealt with in section 93(5) of the General Tax Law, while bank secrecy is dealt with separately in section 93(3).

Confidentiality rules corporate secrecy


161. Section 93(5) of the General Tax Law provides: The obligation of other professionals to supply information having tax significance to the tax authorities does not extend to non-economic private data known to them by reason of the pursuit of their business and the disclosure of which would violate the right to honour or personal and family privacy. Therefore professional secrecy is lifted vis--vis the tax administration for economic data (e.g. assets and wealth) and for non-economic data that would not violate the right to honour or personal and family privacy.39 The Spanish authorities indicate that as concerns auditors, the tax administration can ask them to provide the audit report they have prepared on a company, but not their working papers (e.g. informal communications with the client, documented personal opinions in non-official papers, etc.). 162. The same provision applies with regard to attorney-client privilege: the obligation of professionals to supply information having tax significance does not extend to such of their clients confidential data as are known to them as a result of the provision of professional services of legal advice or defence, which corresponds to the definition of attorney-client privilege in
37. 38. 39. No data exist as regard the compliance rate for EOI purpose as opposed to domestic purposes. Article 20-1(d). The Constitutional Court recognised professional secrecy of attorneys in a decision dated 20 June 1994. Section 93(5) further provides that A professional may not rely on professional confidentiality to prevent the verification of his own tax position.

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Article 7(3) of the Model TIEA. The Spanish authorities indicate that this does not cover advice on tax schemes. 163. The Spanish competent authority and its EOI partners indicate that professional secrecy never caused any problem in practice.

Bank secrecy
164. Bank secrecy in Spain derives from the right to privacy of Article 81.1 of the Constitution. It is codified in Act 26/1988 requiring financial institutions to keep client information confidential, with the exception of information which the law allows to be communicated. 165. Banks and other financial institutions, as is the case with any legal person, are covered by the reporting duty of section 93 of the General Tax Law on information gathering powers, in addition to the provisions requiring them to periodically provide certain types of information to the tax administration (see section A.3 above). As discussed in A.3 above, the tax administrations database already contains extensive bank information, including the account numbers of all taxpayers. Therefore the Spanish competent authority can, with a full account number, provide treaties partners with the name of the holder of that account. Should details of a bank account be requested, such as movements, the tax administration must gather the information from the bank. 166. Section 93(3) expressly provides that banking confidentiality may not be relied upon to avoid the performance of the obligations under this article. Bank secrecy being protected in Spain, section 93(3) further provides that requests for information made directly to a bank must be authorised by such organ of the tax authority as regulations may determine (i.e. the head of department of the tax official looking for the information), and based on justified reasons. Having received an EOI request based on one of the DTCs or TIEAs of Spain is a justified reason. 167. Any type of banking information can be requested, including all or some of the account movements, financial transactions, supporting documents thereof, identity of the holder of the account of origin or destination of the movements, cheques, or other debit or credit entries. 168. Section 93(3) specifies that an individual request [to a bank] must specify the identifying details of the cheque or payment order in question or the transactions under investigation; the taxpayers concerned, the account holder or authorised account user; and the period of reference. 169. Information can be requested in writing (usually by electronic means) or by a visit to the bank, which cannot take place before a period of 15 days after the bank was notified of the request (two reminders are sent before penalties are applied).

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170. In practice, EOI requests that relate to banking information that the tax administration does not already have in its database are sent to a central, national office of the tax administration dedicated to the gathering of information from financial institutions (ARES ) for both domestic and exchange of information purposes. The authorisation of the head of department has always been granted in EOI cases. Banking information is not usually requested from the taxpayer directly. 171. The main difficulty experienced by the Spanish competent authority in obtaining information in order to respond to requests from EOI partners relates to the identification of the person subject of the request. It is not uncommon that several dozen persons have the same name and surname in Spain. This difficulty usually does not arise for ownership or accounting information, since two legal entities cannot have the same name, but arises particularly for bank information or tax information in respect of individuals. The Spanish authorities need another identifying element such as a date of birth or address, or, ideally, the tax identification number of the person. A number of Spains partners indicated that some requests were not answered because of this practical problem and acknowledged Spain did its best to identify the persons concerned.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

B.2. Notification requirements and rights and safeguards


The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information.

Not unduly prevent or delay exchange of information (ToR B.2.1)


172. Rights and safeguards should not unduly prevent or delay effective exchange of information. For instance, notification rules should permit exceptions from prior notification (e.g. in cases in which the information request is of a very urgent nature or the notification is likely to undermine the chance of success of the investigation conducted by the requesting jurisdiction).

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173. The Spanish domestic law does not require the notification of the person who is the object of an EOI request. In addition, when requesting information to a person, the Spanish tax authorities do not have to inform the person of the purpose of the request. 174. The request for information based on section 93 of the General Tax Law may be appealed, in the same way and under the same conditions as any other administrative act of the tax administration, pursuant to sections 213249 of the law, for instance if the requested person considers that the official having signed the request pursuant to section 93 has no competence to do it, or because it violates his/her rights and liberties. This appeal suspends the procedure only insofar as the taxpayer expressly requested it and the tax office concerned accepted it. The taxpayer cannot appeal against the decision of delivering the information to a treaty partner. 175. In practice, Spain responds to most EOI requests without informing the person concerned. If the information requested is not available in the tax administration database, it is requested from the person concerned, and the representatives of several tax departments met with during the on-site visit indicated that when they collect information with the person concerned, they do not inform him/her of the purpose of the request either. 176. The practice is different in the Large Taxpayers Department, where the tax official usually informs the taxpayer that the request is linked to an EOI request (when made directly to the taxpayer), unless the partner jurisdiction specifically asked to not inform the person. The official may, with the prior approval of the requesting partner, show the request letter to the lawyer of the taxpayer. This specificity is linked to the fact that large taxpayers are very frequently under investigation. 177. The Spanish competent authority has not reported having experienced practical difficulties with the application of rights and safeguards, nor have its EOI partners. Very few legal challenges of the use of information gathering measures happened in the past, and none was made in an EOI case.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

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C. Exchanging information

Overview
178. Jurisdictions generally cannot exchange information for tax purposes unless they have a legal basis or mechanism for doing so. A jurisdictions practical capacity to effectively exchange information relies both on having adequate mechanisms in place as well as an adequate institutional framework. This section of the report assesses Spains network of EOI agreements against the standards and the adequacy of its institutional framework to achieve effective exchange of information in practice. 179. Spain has a wide network of agreements that provide for exchange of information in tax matters that cover a total of 99 partner jurisdictions. These include 89 double tax conventions, 7 tax exchange of information agreements, EU instruments and a multilateral convention (see annex 2). Spain continues negotiating new DTCs and TIEAs. Spain is also negotiating a number of protocols or new treaties with its current partners with a view to modernise or upgrade the EOI provisions of its existing treaties. 180. Spain has never refused to negotiate an EOI agreement with another member of the Global Forum, but has difficulties signing with some nonsovereign jurisdictions. Spain is discussing with these jurisdictions and the jurisdiction assuming international obligations on their behalf, to find a pragmatic solution. 181. All EOI mechanisms and the Spanish law include confidentiality provisions. These provisions apply equally to the information and documents contained in any request received by Spain as they do to the replies actually sent to the partner. Moreover, the treaties and TIEAs concluded by Spain guarantee that the parties involved will not be obliged to reveal information regarding an industrial, business or professional secret, or confidential communications between a client and an attorney, or to disclose information that would be contrary to public policy (ordre public).

