Spain's Council of Ministers approves draft bill transposing directive on a 15% global minimum tax

Published on 23rd Apr 2024

Spain is taking its first step towards implementing global minimum taxation, which involves adapting its domestic legislation to comply with EU and OECD regulations

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The OECD's Pillar 2 is the source of the draft bill, which resulted in the approval of Directive (EU) 2022/2523 on a 15% global minimum tax, in December 2022. The directive is aimed at curbing aggressive tax planning by multinational groups. It was required to be incorporated into the national laws of European Union Member States by the end of December 2023.

Despite significant challenges, Spain has met its obligation to transpose the rule within the given timeframe. However, the parliamentary process is expected to continue during 2024, the first year in which the rule will have an impact.

This Insight focuses on specific aspects of the approved draft bill (you can read more in our previous Insight on the workings and properties of Pillar 2). However, it is worth mentioning that the wording of the bill is very similar to that of the directive.

Legal form and territorial application

The transposition of the draft bill will take the form of a regulation that will have an independent legal status to the Corporate Income Tax Law, rather than as an amendment to it (as had been initially expected).

For all groups with a turnover of at least €750 million during two of the last four fiscal years, this rule will be applicable throughout their Spanish territory. The draft bill includes the same agreement clause with the special local regimes as the Corporate Income Tax Law, indicating that Spain will pass more laws regulating this new tax.

Approval of a top-up tax in Spain

The draft bill proposes the introduction of a top-up tax in Spain. This is a recently created tax designed to guarantee a minimum taxation rate of 15% on the income of low-taxed entities.

The top-up tax has three components following the well-known Global Anti-Base Erosion Model Rules (GloBE rules):

  • The Domestic Top-up Tax, which will be computed and paid by the low-taxed constituent entities in Spain belonging to large national or international groups. The purpose of this tax is to collect at least 15% of the profits generated in Spanish territory.
  • The Primary Top-up Tax, which is equivalent to the Directive's Income Inclusion Rule (IIR). According to this rule, the parent entity computes and pays its allocable share of top-up tax in respect of the low-taxed entities of the group. Spanish entities, on the other hand, will be taxed under the domestic element.
  • The Secondary Top-up Tax, which is equivalent to the Undertaxed Profit Rule (UTPR). This rule acts as a backstop to the IIR when the entire amount of top-up tax relating to low-taxed entities could not be collected by parent entities through the application of the IIR. If this happens, the liability for the top-up tax falls on the relevant subsidiary.

Safe harbours regulations

Both the draft bill and directive establish transitional relief for the affected multinational groups in the initial years during which the GloBE Rules come into effect, provided that the transitional "safe harbours" requirements are met.

These transitional safe harbours seek to ameliorate the immediate compliance difficulties that these groups will face at the start of the implementation of the Top-up Tax in Spain by deeming it zero in the jurisdictions fulfilling its conditions until 2026.

Large-scale domestic groups in Spain and those that are just beginning their international expansion are also exempt to comply with the requirements and procedures mandated by Pillar 2 for the first five reporting periods.

The draft bill suggests that an agreement will be reached on the regulation of permanent safe harbours at an international level. These permanent safe harbours can function in a way that is similar to transitional safe harbours. However, the difference is that they will be meant to be permanent or come as safelists of territories that comply with Pillar 2 regulations and therefore demand a minimum tax of 15% from their taxpayers.

Interpretation of the rules

To interpret the top-up tax legal framework, the draft bill refers to the OECD Model Rules and the applicable criteria when the tax accrues. These criteria are based on the Administrative Comments and Guides issued by the OECD, which will now serve as the new "external" source for interpreting the Spanish top-up tax.

However, there are some challenges with this interpretation reference. The OECD has done extensive work on its criteria, but its efforts have been spread out in multiple documents and are subject to constant change. Even the draft bill does not include the criteria in the Administrative Guidance issued by the OECD in July 2023. Therefore, it will be necessary to monitor international soft law to remain up-to-date with the latest developments in this matter.

The implementation of Pillar 2 and the imposition of extra taxes on regions that do not meet the 15% minimum tax rate could have financial consequences. But even more than financial consequences, multinational groups affected by these changes will face a significant challenge to ensure compliance with the new regulations.

Osborne Clarke comment

The first step to be taken by the multinational groups affected by Pillar 2 will be to calculate the impact of these measures on their financial statements via accounting provision. The administrative burden is expected to outweigh the revenue for the top-up tax at a global level.

There are doubts raised as to the constitutional compatibility of the draft bill in Spain. For example:

  • Implementing Complementary Tax regulations may lead to certain entities paying additional taxes, even if they are loss-making, which could contradict the principle of economic capacity.
  • Using the OECD Guidelines and criteria for interpretation without them being reviewed and approved by the Spanish legislature might potentially infringe upon the principle of the reservation of law.
  • Specific domestic tax regimes recognised by the EU that offer certain incentives below the minimum rate of 15% may be affected if Spain is viewed as a single jurisdiction that must adhere to a top-up tax. For example, investment incentives that apply to the Canary Islands may be impacted as a result of this.

It is therefore crucial for businesses to keep a close eye on the implementation of this directive and any other guidelines that may affect its substance, originating from either the EU or the OECD.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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