On March 30, 2012, the Spanish government announced the 2012 budget. At the same time, the government approved Royal Decree-Law 12/2012, which introduces a number of relevant changes in the corporate tax area, including new limitations on the deductibility of interest expense.
Following a trend started by other European governments, the Spanish government has introduced an interest-capping rule that replaces the existing thin capitalization provisions. The new interest-capping rule, which will apply to both related- and unrelated-party debt, limits tax relief for net interest expense to 30 percent of the taxpayer’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”), with some adjustments. For entities that are part of a tax consolidated group, this 30-percent limit will apply to the EBITDA of the group. Continue Reading
The Spanish Government has approved a special incentive to disclose untaxed cash amounts (black money) at a special 10% rate, without further interest, penalty and/or tax investigations.
This will allow residents and non residents alike to bring into the Spanish system any amount of undisclosed cash held anywhere in the world.
The constitutionality of this measure is to be seen and I personally have many other questions such as the procedure to be followed, KYC and compliance with international anti money laundering regulations.
An interesting way to open the Pandora box. Keep watching this space!
The Spanish Real Decreto-Ley (Royal Decree-Law) 5/2012, of 5th March, on Civil and Commercial Mediation is already in force. This provision incorporates into Spanish law the Directive 2008/52/EC of the European Parliament and the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters (just for the record, deadline for transposition expired on 5/20/2011). Following aspects are of interest for PIL (arts. 2, 3, 27):
The Royal Decree-Law applies to mediation in civil or commercial cases, including cross-border disputes provided they do not affect rights and obligations that are non-disposable under the applicable law. “Cross-border conflict” implies that at least one party is domiciled or habitually resident in a State other than that of the domicile/habitual residence of any of the other parties. For parties residing in different Member States of the European Union, domicile will be determined in accordance with Articles 59 and 60 of Regulation (EC). No 44/2001 of 22 December 2000 concerning jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Continue Reading
The Madrid Regional Administrative Tax Court (known as “TEAR”) in a decision dated 29 November 2011 (notified on 27 December 2011) acknowledges the application of EU Law over previous discriminatory National Law on the treatment of EU resident pension schemes (in this particular case, a UK pension fund). In this regard, the TEAR specifically refers to the Spanish National High Court of Justice (“Audiencia Nacional”) which delivered a judgment regarding withholding taxes levied on three Dutch pension schemes in Spain.
The TEAR states that the tax treatment suffered by the non resident UK pension fund in Spain during FY 2004 was discriminatory under EU Law compared to a resident Spanish pension fund. The TEAR stressed that the Spanish tax law was discriminatory on the grounds of nationality as well as violating one of the four main principles of EU Law, namely the free movement of capital (Art. 63 TFEU). In addition, the TEAR reiterates that since 1 January 2010, the Spanish domestic legislation was amended as a result of said discrimination in order to be compliant with EU principles. Continue Reading
A BRIEF SUMMARY OF THE NEW TAX AND FINANCIAL MEASURES ADOPTED BY THE SPANISH GOVERNMENT
On December 30th 2011 the newly elected Spanish government approved Royal Decree 20/2011 enacting a first package of urgent tax and economic measures to correct the Spanish public deficit.
Among these measures, international private clients should be aware of the following tax resolutions: Continue Reading
The rise of Spanish Income Tax to 50% for higher tax payers, coupled with a 27% for interest, dividends and gains above 24k Euros, the increase of Council Tax and the resurrection of Wealth Tax is making Spain inhabitable.
Instead of reducing superfluous expenditure in the five layers of administration, i.e European, national, regional, provincial and local, the Conservative party is now threatening executives, entrepreneurs and investors with this so called ‘solidarity’ fiscal policy.
The measures aimed to collect circa 6,000 millions Euros barely equals the 6,000 millions Euros ‘given’ yearly to the Catholic Church and fall short of the circa 20,000 millions ‘donated’ to the banking system.
Meanwhile, almost 5 million former workers are at home. In this first day of 2012 I wish we are able to reclaim our fiscal common sense.
In 2008 the Spanish Government chose to ‘eliminate’ wealth tax by applying a 100% exemption, instead of derogating the law. On 17 September 2011 the wealth tax was reintroduced by the Spanish Government as an ‘emergency economic measure’. The 100% exemption was changed to a tax free allowance of 700.000€ for tax years 2011 and 2012. Continue Reading
Spain has signed TIEAs with the following territories: Continue Reading
The Tax Exchange agreement was published in the Spanish Gazzette the 15/7/2011
As per article 1, the agreement will facilitate that the competent authorities of the Contracting Parties shall provide assistance through exchanging information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement. Continue Reading
The new Socialist candidate for the November 2011 presidential elections, Mr Rubalcaba, proposes to resurrect Wealth Tax. Please see our last posting on this topic at Taxprecision.com Fortunately enough, his chances to win the elections are very limited, plus no other party will support such ridiculous measure. It is unfortunate that politicians use Taxes to win the elections instead as using them as wise macroeconomic vehicles to improve the economy. Continue Reading