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182. In practice, one third of these instruments have been used over the last three years for purposes of obtaining information from Spain: Over the last three years Spain has received 1 371 exchange of information (EOI) requests from 39 of its treaty partners, with the majority being from France and the United Kingdom (together accounting for 54% of the received requests), followed by Germany, Portugal and Sweden. These five partners represent together 70% of the requests received by Spain, and all exchange information to the standard. Spain has not yet received EOI requests based on a TIEA. 183. Treaty partners of Spain indicated that Spain is a very good EOI partner, although, when the competent authority is not in a position to respond within 90 days, it advises requesting jurisdictions of the status of their requests only when expressly reminded.

C.1. Exchange of information mechanisms


Exchange of information mechanisms should allow for effective exchange of information.

184. The EOI instruments signed by Spain indicate that the competent authority is the Minister of Finance or his authorised representative. The Spanish delegated competent authority is the head of the Information Office of the Spanish Tax Administration (Equipo Central de Informacin, ECI). 185. Spain can exchange information on several bases: double tax conventions (DTCs), Tax Information Exchange Agreements (TIEAs), EU instruments and a multilateral instrument. Spain has signed 89 DTCs and 7 TIEAs,40 of which 10 are not in force. 186. Spain is able to exchange information with other EU member states41 under the EU Council Directive 77/799/EEC of 19 December 197742 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums, and Directive 2011/16/EU of 15 February 2011 on administrative co-operation in the field of
40. Spain signed TIEAs with Andorra; Aruba; The Bahamas; Curacao; the Netherlands as concerns only Bonaire, San Eustache and Saba; Saint Maarten; and San Marino. It also initialled TIEAs with Bermuda, the Cayman Islands, the Cook Island, St. Lucia, and St. Vincent and the Grenadines. Austria, Belgium, Bulgaria, Cyprus (see footnote below), the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. This Directive came into force on 23 December 1977 and all EU members were required to transpose it into national legislation by 1 January 1979. It has been amended since that time.

41.

42.

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taxation, which repeals Directives 77/799/EEC from 2013.43 This is the basis for exchange of information with Cyprus44 and Denmark, since Spain has no bilateral agreements in place with these partners. Spain also heavily relies on this instrument to exchange information with other EU members the treaty with which may be old and EOI provision not to the standard.45 Spain is also bound by the Savings Directive 2003/48/EC and Community Regulation 1798/2003 on VAT. The Directives do not prejudice the fulfilment of any obligations of the Member States in relation to wider administrative co-operation ensuing from other legal instruments, including bilateral or multilateral agreements.46 187. In 2009 Spain became a signatory to the multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention), which is in force with respect to 17 jurisdictions.47 The Convention provides for all possible forms of administrative co-operation between parties in the assessment and collection of taxes, in particular with a view to combating tax avoidance and evasion. Spain is also a signatory to the protocol to this convention. The protocol and the updated convention which entered into force on 1 June 2011 provide for exchange of information to the standard. Spains exchange of information with Azerbaijan and Georgia occurs exclusively under this Convention as Spain has no bilateral agreements with these partners.
43. 44. The new directive entered into force on 11 March 2011. Directive 77/799/EEC is repealed with effect from 1 January 2013 and transposition of the new Directive must be completed by that date. Footnote by Turkey: The information in this document with reference to Cyprus relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of United Nations, Turkey shall preserve its position concerning the Cyprus issue. Footnote by all the European Union member states of the OECD and the European Commission: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus. For instance the EOI provision of the DTC with the Netherlands allows exchange of information at the disposal of the tax authorities only, and excludes bank information. A rticle 11 of Directives 77/799/EEC and article 1(3) of the Directive 2011/16/UE. Azerbaijan, Belgium, Denmark, Finland, France, Georgia, Iceland, Italy, the Netherlands, Norway, Poland, Slovenia, Sweden, the Ukraine, the United Kingdom and the United States. In addition, Canada, Georgia, Germany, Korea, Mexico, Moldova and Portugal have signed but not ratified the Convention, for a total of 23 signatories as of 21 May 2011.

45. 46. 47.

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Other forms of information exchange


188. In addition to exchanging information upon request, Spain exchanges information automatically and spontaneously. Automatic (or ex officio) exchanges take place with 30 partners, including under the Savings Directive. This has an impact on the volume and nature of information requests: on one hand, exchanging information automatically reduces the number of requests by anticipating them. Automatic exchanges can also spark requests that would not otherwise have been made, if the information thus supplied allows a foreign tax authority to detect situations that deserve investigation. 189. Spain also increasingly exchanges information spontaneously with its treaty partners (more than 20 in 2009). Where Spains tax authorities identify information that is relevant to the administration or enforcement of an exchange of information partner (for example, where they find evidence suggesting that a tax fraud has been committed in the partner state) they are able to transmit this information without the need for a prior request. 190. Simultaneous tax examinations are possible within the European Union if several Member States have a mutual or complementary interest in the situation of one or more taxpayers. In this case each Member conducts an examination within its own territory and exchanges the information thus obtained. This procedure is used whenever such examinations appear more effective than separate investigations.48 Spain also accepts that foreign tax officials enter the territory to passively participate in interviews, but this is quite rare, and foreign authorities rather send questionnaires to their Spanish counterparts. Finally Spain recently started to accept requests for service of notifi191. cations as a result of which its competent authority notifies the addressee of instruments and decisions which emanate from foreign tax authorities. This type of administrative assistance is also provided for in some of the TIEAs signed by Spain recently.

Foreseeably relevant standard (ToR C.1.1)


192. The international standard for exchange of information envisages information exchange upon request to the widest possible extent. Never theless it does not allow fishing expeditions, i.e. speculative requests for information that have no apparent nexus to an open inquiry or investigation. The balance between these two competing considerations is captured in the standard
48. Simultaneous audits mainly relate to VAT issues concerning multinational corporations (on the basis of EC Regulation 1798/2003), direct taxes (Directive 77/799) and excise duties (Directive 2073/2004).

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of foreseeable relevance which is included in paragraph 1 of Article 26 of the Model Tax Convention set out below: The competent authorities of the contracting states shall exchange such information as is forseeably relevant to the carrying out of the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the contracting states or their political subdivisions or local authorities in so far as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2. 193. Spanish EOI mechanisms either use the words foreseeably relevant, for the more recent DTCs and TIEAs, or necessary. The commentary to Article 26 of the Model Tax Convention, paragraph 5, refers to the standard of foreseeable relevance and states that the Contracting States may agree to an alternative formulation of this standard that is consistent with the scope of the Article, for instance by replacing foreseeably relevant with necessary or relevant. The Spanish authorities confirm that they make no distinction between the two terms. All these agreements therefore meet the foreseeably relevant standard.49 194. The treaty with Morocco restricts exchange of information to carrying out the provisions of the present Convention. Therefore it does not cover all information that may be foreseeably relevant to the implementation of the administration or enforcement of the domestic laws of the parties and Spain should renegotiate this treaty. The protocol contained in the newly signed DTC with Panama states, 195. among other things, that the assistance provided for in Article 26 (Exchange of Information) does not include (i) measures aimed only at the simple collection of pieces of evidence, or (ii) when it is improbable that the requested information will be relevant for controlling or administering tax matters of a given taxpayer in a Contracting State (fishing expeditions). It is unclear how these provisions would interact with the foreseeably relevant standard although Spain indicates that they are not expected to interact negatively. In addition, the conditions required by the Protocol are unduly restrictive, requiring, inter alia, that the requesting jurisdiction has pursued all means available in its own territory to obtain the information, without providing for an exception where pursuing all means would give rise to disproportionate difficulties.
49. More generally, some DTCs expressly indicate that the treaty should be interpreted in light of the Commentaries to the OECD Model Tax Convention (e.g. DTCs with Albania, Salvador).

