Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Spain 2011 by OECD

VIEWS: 7 PAGES: 90

More Info
									GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES



Peer Review Report
Combined: Phase 1 + Phase 2


SPAIN
      Global Forum
    on Transparency
      and Exchange
 of Information for Tax
Purposes Peer Reviews:
       Spain 2011
      COMBINED: PHASE 1 + PHASE 2



                    October 2011
  (reflecting the legal and regulatory framework
                   as at July 2011)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.

This document and any map included herein are without prejudice to the status of
or sovereignty over any territory, to the delimitation of international frontiers and
boundaries and to the name of any territory, city or area.


  Please cite this publication as:
  OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
  Reviews: Spain 2011: Combined: Phase 1 + Phase 2: Legal and Regulatory Framework, Global Forum
  on Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD
  Publishing.
  http://dx.doi.org/10.1787/9789264126756-en



ISBN 978-92-64-12674-9 (print)
ISBN 978-92-64-12675-6 (PDF)



Series: Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)




Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.
© OECD 2011

You can copy, download or print OECD content for your own use, and you can include excerpts from OECD
publications, databases and multimedia products in your own documents, presentations, blogs, websites and
teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given.
All requests for public or commercial use and translation rights should be submitted to rights@oecd.org
Requests for permission to photocopy portions of this material for public or commercial use shall be addressed
directly to the Copyright Clearance Center (CCC) at info@copyright.com or the Centre français d’exploitation du
droit de copie (CFC) at contact@cfcopies.com.
                                                                                                 TABLE OF CONTENTS – 3




                                            Table of Contents


About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
   Information and methodology used for the peer review of Spain . . . . . . . . . . . . . 9
   Overview of Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
   Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
   Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
   A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
   A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
   A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
B. Access to information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
   Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
   B.1. Competent Authority’s ability to obtain and provide information . . . . . . . . 42
   B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 48
C. Exchanging information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
   Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   51
   C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        52
   C.2. Exchange of information mechanisms with all relevant partners . . . . . . . .                                       61
   C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       63
   C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . .                             67
   C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . .                             68




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
4 – TABLE OF CONTENTS

Summary of Determinations and Factors Underlying Recommendations . . . 73

Annex 1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 77
Annex 2: List of all Exchange-of-Information Mechanisms in Force. . . . . . . . 78
Annex 3: List of all Laws, Regulations and Other Relevant Material . . . . . . . 84
Annex 4: Persons Interviewed During the On-Site Visit . . . . . . . . . . . . . . . . . . 85




                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                               ABOUT THE GLOBAL FORUM – 5




                              About the Global Forum

           The Global Forum on Transparency and Exchange of Information for Tax
       Purposes is the multilateral framework within which work in the area of tax
       transparency and exchange of information is carried out by over 100 jurisdic-
       tions, which participate in the Global Forum on an equal footing.
            The Global Forum is charged with in-depth monitoring and peer review of
       the implementation of the international standards of transparency and exchange
       of information for tax purposes. These standards are primarily reflected in the
       2002 OECD Model Agreement on Exchange of Information on Tax Matters
       and its commentary, and in Article 26 of the OECD Model Tax Convention on
       Income and on Capital and its commentary as updated in 2004. The standards
       have also been incorporated into the UN Model Tax Convention.
            The standards provide for international exchange on request of foresee-
       ably relevant information for the administration or enforcement of the domes-
       tic tax laws of a requesting party. Fishing expeditions are not authorised but
       all foreseeably relevant information must be provided, including bank infor-
       mation and information held by fiduciaries, regardless of the existence of a
       domestic tax interest or the application of a dual criminality standard.
            All members of the Global Forum, as well as jurisdictions identified by
       the Global Forum as relevant to its work, are being reviewed. This process is
       undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s
       legal and regulatory framework for the exchange of information, while Phase 2
       reviews look at the practical implementation of that framework. Some Global
       Forum members are undergoing combined – Phase 1 and Phase 2 – reviews.
       The Global Forum has also put in place a process for supplementary reports
       to follow-up on recommendations, as well as for the ongoing monitoring of
       jurisdictions following the conclusion of a review. The ultimate goal is to help
       jurisdictions to effectively implement the international standards of transpar-
       ency and exchange of information for tax purposes.
            All review reports are published once adopted by the Global Forum.
           For more information on the work of the Global Forum on Transparency
       and Exchange of Information for Tax Purposes, and for copies of the pub-
       lished review reports, please refer to www.oecd.org/tax/transparency.



PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                               EXECUTIVE SUMMARY – 7




                                   Executive Summary

       1.       This report summarises the legal and regulatory framework for
       transparency and exchange of information in Spain as well as the practi-
       cal implementation of that framework. The international standard, which
       is set out in the Global Forum’s Terms of Reference to Monitor and Review
       Progress Towards Transparency and Exchange of Information, is concerned
       with the availability of relevant information within a jurisdiction, the compe-
       tent authority’s ability to gain access to that information, and in turn, whether
       that information can be effectively and timely exchanged with its exchange of
       information partners.
       2.       The Kingdom of Spain is a Member State of the European Union and
       of the Economic and Monetary Union formed by the Euro-zone countries. It
       is one of the largest economies in Europe, driven by tourism and the automo-
       tive industry. It is also a popular destination for retirement and secondary
       homes, which triggers some exchange of information for tax purposes.
       3.       The legal and regulatory framework for the availability of informa-
       tion in Spain is in place. Ownership and identity information as well as
       accounting information is maintained by relevant entities and arrangements.
       In addition, much information is filed with governmental authorities, in
       particular the tax authorities and the Commercial Register. Full bank infor-
       mation is available in Spain, and the tax authorities also collect certain bank
       data every year, such as the identity of all bank account holders. The Spanish
       competent authority replies directly to almost 40% of the requests for infor-
       mation it receives thanks to the large databases of the tax administration,
       mainly requests on the ownership of commercial entities active in Spain, but
       also, to a lesser extent, accounting and banking information.
       4.      The gathering of data not already contained in the tax databases is
       performed by the tax departments responsible for the persons concerned by
       the request, e.g. the Large Taxpayers Department. Banking information is
       collected directly from the banks by a centralised tax office dedicated to this
       task. The Spanish tax authorities have the power to obtain and provide infor-
       mation that is the subject of a request from any person within their jurisdic-
       tion who is in possession or control of such information.



PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
8 – EXECUTIVE SUMMARY

     5.        Spain communicates a large volume of information every year. Over
     the last three years Spain has received 1 371 exchange of information requests
     from 39 of its 99 treaty partners, with the majority being from France, the
     United Kingdom, Germany and Portugal. The EU countries together represent
     almost 92% of the exchange of information requests received by Spain, mainly
     on the basis of the EU directive 77/799/EEC on exchange of tax information,
     and from 1 January 2013 on the basis of the new directive 2011/16/EU.
     6.      Spain continues to expand its network of exchange of information
     instruments. It recently joined the Council of Europe/OECD Convention on
     mutual administrative assistance in tax matters and is negotiating a dozen
     new double tax conventions and tax information exchange agreements. Some
     Global Forum members reported that the negotiation of some exchange of
     information agreements has been stalled for reasons not linked to exchange
     of information for tax purposes.
     7.       Ultimately, Spain’s regular partners praised the way in which Spain
     replies to their requests, in term of both timing and quality of communica-
     tions. The competent authority should nonetheless inform the requesting
     jurisdictions on the progress of requests being processed, once a period of
     90 days has elapsed, on a systematic basis, and not only when reminded.




                           PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                               INTRODUCTION – 9




                                          Introduction


Information and methodology used for the peer review of Spain

       8.      The assessment of the legal and regulatory framework of Spain and
       the practical implementation and effectiveness of this framework was based
       on the international standards for transparency and exchange of information
       as described in the Global Forum’s Terms of Reference, and was prepared
       using the Global Forum’s Methodology for Peer Reviews and Non-Member
       Reviews. The assessment was based on the laws, regulations, and exchange of
       information mechanisms in force or effect as at July 2011, other information,
       explanations and materials supplied by Spain during the on-site visit that took
       place on 4-6 April 2011, and information supplied by partner jurisdictions.
       During the on-site visit, the assessment team met with officials and repre-
       sentatives of the relevant Spanish public agencies, including the Spanish Tax
       Administration and the Ministry of Economy and Finance (see Annex 4).
       9.      The Terms of Reference break down the standards of transparency
       and exchange of information into 10 essential elements and 31 enumerated
       aspects under three broad categories: (A) availability of information; (B)
       access to information; and (C) exchanging information. This combined
       review assesses Spain’s legal and regulatory framework and the implementa-
       tion and effectiveness of this framework against these elements and each of
       the enumerated aspects. In respect of each essential element a determination
       is made regarding Spain’s legal and regulatory framework that either: (i) the
       element is in place, (ii) the element is in place but certain aspects of the legal
       implementation of the element need improvement, or (iii) the element is not
       in place. These determinations are accompanied by recommendations for
       improvement where relevant. In addition, to reflect the Phase 2 component,
       recommendations are also made concerning Spain’s practical application
       of each of the essential elements. As outlined in the Note on Assessment
       Criteria, following a jurisdiction’s Phase 2 review, a “rating” will be applied
       to each of the essential elements to reflect the overall position of a jurisdic-
       tion. However this rating will only be published “at such time as a representa-
       tive subset of Phase 2 reviews is completed”. This report therefore includes



PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
10 – INTRODUCTION

      recommendations in respect of Spain’s legal framework and regulatory and
      the actual implementation of the essential elements, as well as a determina-
      tion on the legal and regulatory framework, but it does not include a rating of
      the elements.
      10.    The assessment was conducted by an assessment team composed of
      two expert assessors and a representative of the Global Forum Secretariat:
      Mr. Malcolm Campbell, Comptroller of Taxes, Jersey; Ms. Maria Soledad
      Salman, Legal Adviser, International Taxation Department, Servicio de
      Impuestos Internos, Chile; and Ms. Gwenaëlle Le Coustumer from the Global
      Forum Secretariat.

Overview of Spain

      11.     The Kingdom of Spain is a Member State of the European Union and
      of the Economic and Monetary Union formed by the Euro-zone countries.
      The national territory consists of the 17 autonomous regions including the
      Balearic and the Canary Islands, as well as two autonomous cities (Ceuta and
      Melilla) in the North of Africa. Spain has a population of about 46 million.
      The nation’s capital, Madrid, is its largest city with more than 3.2 million
      inhabitants. Other large cities include Barcelona, Valencia and Seville.
      12.      Spain is one of the largest economies in Europe and one of the top
      fifteen in the world with a GDP of EUR 1 054 billion and GDP per capita
      of EUR 22 900. The economy is largely dominated by the service sector –
      tourism in particular – which accounts for around 71.8% of the total GDP.
      Industry contributes 24% to the GDP, driven by the automotive sector, and
      the construction sector which alone has been a leading factor for Spain’s
      economic growth in the last decade. Agriculture accounts for only 4.4% of
      the total GDP. As a consequence of the international financial crisis of 2008,
      Spain, after a decade of rapid growth, has entered a recession, from which the
      economy is slowly recovering.
      13.    Spain has an open economy where trade in goods and services
      accounts for 29.5% of the total GDP. Spain’s main trading partners are the
      European Union (Germany, France, Italy, Portugal, United Kingdom), China,
      United States, Algeria, Morocco, Japan, and Mexico. Spain’s main exports
      are machinery, tourism, and foodstuff. Spain’s main imports are energy and
      manufactured goods.1

1.    Economic and geographical data in this section are taken from: OECD (2010),
      OECD Economic Surveys: Spain 2010, OECD Publishing; The Ministry of
      Industry, Tourism and Trade at www.investinspain.org; Instituto Nacional de
      Estadística at www.ine.es; and the WTO at http://stat.wto.org/CountryProfile/
      WSDBCountryPFView.aspx?Language=E&Country=ES.


                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                               INTRODUCTION – 11



       14.     Spain is a popular retirement destination for workers from all around
       Europe, and many foreigners maintain second homes in Spain. The large pro-
       portion of foreign residents and landowners accounts for a significant number
       of exchange of information requests from the foreign resident jurisdictions, in
       many cases EU Member States. Most of these exchanges take place through
       automatic exchange, but a number of exchanges on request also take place
       every year.

