Spanish tax advisers required to report customers

by Lorraine Williamson
tax advisers reporting when transferring money abroad

MADRID – A new regulation in Spain requires tax advisers to report their clients to the tax authorities if they want to transfer money abroad. This obligation also applies to corporate lawyers. 

The regulation requires an ‘automatic and mandatory’ exchange of information. Relating to the field of ‘taxation with regard to cross-border mechanisms subject to the communication of information’. The regulation was finalised by the Spanish government on Tuesday. 

Gestores or tax advisers

El Economista writes those who must provide the relevant information to the tax authorities include advisers, lawyers or administrative managers. More often known by the collective name ‘gestores administrativos’ or ‘gestorías’. 

Possible aggressive tax planning 

The new text states tax authorities must receive information about ‘cross-border mechanisms’ (agreements, operations, legal acts or arrangements) involving two or more parties located or taking place in at least two states of the European Union or between an EU Member State and a third country. This is on condition it is clear based upon a ‘distinguishing indication’ that there is a possible ‘aggressive tax planning’. In the text, a distinguishing indication is regarded, among other things, as ‘seeking tax benefits’. 

Who must provide the information? 

Those who must provide the information include the advisers, attorneys or administrative managers. This will be the case when they have designed, commercialised, organised, made available or managed the cross-border mechanism that is subject to the communication obligation. 

The disclosure requirement also applies when they provide help, assistance or advice directly through other people in the design, marketing or management of such instruments. 

Cogesa Expats

Stakeholder himself as a provider of information 

In some cases, it is the interested party him/herself who is obliged to provide the information. For example, the intermediary must maintain professional secrecy, as regulated in the 23rd additional provision of the General Tax Act. The obligation also applies when there is no intermediary. This is because the advice is provided by the advisers or lawyers of a company that has taxable status. 

The information to be provided will mainly concern the identification of the parties involved in the intended operations. In addition, the value of the tax effect resulting from the mechanism must be reported. 

Cross-border mechanisms are not necessarily fraudulent 

The new regulation is based on the premise that all these cross-border practices are seen as “aggressive tax planning mechanisms”. However, the preamble to the Regulation recognises that “the obligation to declare a cross-border mechanism does not necessarily imply that this mechanism is fraudulent or elusive”. In any case, the tax authorities understand that in each of these practices “there are certain tax planning conditions that justify the obligation to declare. 

What are indications of ‘aggressive tax planning’? 

Some general and some specific indications are mentioned in the new regulations. On one hand, it must be clear or foreseeable that the mechanism is seeking a tax benefit. This could be evidenced by the fact the intermediary sets fees based on the tax relief provided by the mechanism. And that there is a duty of confidentiality or that the operation is intended to be used by multiple taxpayers. 

Among the specific indications, there are those that can be gleaned from transactions such as purchasing businesses at a loss to take advantage of them and reduce the tax bill; payments presented as deductible expenses at the payer’s head office but not taxed – or taxed only to a limited extent at the recipient’s head office with whom there is a relationship. 

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