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196. In practice, Spain considers that it very rarely receives EOI requests that it may qualify as fishing expeditions. The Spanish competent authority could only remember two requests it rejected, because the requesting jurisdiction had not explained the purpose of the request and asked for information on a category of persons in one case, rather than identified persons.

In respect of all persons (ToR C.1.2)


197. For exchange of information to be effective it is necessary that a jurisdictions obligation to provide information is not restricted by the residence or nationality of the person to whom the information relates or by the residence or nationality of the person in possession or control of the information requested. For this reason the international standard for exchange of information envisages that EOI mechanisms will provide for exchange of information in respect of all persons and paragraph 1 of Article 26 of the Model Tax Convention indicates that The exchange of information is not restricted by Article 1 that defines the personal scope of application of the Convention.50 198. Some DTCs do not contain the sentence indicating that the exchange of information is not restricted by Article 1 (persons covered). However, Spain advises that they interpret the EOI provision of those treaties as allowing for exchange of information with respect to all persons, residents and non-residents. In no instance has Spain refused to exchange information, or been refused the exchange of information by an EOI partner, on this basis. 199. The treaty with Morocco, dated 1978, restricts exchange of information to carrying out the provisions of the present Convention, i.e. double taxation. In this case, exchange of information is limited to residents because Article 1 of the treaty indicates that it applies to persons who are residents of one or both of the Contracting States. The treaty with Morocco does not meet the standard. 200. The DTC between Spain and Switzerland contains an EOI provision that does not provide for exchange of all foreseeably relevant information. However, there is a most favoured nation clause as against the treaties concluded by Switzerland with other EU member states, with the result that information may be exchanged consistently with the standard in respect of element C1 under the Swiss-Spanish agreement. 201. The TIEAs signed by Spain contain a provision concerning jurisdictional scope which is equivalent to Article 2 of the Model TIEA and which

50.

DTCs apply to persons who are residents of one or both of the Contracting States.

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conforms to the international standard.51 The TIEA with San Marino also specifies that information should be exchanged whatever the residence, nationality or citizenship of the person concerned or who possesses the requested information.

Exchange information held by financial institutions, nominees, agents and ownership and identity information (ToR C.1.3)
202. Jurisdictions cannot engage in effective exchange of information if they cannot exchange information held by financial institutions, nominees or persons acting in an agency or a fiduciary capacity. Both the Model Tax Convention and the Model Agreement on Exchange of Information, which are the authoritative sources of the standards, stipulate that bank secrecy cannot form the basis for declining a request to provide information and that a request for information cannot be declined solely because the information is held by nominees or persons acting in an agency or fiduciary capacity or because the information relates to an ownership interest.

Bank information
203. The TIEAs concluded by Spain explicitly forbid the requested jurisdiction from declining to supply the information requested solely because it is held by a financial institution, nominee or person acting in an agency or a fiduciary capacity, or because it relates to ownership interests in a person, in conformity with Article 5(4) of the Model TIEA. 204. Apart from the recent DTCs, many of Spains DTCs currently in force do not include a similar provision (equivalent to Article 26(5) of the Model Tax Convention). However, the absence of this paragraph does not automatically create restrictions on exchange of bank information in Spain. The commentary on article 26(5) indicates that whilst paragraph 5 (added to the Model Tax Convention in 2005) represents a change in the structure of the Article, it should not be interpreted as suggesting that the previous version of the Article did not authorise the exchange of such information. Spain has access to bank information for tax purposes in its domestic law (see section B), and pursuant to its treaties is able to exchange this type of information when requested, on a reciprocal basis, i.e. where there are no domestic impediments to exchange bank information in the case of the requesting party.
51. Model Article 2: A requested party is not obligated to provide information which is neither held by its authorities nor in the possession or control of persons who are within its territorial jurisdiction. This sentence is also included in the protocol to the DTC with the United Arab Emirates.

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205. The DTC with Saudi Arabia does not contain an equivalent of Article 26(5) but its protocol provides that as long as the domestic laws of the parties so allow, both shall exchange any information held by a bank, other financial institution, etc. It therefore expressly conditions exchange of bank information to reciprocity. Also a protocol to the DTC with Costa Rica provides that bank information will be exchanged, using the information gathering measures at the disposal of the competent authority concerning their residents and, where needed, upon a court decision. It is unclear whether Costa Rica and Saudi Arabia have full access to bank information and whether Spain could refuse to provide them information, based on reciprocity. 206. Until July 2011, Belgium could not exchange bank information absent full paragraph 5 and the treaty is therefore not to the standard. Spain already signed a protocol to the Belgian treaty that meets the standard.52 The protocol to the DTC with the Netherlands expressly excludes exchange of information from banks and insurance companies. In these cases Spain and the Netherlands exchange information on the basis of the EU Directives. 207. The DTC with Switzerland restricts exchange of bank information to the cases of tax fraud and is therefore more restrictive than the standard. It also contains a most favoured nation clause and Switzerland has signed more favourable EOI instruments since then, in particular a DTC with France that does not limit exchange of bank information to cases of tax fraud. 208. In practice, when Spain receives an EOI request from a jurisdiction, with whom the treaty does not contain Article 26(5), the tax authorities check whether this jurisdiction would be able to provide banking information on the basis of reciprocity.

Absence of domestic tax interest (ToR C.1.4)


209. The concept of domestic tax interest describes a situation where a contracting party can only provide information to another contracting party if it has an interest in the requested information for its own tax purposes. An inability to provide information based on a domestic tax interest requirement is not consistent with the international standard. Contracting parties must use their information gathering measures even though invoked solely to obtain and provide information to the other contracting party. 210. Apart from the recent DTCs, many of Spains DTCs currently in force do not include the provision contained in Article 26(4) of the OECD Model Tax Convention, which states that the requested party shall use its information gathering measures to obtain the requested information, even
52. Belgium amended its domestic law on 1 July 2011 and may be able in future to exchange bank information with Spain on the basis of reciprocity.

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though that [it] may not need such information for its own tax purposes. However, the absence of a similar provision in other treaties does not in principle create restrictions on exchange of information provided there is no domestic tax interest impediment to exchange information in the case of either contracting party (see Commentary 19.6 to the OECD Model Tax Convention). 211. Spains domestic powers to access relevant information are not constrained by a requirement that the information must be required for a domestic tax purpose. In addition, the Spanish authorities indicated that in practice they do not exercise reciprocity on this basis and therefore do not question whether a requesting party knows a domestic tax interest. No issue has ever arisen in practice. 212. All of the TIEAs concluded by Spain explicitly permit the information to be exchanged, notwithstanding that it may not be required for a domestic tax purpose.

Absence of dual criminality principles (ToR C.1.5)


213. The principle of dual criminality provides that assistance can only be provided if the conduct being investigated (and giving rise to an information request) would constitute a crime under the laws of the requested jurisdiction if it had occurred in the requested jurisdiction. In order to be effective, exchange of tax information should not be constrained by the application of the dual criminality principle. There are no dual criminality provisions in the Spanish DTCs and TIEAs53 and no issue linked to dual criminality arose in practice.

Exchange of information in both civil and criminal tax matters (ToR C.1.6)
214. Information exchange may be requested both for tax administration purposes and for tax prosecution purposes. The international standard is not limited to information exchange in criminal tax matters but extends to information requested for tax administration purposes (also referred to as civil tax matters). All of the EOI article in DTCs signed by Spain may be used to obtain information to deal with both civil and criminal tax matters. 215. Some recent DTCs contain the explicit wording of Article 26(1) of the OECD Model Tax Convention, which refers to information foreseeably
53. While DTCs are usually silent on this issue, the protocols to a few recent DTCs expressly provide that dual criminality does not apply (e.g. Jamaica, Panama, United Arab Emirates, Trinidad and Tobago, and Uruguay).