       General information on the legal system
       15.      Spain is a parliamentary monarchy whose 1978 Constitution provides
       for the administrative and political system as well as the fundamental rights
       of Spaniards. The Constitution is the supreme law against which the validity
       of all laws and regulations may be measured. Spain has a civil law system.
       16.     While the King is the head of State and the symbol of its unity, the
       division of powers is at the core of the Spanish political system. The govern-
       ment is comprised of the President of the Government (the head of govern-
       ment) and the Council of Ministers designated by the President. The legislative
       power lies with the Parliament (Las Cortes Generales), composed of the
       Senate and the Congress of Deputies. Parliamentarians are elected by uni-
       versal suffrage; they choose the President of the Government and control the
       action of the executive, thus making Spain a parliamentary political system.
       Judges and courts are independent of the legislative and executive branches.
       The Constitutional Court ensures that the laws and the regulations of the gov-
       ernment are in line with the Constitution.
       17.      Spain is administratively composed of 17 Autonomous Communities
       that can each levy taxes, and the two Autonomous Cities of Ceuta and Melilla.
       The Constitution sets the organisational framework of the States. Autonomous
       Communities are further regulated through an “autonomy statute” (estatuto
       de autonomía), which sets out the distribution of powers and responsibilities
       between the State and each Community. Each has wide legislative and execu-
       tive autonomy, with their own parliaments and regional governments. The
       central government of Spain retains exclusive responsibility for nationality,
       international relations, external trade, defence, justice, criminal and com-
       mercial law, etc. Autonomous Communities may assume competencies over
       matters like the organisation of their institutions of self/government, health,
       social assistance. The Spanish Constitutional Court is the body responsible
       for resolving conflicts between the State and the Autonomous Communities
       regarding their powers.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
12 – INTRODUCTION

      Spanish general tax system
      18.     There are three tax subsystems in Spain: the state, regional and local sys-
      tems. Taxes are accordingly levied by the central Government, the Autonomous
      Community governments, and local authorities. There are special regimes
      applicable in the Basque Country and Navarra, which are two Autonomous
      Communities with special rights recognised in the Spanish Constitution, but
      these special regimes have no impact on the availability and access to tax
      information.
      19.     The main state taxes are the corporate income tax, personal income
      tax, non-residents income tax, inheritance and gift tax (direct taxes), value
      added tax (VAT), transfer tax, stamp duty, excise taxes, and customs duties
      (indirect taxes).
      20.     The Spanish Tax Agency (AEAT) is the relevant public body at the
      Ministry of Economy and Finance, responsible for the management, tax
      auditing and collection of national taxes. The Spanish system is predomi-
      nantly one of self-assessment, with the taxpayer completing a tax return and
      making the appropriate payment or receiving the appropriate refund, subject
      to review by the tax authorities.
      21.     Resident individuals are liable to personal income tax in respect of
      their worldwide income.
      22.      Resident companies (except civil companies) and other entities with-
      out legal personality such as pension funds are subject to corporate income
      tax. The general rate of corporate income tax is 30%, but there are other rates
      applicable, e.g. according to section 28 of the Corporate Enterprises Act,
      investment funds (with at least 100 investors) are subject to 1% tax rate and
      pension funds are taxed at a rate of 0%. Resident companies are companies
      incorporated under Spanish law, companies domiciled in Spain and compa-
      nies whose place of effective management is located in Spain. The Corporate
      income tax is levied on the net aggregate taxable income from all sources of
      the entities. However, income from permanent establishments located abroad
      is exempt, provided that certain conditions are met. Foreign source dividends
      are exempt according to participation exemption provisions. There is a classic
      double taxation system, under which corporate income is first taxed in the
      hands of the company and dividends are subsequently taxed in the hands of
      the shareholders at the appropriate rates. Distributions by resident holding
      companies “Entidades de Tenencia de Valores Extranjeros” to non-resident
      persons, which are attributable to income obtained by such companies from
      sources outside Spain (exempt from tax in Spain), are deemed to be foreign
      source income and are also exempt from tax.
      23.      Domestic or foreign source income derived by non-residents that
      is attributable to a permanent establishment situated in Spain is subject to


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                               INTRODUCTION – 13



       non-resident income tax. Such income is computed according to the rules of
       the Corporate Income Tax Act. A non-resident is deemed to have a permanent
       establishment in Spain if, either directly or through a representative with
       power of attorney, it maintains premises or places of work where the enter-
       prise, either wholly or partly, carries on its business. Non-residents deriving
       income that is not attributable to a permanent establishment in Spain are
       subject to non-resident income tax on their Spanish-source income.

