Publications

The Ministry of Finance has published various exchanges of letters and agreements in relation to a few tax treaties signed by Spain

The website of the Ministry of Finance (SEE HERE) has published exchanges of letters and agreements relating to a few tax treaties signed by Spain and which had not been published to date.

As a rule, they either have no major changes or had already been revised in the public materials of the Directorate General for Taxes.  A few of the published documents, however, contain important changes:

1. Agreement with the Netherlands: this is a mutual agreement in which it is decided that the treaty with the Netherlands will be applicable to investors in “closed” mutual funds. The agreement states that the agreement is intended to come into force in January 1, 2013.
2. Agreement with the United Kingdom: this is a mutual agreement to settle the mode of application of the arbitration process provided by article 25.5 of the tax treaty with the United Kingdom. The agreement appears to have been reached in 2014.
3. Exchange of letters with Chile: these are two letters dated August 23, 2017 and September 17, 2018, relating to (i) the most favored nation clause in paragraph X of the Protocol to the convention between both states, and to (ii) article 11 (interest) and article 12 (royalties) in the same treaty, which have been given new wording.
    
   It is to be noted that, on the basis of the most favored nation clause, since January 1, 2019 the withholding tax percentage at source has been reduced from 15% to 10% on the interest paid by the resident in one state to a resident in the other state (except for financial institutions, public finance and sale on credit which have specific reduced rates).
    
4. Letter from the Spanish minister of finance and public authorities to his counterpart in Estonia, dated June 14, 2016, relating to modification of the treaty between both territories as a result of applying a most favored nation clause.
    
   Specifically, the concept of permanent establishment under that clause is changed. Accordingly (i) the period of time after which a building site or construction or installation project or connected activities may be treated as a permanent establishment is increased from 9 months to 12; and (ii) the definition of permanent establishment no longer includes assembly projects.

    

AEAT publishes the draft legislative instruments to transpose the tax intermediaries directive (DAC 6)

AEAT made public on June 20 (i) the preliminary bill for the law amending the General Taxation Law and (ii) the bill for the royal decree amending the regulations on the application of taxes, through which it is sought to transpose into Spanish law Council Directive (EU) 2018/822 of May 25 2018 as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

The contents of those instruments were discussed in our Spain Tax Alert  dated June 20, 2019.