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relevant for carrying out the provisions of this Convention or to the administration and enforcement of the domestic [tax] laws. The TIEAs make express provision to this effect in their article 1. Most DTCs refer more broadly to information necessary for carrying out the provisions of the Convention or of the domestic laws concerning taxes covered by the Convention, without excluding either civil nor criminal matters.54 216. The only jurisdiction with which information in civil and criminal matters could not be exchanged is Morocco, the DTC with which limits exchange of information to the application of the Convention, i.e. to civil matters.

Provide information in specific form requested (ToR C.1.7)


217. In some cases, a Contracting State may need to receive information in a particular form to satisfy its evidentiary or other legal requirements. Such forms may include depositions of witnesses and authenticated copies of original records. Contracting States should endeavour as far as possible to accommodate such requests. The requested State may decline to provide the information in the specific form requested if, for instance, the requested form is not known or permitted under its law or administrative practice. A refusal to provide the information in the form requested does not affect the obligation to provide the information. 218. All of the TIEAs concluded by Spain allow for information to be provided in the specific form requested, to the extent allowable under the requested jurisdictions domestic laws, on the basis of Article 5(3) of the Model TIEA. 219. On the other hand, most of Spains treaties do not expressly address this question but they do not contain any restrictions either, which would prevent Spain from providing information in a specific form, so long as this is consistent with its own administrative practices. As an exception a few recent DTCs are accompanied by a protocol that reproduces some of the provisions of the Model TIEA, including the formalism with which information can be provided (e.g. Jamaica, Panama, Trinidad and Tobago, United Arab Emirates, and Uruguay). 220. In practice, Spain does authenticate copies of original records when specifically requested by the requesting jurisdiction.

54.

In addition, the EOI article in some DTCs specifically mentions that the information exchange will occur including for the prevention of fraud and/or evasion in relation to taxes (criminal matters).

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In force (ToR C.1.8)


221. Exchange of information cannot take place unless a jurisdiction has EOI arrangements in force. Where EOI arrangements have been signed, the international standard requires that jurisdictions must take all steps necessary to bring them into force expeditiously. 222. Spain has EOI arrangements in force with 87 jurisdictions. The latest DTCs entered into force between one and two years after having been signed. Ten DTCs are signed but not yet in force. 223. Spain signed TIEAs with seven jurisdictions and initialled TIEAs with five others over the last three years. Five TIEAs are already in force and two will enter into force in August 2011.

Be given effect through domestic law (ToR C.1.9)


224. For information exchange to be effective the parties to an EOI arrangement need to enact any legislation necessary to comply with the terms of the arrangement. For a DTC or TIEA to have effect, its ratification must be authorised by the Parliament and performed by the King, and its text must be published in the Official Gazette. Once a DTC or TIEA comes into force, Spain does not need to take additional measures to make it effective.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

C.2. Exchange of information mechanisms with all relevant partners


The jurisdictions network of information exchange mechanisms should cover all relevant partners.

225. Ultimately, the international standard requires that jurisdictions exchange information with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement. Agreements cannot be concluded only with counterparties without economic significance. If it appears that a jurisdiction is refusing to enter into agreements or negotiations with partners, in particular ones that have a reasonable expectation of requiring

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information from that jurisdiction in order to properly administer and enforce its tax laws it may indicate a lack of commitment to implement the standards. 226. Spain has a very broad network of tax treaties and TIEAs covering all its significant partners. In particular, it is an EOI partner of all its neighbours and of all members of the European Union. Spain is linked to EOI arrangements with 99 jurisdictions of which 89 are in force. The oldest treaty was that signed with Austria in 1965 and the most recent ones are with Singapore and Hong Kong, China in 2011 (see Annex 2). Spain is also actively negotiating a number of new EOI instruments. 227. So far, a priority of the Spanish authorities is to modernise the network by renegotiating agreements signed in the 1960s and 1970s in order to modernise them in general, or bring them to the standard of exchange of information (e.g. Belgium, Luxembourg and Switzerland). 228. Spain is also seeking to expand its network and it has offered to open negotiations with a number of jurisdictions in Asia and the Caribbean in particular. The negotiation of a dozen of new EOI mechanisms is ongoing. 229. In no case has a member of the Global Forum reported that, after contacting Spain in order to negotiate an agreement or a protocol, it received no response or a negative response. The Spanish authorities confirm that they are willing to sign an EOI agreement with any jurisdiction that so requests. In particular, Spain has participated in all the multilateral negotiations programs of the OECD with the Pacific islands and the Caribbean. While Spain has never refused to enter into negotiations with any juris230. diction, an issue has been reported as concerns the conclusion of some treaties with a number of Overseas Territories and Crown Dependencies of the United Kingdom. Spain maintains that, according to the law of treaties, the treaty making power pertains to a sovereign State as a subject of international law. Consequently, Spain prefers to conclude exchange of information agreements directly with the UK on behalf of these jurisdictions instead of concluding the agreements directly with the jurisdictions. Accordingly, the TIEAS concluded by Spain with the former Netherlands Antilles and with Aruba have been concluded between the Kingdom of Spain and the Kingdom of the Netherlands on behalf of those jurisdictions. However, the United Kingdom view is that the UK Overseas Territories and Crown Dependencies have been entrusted by the United Kingdom to conclude such agreements and that it would not be appropriate for the UK to conclude tax exchange information agreements on behalf of these jurisdictions. Accordingly, the Overseas Territories and Crown Dependencies have concluded agreements with a number of jurisdictions on the authority of the letter of entrustment and without the intervention of the United Kingdom. As a consequence of the above mentioned different views the conclusion of some exchange of information agreements has been stalled for reasons

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not linked to exchange of information for tax purposes. The Spanish authorities indicated during the on-site visit that they are working together with the United Kingdom to solve this issue in a pragmatic fashion.
Determination and factors underlying recommendation
Phase 1 determination The element is in place, but certain aspects of the legal implementation of the element need improvement Factors underlying recommendations Recommendations

The negotiation of some exchange of Spain should continue to develop its information agreements has been stalled EOI network to the standard with all for reasons not linked to exchange of relevant partners. information for tax purposes. Phase 2 rating Largely Compliant.

C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.

231. Governments would not engage in information exchange without the assurance that the information provided would only be used for the purposes permitted under the exchange mechanism and that its confidentiality would be preserved. Information exchange instruments must therefore contain confidentiality provisions that spell out specifically to whom the information can be disclosed and the purposes for which the information can be used. In addition to the protection afforded by the confidentiality provisions of information exchange instruments, tax jurisdictions generally impose strict confidentiality requirements on information collected for tax purposes.

Information received: disclosure, use, and safeguards (ToR C.3.1) Exchange of information mechanisms
232. The provisions governing confidentiality are based on Article 26(2) of the Model Tax Convention (in its successive versions, depending on the date of signature of the treaty in question) or on Article 8 of the Model TIEA.

