NON RESIDENTS TAXATION Carolina del Campo Azpiazu Deputy Director General for Non Residents Taxation

EU: DIRECT TAXATION  Directives:  Parent-subsidiary  Interests and Royalties: transitional period  Mergers, Savings  Joint Transfer Pricing Forum (JTPF)  MAP  Arbitration  Documentation  APA

INTERNAL LEGISLATION (I) Recent changes: corporation tax  Transfer pricing rules  New regulations on transfer pricing: methods and ALP principles  Penalties  Documentation  limitations for SME:  transactions with associated enterprises, less than €  Penalties: a maximum is established  APA

INTERNAL LEGISLATION (II) Recent changes: Non residents taxation  Taxable base: net vs gross  MAP regulation  Exemptions:  CIV resident in EU (Directive)  Pension funds resident in EU  Royalties: finalisation of transitional period  Public (and Private) debt

OECD: RECENT WORKS (I) Global Forum  Exchange of information Agreements  At least 12  White/grey list  Monitoring

OECD: RECENT WORKS (II) 2008 Update  Arbitration clause  New paragraph 5 to Article 25: very similar to Arbitration Convention  Two years  Arbitration comission  Does not need to waive its rights before Courts  Different content for the AC  DTA?

OECD: RECENT WORKS (III) 2008 Update  Article 7: Report on the attribution of profits to permanent establishment  Attribution of free capital  Symmetry  Existing DTA?  REIT: new proposal for future DTA

OECD: RECENT WORKS (IV) 2010 Update  New Article 7:  ALP principle: only in relation to the attribution of profits to the permanent establishment  Notional income  Elimination of double taxation: similar to 9.2  DTA?

OECD: RECENT WORKS (V) 2010 Update  CIV  Persons, residents, beneficial owner  Entitlement to Treaty benefits  Different ways:  Directly  Equivalent beneficiaries  In the name of  Pilot/Trace

DTA POLICY (I)  Spanish Tax havens list  DTA with tax havens  Exchange of information Article  Very important Protocol  Antiabuse rules  Rest of the Treaties: Comprehensive EOI Article  Renegotiations: necessary

DTA POLICY (II)  73 in force (Colombia, Moldavia, El Salvador, Jamaica, Serbia y Trinidad y Tobago,...)  73 in force (Colombia, Moldavia, El Salvador, Jamaica, Serbia y Trinidad y Tobago,...)  9 ratified by Spain (Bosnia-Herzegovina, Costa Rica, Kazajstán, Kuwait, Nigeria, Senegal, Uruguay, Luxemburg (Protocol) y Belgium (Protocol))  8 initialled ( Albania, Armenia, Byelorussia, Georgia, Namibia y Syria Barbados)  14 in negotiation (Azerbaijan, Bahrain, Cabo Verde, Libya, Qatar, Pakistan, Ukraine, Dominican Republic, Guatemala, Jordan, Panama, Cyprus, Hong Kong y Oman)  3 Renegociaciones: Germany, Canada, UK  Terminated: Dinamarca

MAIN DTA PROBLEMS  Certificates of residence  Taxation of services:  Article 14 vs Article 7  Withholding tax on the gross  CIV, partnerships, trust  Transfer pricing and Article 9  Definition of permanent establishment  Royalties (software)

DISPUTE RESOLUTION MECHANISMS (I)  Article 25.1: MAP to guarantee the taxation in accordance with the Convention  Not obliged to reach an agreement (arbitration)  Article 9.2  All DTA  Problems with old treaties  Time limits  Three year rule  Article 25.3: exchange of letters

DISPUTE RESOLUTION MECHANISMS (II)  New regulation in relation to MAP and EU Arbitration  Organizes the internal process for MAP:  Competent Authority  Time periods  Rights and obligations of taxpayers: documentation…  Mode of implementation  Guarantees that MAP will reach a solution (when possible) within a reasonable period of time

DISPUTE RESOLUTION MECHANISMS (III) Suspension in the collection of taxes  Before: it could only be suspended under Court approval  Now: it can be suspended when an MAP is initiated, but only when the Court cannot do it. Other issues: interest payments