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Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 233. The majority of Spanish treaties as well as the EU Directives, the OECD/COE multilateral Convention and all the TIEAs provide that the information obtained in the course of a request for assistance shall be accessible only to persons directly concerned with or involved in the assessment of taxes, or the administrative control of that assessment, etc. Only the use of the first term encompasses the taxpayers or their representatives. However, the Spanish versions of the instruments indistinctly refer to the persons charged with tax duties (las personas encargadas de la gestin o recaudacin de los impuestos). The Spanish authorities indicate that their treaties follow the official translation of the Model DTC, which does not make a difference between the two English terms, and therefore information may also be communicated to the taxpayer, his/her proxy or the witnesses, as stated in Commentary 12 to the Mode Tax Convention. 234. While an instrument may allow information to be disclosed to the taxpayer, it does not oblige the competent authority to do this. In fact, there may be cases where the information is given in confidence to the requesting party and the source of the information may have a legitimate interest in preventing its disclosure to the taxpayer (see chapter B.2 above). 235. Only a few treaties substantially depart from this model text. The provisions of the DTCs with Brazil, Canada, Japan and Tunisia restrict the disclosure of information to the authorities concerned with the assessment or collection of taxes, and do not cover, in particular, disclosure of information in public court proceedings or in judicial decisions.55 236. All the TIEAs and some DTCs of Spain allow the disclosure of information exchanged for other purposes with the consent of the requested party, in accordance with Article 8 of the Model TIEA and Commentary 12.3 to the Model Tax Convention.56 The TIEAs all provide that information
55. 56. Similarly, the DTC with former-USSR provides that information shall be disclosed only to the authorities concerned with the application of the DTC. Contracting States may wish to allow the sharing of tax information by tax authorities with other law enforcement agencies and judicial authorities on

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provided to the competent authority of the requesting party may not be used for any purpose other than for the purposes stated in Article 1 without the prior express written consent of the requested party. The treaties use the formulation of Commentary 12.3: Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use. 237. In addition, Article 7(4) of the EU Directive 77/799 provides that Where a competent authority of a Member State considers that information which it has received from the competent authority of another Member State is likely to be useful to the competent authority of a third Member State, it may transmit it to the latter competent authority with the agreement of the competent authority which supplied the information. Spain indicates that it has happened in rare occasions that information received from one EU country has been shared with another country where authorisation has been sought and obtained from the first country. 238. Many of the treaties require the information exchanged to be treated as secret in the same manner as information obtained under the domestic law. Spains domestic law contains relevant confidentiality provisions under section 95 of the General Tax Law (see below). The confidentiality provisions of the DTCs with a few jurisdictions do not refer to the confidentiality provision of the domestic laws of the Contracting States. In the case of Spain, this does not prevent the enforcement of the confidentiality duty since information received from partner jurisdictions are received on the basis of a treaty signed in application of the Income Tax Act, and therefore the domestic provision assessed below will apply.

Spanish legislation
239. The maintenance of secrecy in the Contracting State receiving information is a matter of domestic laws (whether it is the requested or the requesting jurisdiction). Sanctions for the violation of such secrecy in that State are governed by the administrative and penal laws of that State. Spains domestic legislation contains relevant confidentiality provisions under section 95 of the General Tax Law: The data, reports or background particulars obtained by the tax authority in the performance of its duties is confidential, and may be used only for the effective application of the taxes or resources under its
certain high priority matters (e.g. to combat money laundering, corruption, terrorism financing). Contracting States wishing to broaden the purposes for which they may use information exchanged under this Article may do so by adding a specific provision.

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management and for the purpose of imposing applicable penalties, such that they may not be assigned or disclosed to third parties. 240. Exceptions to this rule include the disclosure of information to other tax authorities for the purpose of the performance of tax obligations in their remits, i.e. to other competent authorities for EOI purposes (section 95(1)(b)). Other exceptions cover courts and prosecutors office, Labour and Social Security Inspectorate, Financial Intelligence Unit, etc. that conform to the standard. 241. The breach of confidentiality duty is a very serious disciplinary offence, without prejudice to the criminal or civil liability that may exist. Pursuant to the Public Employee Charter Act 2007, the magnitude of the disciplinary penalty will vary from an admonishment to the removal from office, depending on the degree of intentionality or negligence, the harm done to the public interest, the repetition of the offence and the degree of involvement in the facts.

All other information exchanged (ToR C.3.2)


242. Confidentiality rules should apply to all types of information exchanged, including information provided in a request, information transmitted in response to a request and any background documents to such requests. Section 95 of the General Tax Law expressly covers background particulars and any information obtained by the tax authority in the performance of its duties. Information provided in a request is therefore confidential in Spain. 243. In practice, all information received in an EOI request is scanned and entered into the IT system of the Spanish competent authority. Different levels of access are given to the tax officials that could be involved in exchange of information. Access to files is periodically monitored. Spain and its treaty partners never faced a problem of breach of confidentiality by the Spanish tax administration.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

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C.4. Rights and safeguards of taxpayers and third parties


The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.

244. The international standard allows requested parties not to supply information in response to a request in certain identified situations where an issue of trade, business or other legitimate secret arises.

Exceptions to requirement to provide information (ToR C.4.1)


245. All of Spains DTCs ensure that the parties are not obliged to provide information which would disclose any trade, business, industrial, commercial or professional secret or information the disclosure of which would be contrary to public policy (ordre public), in a manner consistent with Article 26(3) (c) of the Model Tax Convention.57 246. The TIEAs of Spain contain similar provisions (based on the Model TIEA), as well as an express reference to the professional secrecy duties of lawyers (legal privilege), based on Article 7, paragraphs 2 and 3, of the Model TIEA.58 247. The Spanish General Tax Law does not contain any specific prohibition linked to the abovementioned reasons, apart from rules on professional secrecy and attorney secrecy discussed at section B.1.5 of the present report. 248. The Spanish competent authority has so far not received any request to which no answer was provided because an issue of trade, business or other legitimate secret arose.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.

57. 58.

The DTC with former USSR does not cover public order. A few protocols to DTCs also reproduce this provision, e.g. Trinidad and Tobago, Uruguay.

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68 COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

C.5. Timeliness of responses to requests for information


The jurisdiction should provide information under its network of agreements in a timely manner.

Responses within 90 days (ToR C.5.1)


249. In order for exchange of information to be effective it needs to be provided in a timeframe that allows tax authorities to apply the information to the relevant cases. If a response is provided but only after a significant lapse of time, the information may no longer be of use to the requesting authorities. This is particularly important in the context of international cooperation as cases in this area must be of sufficient importance to warrant making a request. Thus, jurisdictions should be able to respond to requests within 90 days of receipt by providing the information requested or offering an update on the status of the request. 250. The procedure for exchange of information set forth in Spanish law and regulations appear to permit the competent authorities to gather and exchange information in a proper timeframe. In particular, no provision would prevent the Spanish authorities from responding to requests within 90 days of receipt, or at least providing a progress report concerning the procedure. 251. The Spanish TIEAs require the provision of request confirmations, status updates and the provision of the requested information, within the timeframes set in Article 5(6)(b) of the OECD Model TIEA: the requested party should confirm receipt of the request in writing and notify any deficiencies in the request within 60 days. It should in any event answer as promptly as possible and at least provide a detailed update of the status of the request, be it because it encounters obstacles in furnishing the information or it refuses to furnish the information. The DTC with Barbados, Jamaica, Panama, Trinidad and Tobago, Uruguay and EU Directive 2011/16 impose similar or tighter deadlines (article 7, whereas Directive 77/799 only requires answering as swiftly as possible). 252. As indicated by many EOI partners, the Spanish authorities often respond within 90 days of the request, but they also often fail to advise their partners of the status of their requests when they have not responded within this deadline. Spain advises the requesting jurisdiction of the status of the ongoing procedure only upon express request. The Spanish authorities acknowledge that they do not systematically provided updates. 253. The Spanish authorities do not have statistics on their average response time. The only statistical data they have relate to whether information was provided within 180 days or afterwards.

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Year 2008 2009 2010

Information provided within 180 days 240 270 358

Information provided in more than 180 days 231 249 139

254. Response time varies greatly, depending on the complexity of the request (the number of persons involved, the number of questions) and on whether the information is already in the tax administrations databases or has to be obtained through information gathering measures taken by local tax offices. EOI requests that typically take longer than others relate to information not at the direct disposal of the tax authorities and that require the involvement of local tax authorities, such as some accounting information. Local offices are given a first four month deadline to collect information, but it often takes longer in practice, although rarely more than a year. Another type of request that takes longer to deal with concerns natural persons that are difficult to identify, for which Spain made unfruitful research and has to wait for additional information from the requesting party. Finally, Spains customary partners have confirmed that response times vary with the complexity of their requests and that they are generally satisfied. 255. Recent DTCs and TIEAs contain further provisions on the timeliness of responses. The TIEAs with Curacao and St Maarten and the protocols to the DTCs with Barbados, Costa Rica, Jamaica, Panama, Trinidad and Tobago and Uruguay provide that In the event that the Requested Party has not provided the information within 6 months of the receipt of the request, it shall inform the Applicant Party of the progress made in obtaining the requested information and provide the Applicant Party with its best estimate within what period of time the request can be complied with. If the Requested Party is unable to comply with the request it will so inform the Applicant Party, while providing the reasons for its inability. The Applicant Party shall subsequently decide whether or not to rescind its request. If it decides not to rescind its request the Parties shall informally and directly, through Mutual Agreement or otherwise, discuss the possibilities to achieve the purpose of the request and consult with each other the manner in which to achieve that objective. 256. These TIEAs and DTCs are all very recent and no EOI requests were received by Spain on this basis, so it was not possible to assess how Spain implements these new deadlines in practice.

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Resources and Organisational process (ToR C.5.2)


255. Spains DTCs indicate that the competent authority for the exchange of information for tax purposes is the Minister of Finance or his authorised representative. There is a delegation of power by the Minister to the Director General of the Spanish Tax Administration (Agencia Estatal de Administracin Tributaria, AEAT), who delegates to the Director General of Inspection, who delegates to the head of the Information Office (Equipo Central de Informacin, ECI). In practice, treaty partners are given the coordinates of the latest delegated person, who receives all EOI requests. 257. The ECI counts nine officers in charge of all EOI requests received and sent by Spain in direct taxation matters. In addition, Spain has crossborder agreements with France and Portugal that delegate authority to certain border directorates, allowing them to exchange information directly. This encourages informal contacts and better understanding among partners. Spain reports that these agreements have proven very useful, although in VAT matters more than direct taxation.

Resources
258. The ECI counts nine persons, i.e. one head, six professionals and two assistants, dealing with an average of 460 EOI requests received every year. Staff members have belonged to ECI for three years on average and all have been trained in the Spanish Public School of Tax and received basic training on exchange of information. Every year they receive some training on audits and other relevant matters. Languages being key in exchange matters, the office counts two officers dealing with French-speaking jurisdictions and two others dealing with English-speaking jurisdictions and other jurisdictions using English in their requests. A similar team exists to deal with spontaneous and automatic information sent and received by Spain. A third team deals with VAT issues within the EU. 259. The ECI has not developed any manual or guidelines on how to handle EOI requests, but relies on its dedicated IT application. This application, developed in 2005, guides the officer between the various possible options he/she has to deal with the request. This application, called INTER, is the system through which all requests are managed. It allows knowing in real time at which stage of the procedure an EOI request is.

Organisational process
260. The typical routing of a request is as follows: the competent authority (ECI) receives the EOI request, makes a new entry into the IT system INTER and scans all the documents received. It then confirms its admissibility and

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acknowledges receipt within one or two days by mail post or secured e-mail system within the EU. It informs the EOI partner of the allocated reference number of the request, to ease future communications on the request. 261. If there is any ambiguity in the request, or if details essential to find the information are missing (typically if the person cannot be identified in the tax databases), ECI contacts its counterpart. Many EOI partners of Spain declared that communication with ECI was easy, and prompt responses were received. The official assigned to the handling of a request analyses its content 262. and decides whether to collect the information him/herself from available databases, or to refer it to another central or local tax office (for instance as concerns banking information), depending on the content of the request and the person concerned (especially for large taxpayers). If part of the information is in the tax databases or other accessible databases, this is sent to the requesting authority with a note indicating that the rest of the request is being processed. 263. Local tax offices are given four months to collect the information. All correspondence is done through the IT system. Responses are checked by the head of the local office before being sent on to the ECI office, which again verifies the responses. The head of the team verifies that the elements necessary to the response have been properly transmitted and that the appropriate measures have been taken. The responses are sent the next day to the requesting authority. If there are shortfalls, supplementary measures are requested, and at the same time ECI sends a partial response to the requesting authority.

Absence of restrictive conditions on exchange of information (ToR C.5.3)


264. There is no provision in Spains legislation or in its EOI instruments that would impose conditions on the exchange of information beyond those contemplated in Article 26 of the Model Tax Convention or the Model TIEA. It does not appear either that Spain has created any restriction on the exchange of information in practice.
Determination and factors underlying recommendations
Phase 1 determination This element involves issues of practice that are assessed in the Phase 2 review. Accordingly no Phase 1 determination has been made.

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Phase 2 rating Compliant. Factors underlying recommendations Spain advises requesting jurisdictions of the status of their requests when the competent authority is not in a position to respond within 90 days, only when reminded by the requesting jurisdiction. Recommendations Spain should promptly implement a system for advising requesting jurisdictions of the status of their requests, when the competent authority is not in a position to respond within 90 days.

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Summary of Determinations and Factors Underlying Recommendations


Factors underlying recommendations

Determination/rating

Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1) Phase 1 determination: the element is in place Phase 2 rating: Compliant. Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2) Phase 1 determination: the element is in place Phase 2 rating: Compliant. Banking information should be available for all account-holders. (ToR A.3) Phase 1 determination: the element is in place Phase 2 rating: Compliant. Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1) Phase 1 determination: the element is in place Phase 2 rating: Compliant.

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74 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS


Factors underlying recommendations

Determination/rating

Recommendations

The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2) Phase 1 determination: the element is in place Phase 2 rating: Compliant. Exchange of information mechanisms should allow for effective exchange of information. (ToR C.1) Phase 1 determination: the element is in place Phase 2 rating: Compliant. The jurisdictions network of information exchange mechanisms should cover all relevant partners. (ToR C.2) Phase 1 determination: the element is in place but certain aspects of the legal implementation of the element need improvement Phase 2 rating: Largely Compliant. The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3) Phase 1 determination: the element is in place Phase 2 rating: Compliant. The negotiation of some exchange of information agreements has been stalled for reasons not linked to exchange of information for tax purposes. Spain should continue to develop its EOI network to the standard with all relevant partners.

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Determination/rating

Factors underlying recommendations

Recommendations

The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4) Phase 1 determination: the element is in place Phase 2 rating: Compliant. The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5) This element involves issues of practice that are assessed in the Phase 2 review. Accordingly no Phase 1 determination has been made. Phase 2 rating: Compliant. Spain advises requesting jurisdictions of the status of their requests when the competent authority is not in a position to respond within 90 days, only when reminded by the requesting jurisdiction. Spain should promptly implement a system for advising requesting jurisdictions of the status of their requests when the competent authority is not in a position to respond within 90 days.

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ANNEXES 77

Annex 1: Jurisdictions Response to the Review Report 59


Spain would like to express a deep appreciation for the work done by the assessment team in evaluating Spain for this combined review and the expert team and the Secretariat of the Global Forum for all the excellent work done in order to achieve the G20 call to complete the allocation of comprehensive country ratings regarding the effective implementation of information exchange upon request. Spain wants to also thank the members of the Peer Review Group and the other exchange of information partners for their valuable contribution to the review and its overall rating. Spain continues to expand its network of exchange of information with all relevant partners and to renegotiate old agreements in order to modernise them in general, or bring them to the standard of exchange of information. We are also enhancing our internal procedures to systematically advise requesting jurisdictions of the updated status of their requests within 90 days. As result to such commitment, Spain has recently initialized DTCs with Qatar, Oman and Austria; signed with Argentina, India, Cyprus, Uzbekistan, the United Kingdom and the United States of America; ratified by parliament the DTCs with Dominican Republic; and the DTCs with Armenia, Germany, Hong Kong, Kuwait, Singapore and Switzerland have entered in force. Regarding TIEAs, Spain has initialized TIEAs with Jersey, Guernsey, Isle of Man, Monaco and Macao. As member of the EU, Spain is able to exchange information with other EU member states under EU legislation and as signatory to the multilateral Convention on Mutual Administrative Assistance in Tax Matters and its Protocol, which provides for all possible forms of administrative co-operation between parties in the assessment and collection of taxes, in particular with a view to combating tax avoidance and evasion, Spain is able to exchange information with all Convention partners.

59.

This Annex presents the jurisdictions response to the review report and shall not be deemed to represent the Global Forums views.

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78 ANNEXES
To enhance transparency, amendments of national fraud prevention legislation now include an additional provision whereby taxpayers will be obliged to provide information on accounts held with financial institutions located overseas, of which they are the beneficiary or are authorised or have power of attorney to access. This obligation to provide information will apply to other shares, securities or rights representative of capital stock, own funds or entity assets, as well as life insurance, personal disability insurance, fixed asset and real estate insurance taken out with entities based overseas. With the aim to go beyond EOI on request by building a single global standard of automatic exchange of information, Spain has signed with the United States of America the Intergovernmental Agreement to improve international tax compliance and implementing FATCA. Moving fast forward and based on such agreements, France, German, Italy, Spain and the UK launched an initiative to pilot the new standard in automatic exchange, currently joined by other 17 EU member states, Mexico and Norway, being shortly followed by others. At the G20s Summit at St Petersburg 2013, Spain confirmed its commitment to fully support the automatic exchange of information as the new global standard and to implement the new standard without undue delay. We welcome the OECDs work in this area and encourage the Global Forum members to take advantage of this same forum to share knowledge and benefit from our gained experience through the peer reviews in order to overcome possible obstacles in our way.

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Annex 2: List of all Exchange-of-Information Mechanisms in Force

Multilateral agreements
Spain is a party to the: EU Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums. The current EU members, covered by this Council Directive, are: Austria, Belgium, Bulgaria, Cyprus,60 Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. EU Council Directive of 15 February 2011 concerning administrative cooperation in tax matters will strengthen this directive. The deadline for transposition of the directive into the national laws of the member states is 1 January 2013. EU Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments. This Directive aims to ensure that savings income in the form of interest payments

60.

Footnote by Turkey: The information in this document with reference to Cyprus relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognizes the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of United Nations, Turkey shall preserve its position concerning the Cyprus issue. Footnote by all the European Union member states of the OECD and the European Commission: The Republic of Cyprus is recognized by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

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80 ANNEXES
generated in an EU member state in favour of individuals or residual entities being resident of another EU member state are effectively taxed in accordance with the fiscal laws of their state of residence. It also aims to ensure exchange of information between member states. Council of Europe and OECD Convention on Mutual Administrative Assistance in Tax Matters, which is currently in force with respect to 17 jurisdictions: Azerbaijan, Belgium, Denmark, Finland, France, Georgia, Iceland, Italy, the Kingdom of the Netherlands, Norway, Poland, Slovenia, Spain, Sweden, the Ukraine, the United Kingdom and the United States.61 The Protocol amending this Convention has been signed by 20 jurisdictions, including Spain. It entered into force on 1 June 2011 with respect to Denmark, Finland, Georgia, Norway and Slovenia.

Bilateral agreements
List of information exchange agreements (TIEA) and tax treaties (DTC) signed by Spain as of June 2011. For jurisdictions with which Spain has several agreements, a reference to the multilateral agreement is placed in parentheses (EU or OECD/COE treaty). When the date of signature is followed by a date in parentheses, the latter refers to signature of the agreement, while the former refers to signature of the protocol. The text of the DTCs and TIEAs is available on the website of the Spanish Ministry of Economy (mainly in Spanish).
Treaty partner 1 2 3 4 5 6 7 8 9 10 Albania Algeria Andorra Argentina Armenia Aruba Australia Austria Azerbaijan Barbados Type of EoI arrangement DTC DTC TIEA DTC DTC TIEA DTC DTC (EU) COE/OECD DTC Date signed 02/07/2010 07/10/2002 14/01/2010 21/07/1992 16/12/2010 24/11/2008 24/03/1992 24/02/1995 12/11/2009 1/12/2010 Date in force 04/05/2011 06/07/2005 10/02/2011 28/07/1994 27/01/2010 10/12/1992 02/10/1995 01/12/2010 -

61.

Canada, Germany, Korea, Mexico, Mexico, Moldova and Portugal have signed but not yet ratified the Convention.

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qdf62 qdf63
Treaty partner 11 12 13 14 15 16 17 18 19 21 Belarus (former USSR) Belgium Bolivia Bosnia and Herzegovina Brazil Bulgaria Canada Chile China Costa Rica

Type of EoI arrangement DTC DTC (EU, COE/ OECD) Protocol DTC DTC DTC DTC (EU) DTC DTC DTC DTC DTC DTC DTC TIEA EU DTC (EU) EU; COE/OECD DTC DTC DTC (EU) DTC Protocol (EU, COE/OECD) DTC (EU, COE/ OECD)

Date signed 01/03/1985 14/06/1995 02/12/2009 62 30/06/1997 05/02/2008 14/11/1974 06/03/1990 23/11/1976 07/07/2003 22/11/1990 31/03/2005 04/05/2004 19/05/2005 03/02/1999 2008-06-10 2003 08/05/1980 1977 12/11/2009 20/05/1991 10/06/2005 03/09/2003 15/11/1967 22/02/1973 27/04/1990 10/10/1995

Date in force 07/08/1986 25/06/2003 23/11/1998 04/01/2011 03/12/1975 14/06/1991 26/12/1980 23/12/2003 20/05/1992 23/10/2008 15/12/2010 20/04/2006 31/12/2000 27/01/2010 [2004] 05/06/1981 1979 1/12/2010 19/04/1993 28/05/2006 28/12/2004 30/10/1968 24/04/1973 28/07/1992 01/07/1997

20 Colombia 22 Croatia 23 Cuba 24 Curacao (former Netherlands Antilles)

25 Cyprus 63 26 Czech Republic 27 Denmark 28 Ecuador 29 Egypt 30 Estonia 31 Finland

32 France

62. 63.

This Protocol removes old Article 26 (Exchange of information) and introduces a new article on exchange of information conform to the standards. See footnote 60.

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Type of EoI arrangement DTC DTC (COE/ OECD) DTC (EU) DTC (EU) DTC DTC (EU) DTC (COE/ OECD) DTC DTC DTC DTC (EU) DTC DTC (EU, COE/ OECD) DTC DTC DTC (former USSR) DTC DTC DTC DTC DTC (EU) DTC (EU) DTC Protocol (EU) DTC DTC (EU) DTC

Treaty partner Former Yugoslav 33 Republic of Macedonia 34 Georgia 35 Germany 36 Greece 37 Hong Kong, China 38 Hungary 39 Iceland 40 India 41 42 Indonesia Iran

Date signed 20/06/2005 7/06/2010 12/10/2010 05/12/1966 04/12/2000 01/04/2011 09/07/1984 22/01/2002 08/02/1993 30/05/1995 19/07/2003 10/02/1994 30/11/1999 08/09/1977 08/07/2008 13/02/1974 01/03/1985 02/07/2009 01/03/1985 17/01/1994 26/05/2008 04/09/2003 22/07/2003 03/06/1986 10/11/2009 24/05/2006 08/11/2005 24/07/1992

Date in force 01/12/2005 01-06-2011 14/03/1968 21/08/2002 20/05/1987 02/08/2002 12/01/1995 20/12/1999 30/01/2006 21/11/1994 20/11/2000 14/11/1980 16/05/2009 20/11/1974 07/08/1986 07/08/1986 21/11/1994 14/12/2004 26/12/2003 19/05/1987 16/07/2011 28/12/2007 12/09/2006 06/10/1994

43 Ireland 44 Israel 45 Italy 46 Jamaica 47 Japan

48 Kazakhstan 49 Kirghizstan (former USSR) Kuwait Latvia

50 Korea 51 52

53 Lithuania 54 Luxembourg 55 Malaysia 56 Malta 57 Mexico

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Treaty partner 58 Moldavia 59 Morocco 60 Netherlands 61 New Zealand

Type of EoI arrangement DTC DTC DTC (EU, COE/ OECD) DTC DTC DTC (EU, COE/ OECD) DTC DTC DTC DTC DTC (EU, COE/ OECD) DTC (EU) DTC (EU) DTC TIEA DTC TIEA DTC DTC DTC DTC DTC (EU) DTC (EU, COE/ OECD) DTC DTC (EU, COE/ OECD) DTC Protocol

Date signed 08/10/2007 10/07/1978 16/06/1971 28/07/2005 23/06/2009 06/10/1999 01/01/2010 07/10/2010 06/04/2006 14/03/1989 15/11/1979 26/10/1993 24/05/1979 16/12/1998 10/06/2008 07/07/2008 06/09/2010 19/06/2007 05/12/2006 09/03/2009 13/04/2011 08/05/1980 23/05/2001 23/06/2006 16/06/1976 26/04/1966 29/06/2006

Date in force 30/03/2009 16/05/1985 20/09/1972 31/07/2006 18/12/2000 12/09/1994 06/05/1982 28/06/1995 28/06/1980 13/06/2000 27/01/2010 13/08/2009 02/08/2011 01/10/2008 28/03/2010 05/06/1981 19/03/2002 28/12/2007 21/12/1976 02/02/1967 01/06/2007

62 Nigeria 63 Norway 64 Pakistan 65 Panama 66 Peru 67 Philippines

68 Poland 69 Portugal 70 71 72 73 74 75 76 78 Romania Russia Saint Maarten (former Netherlands Antilles) Salvador San Marino Saudi Arabia Senegal Singapore

77 Serbia 79 Slovakia 80 Slovenia 81 South Africa

82 Sweden 83 Switzerland

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84 ANNEXES
Type of EoI arrangement DTC DTC TIEA

Treaty partner Tajikistan (former 84 USSR) 85 Thailand 86 The Bahamas The Netherlands, Caribbean islands (Bonaire, Saint Eustache and Saba, former Netherlands Antilles) Timor Oriental (Indonesia)

Date signed 01/03/1985 14/10/1997 11/03/2010

Date in force 07/08/1986 16/09/1998 17/08/2011

87

TIEA

10/06/2008

27/01/2010

88

DTC DTC DTC DTC DTC DTC (COE/ OECD) DTC DTC Protocol (EU, COE/OECD) DTC (COE/ OECD) DTC DTC DTC

30/05/1995 09/03/2009 02/07/1982 05/07/2002 01/03/1985 01/03/1985 04/07/2006 21/10/1975 13/12/1993 17/06/1994 22/02/1990 09/10/2009 08/04/2003 07/03/2005

20/12/1999 28/12/2009 14/02/1987 18/12/2003 07/08/1986 07/08/1986 02/04/2007 25/11/1976 25/05/1995 25/05/1975 21/11/1990 24/04/2011 29/04/2004 22/12/2005

89 Trinidad and Tobago 90 Tunisia 91 92 93 Turkey Turkmenistan (former USSR) Ukraine (former USSR)

94 United Arab Emirates 95 United Kingdom 96 United States 97 Uruguay

98 Venezuela 99 Vietnam

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Annex 3: List of all Laws, Regulations and Other Relevant Material


The General Tax Law 2003 The General Regulation on Tax Auditing The Commercial Code The Corporate Enterprises Act The Civil Code The Foundations Act 2002

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86 ANNEXES

Annex 4: Persons Interviewed During the On-Site Visit


The assessment team met with representatives of the following entities:

Ministry of Economy and Finance (Ministerio de Economa y Hacienda)


Office of the Secretary of State for Finance and the Budget (Gabinete Secretara de Estado de Hacienda y Presupuestos) Office of the General Secretary of Finance (Gabinete SGH ) is responsible of the Fiscal Policy, the Tax System strategy together with the General Directorate of Taxation. General Directorate of Taxation (Direccin General De Tributos) is responsible of the Fiscal Policy, the Tax System strategy together with the General Secretary of Finance. The DGT is also responsible for Legislation interpretation binding the Tax Agency (AEAT). Division of International Tax Affairs (Subdireccin General de Asuntos Fiscales Internacionales) Division of non-residents (Subdireccin General de No Residentes) Division of financial operations (S.G. Operaciones Financieras) Division of natural persons (S.G. Personas Fsicas) Division of legal persons (S.G. Personas Jurdicas) Division of taxes (S.G. Tributos) Directors Office (Gabinete del Director) Co-ordinating Unit for International Relations (Unidad de Coordinacin de las Relaciones Internacionales) Department of Tax and Financial Inspection (Departamento de Inspeccin Financiera y Tributaria)

Tax Agency (AEAT)

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Department of Tax Management (Departamento de Gestin Tributaria) IT Department (Departamento de Informtica Tributaria) Office for the Planification and Institutional Relations (Servicio de Planificacin y Relaciones Institucionales) Large Taxpayers Department (Delegacin Central de Grandes Contribuyentes) Tax Office of Madrid (Delegacin Especial de Madrid)

Treasury Directorate (Direccin General del Tesoro) Institute of Accountants and Auditors (Instituto de Contabilidad y Auditora de Cuentas)

Ministry for Foreign Affairs and Co-operation (Ministerio de Asuntos Exteriores y Cooperacin) Ministry of Justice (Ministerio de Justicia)
General Council of Public Notaries (Consejo General del Notariado)

Central Bank of Spain (Banco de Espaa) Stock Exchange regulator (CNMV)

PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT SPAIN OECD 2013

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT


The OECD is a unique forum where governments work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to coordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Union takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisations statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members.

OECD PUBLISHING, 2, rue Andr-Pascal, 75775 PARIS CEDEX 16 (23 2013 65 1 P) ISBN 978-92-64-20591-8 No. 61035 2013-01

Global Forum on Transparency and Exchange of Information for Tax Purposes

PEER REVIEWS, COMBINED: PHASE 1 + PHASE 2,

incorporating Phase 2 ratings SPAIN


The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by 120 jurisdictions, which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004. The standards have also been incorporated into the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by duciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identied by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase 1 and Phase 2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.
Consult this publication on line at http://dx.doi.org/10.1787/9789264205925-en. This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org for more information.

ISBN 978-92-64-20591-8 23 2013 65 1 P

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