       Spain and the standards
       24.     A member of the OECD and the FATF, Spain has also been part
       of the Global Forum since its inception.2 Spain has bilateral or multilateral
       exchange of information relationships with 99 jurisdictions (see Annex 2).
       Spain is currently negotiating new DTCs and TIEAs.
       25.     Over the last three years Spain has received 1 371 exchange of infor-
       mation (EOI) requests from 39 of its treaty partners, with the majority being
       from France, the United Kingdom, Germany and Portugal.

       Overview of the financial sector and relevant professions
       26.      The Spanish financial system is primarily a bank-based system, with
       87% of assets kept in credit institutions. There are three types of credit insti-
       tutions, namely private commercial banks, savings banks, and credit unions,
       which act in accordance with the European Community’s legal framework
       concerning Credit Institutions.3 In 2009, the total assets of credit institu-
       tions were about EUR 3.7 trillion, of which around 60% and 35% are held by
       commercial banks and saving banks respectively.4 The supervising authority
       of credit institutions is the Bank of Spain. Newly created credit institutions
       require authorisation by the Ministry of Finance. Credit institutions author-
       ised abroad belonging to the European Economic Area (EEA) must notify
       the Bank of Spain when they have intention to offer services or to open a
       branch in Spain; those institutions based outside the EEA need authorisation
       by the Ministry of Finance. There are over 400 credit institutions currently
       registered in Spain.
       27.     Investment institutions operating in Spain are investment compa-
       nies and investment funds. While their business aims are the same, invest-
       ment companies and investment funds have different legal forms: funds are

2.     Spain has notably been a member of the Joint Ad Hoc Group on Accounts
       (JAHGA) that produced the JAHGA report and standard.
3.     Article 1, Legislative RD 1298/1986 of 28 June
4.     See Financial Stability Board, IMF, and Banco de España for more information
       and statistical data on the financial sector in Spain.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
14 – INTRODUCTION

      separated assets without legal personality belonging to a number of investors;
      investment companies take the form of a public limited company. According
      to the Spanish Securities and Exchange Commission, there are about 5 725
      investment institutions registered in Spain as at 31 December 2010. The
      bodies responsible for the management of the investment institutions are
      the CIS Management Companies. In addition, these institutions must have a
      depository, responsible for the custody of the assets and the supervision of the
      management company. The Spanish Securities and Exchange Commission
      (CNMV) oversees the Spanish investment sector.
      28.     Spain’s capital markets are deep and well-developed, with financial
      instruments traded in a variety of platforms and settlement infrastructures.
      Spain’s stock exchange market capitalization reached almost EUR 1 trillion at
      end of 2009, though the size of the debt securities markets remains relatively
      small (perhaps because domestic corporations have preferred to seek financ-
      ing through bank loans and internally-generated funds).
      29.     The Spanish insurance market is the eleventh largest in the world and
      the sixth largest in Europe by net premium income. The assets managed by
      the insurance sector were EUR 243 billion at the end of March 2010, and is
      largely dominated by life insurance. The Directorate General for Insurance
      and Pension Funds is the body which supervises insurance companies. Before
      they can begin to operate, insurance companies must obtain the authorisation
      of the Ministry of Finance.

Recent developments

      30.     The most recent DTCs incorporating EOI articles are those signed
      in April 2011 with Singapore and Hong Kong, China. Spain signed 22 DTCs
      or protocols over the last three years, as well as TIEAs with 7 jurisdictions.
      Spain has also recently signed the OECD/Council of Europe Convention on
      Mutual Administrative Assistance in Tax Matters, which came into force in
      2010, and its protocol.
      31.     The Directive 77/799/EEC was recently repealed and replaced by the
      Council Directive 2011/16/EU on administrative cooperation in the field of
      taxation. This Directive sets forth provisions for the exchange of information
      by electronic means, as well as rules and procedures under which Member
      States and the Commission are to cooperate on matters concerning coordi-
      nation and evaluation. The Directive conforms to the international standard
      on transparency and exchange of information as contained in the Terms of
      Reference, and in particular implies the end of bank secrecy within the EU.
      32.    The Spanish authorities indicated that the General Tax Law will soon
      be amended in order to transpose the latest EU directive on mutual assistance



                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                               INTRODUCTION – 15



       and other EU instruments that affect international mutual assistance. The Bill
       was not ready at the time of drafting the present report.
       33.     Finally, recent legislative developments occurred that improve trans-
       parency, such as the entry into force on 30 April 2010 of the Act 10/2010 on
       the Prevention of Money Laundering and Terrorist Financing, which trans-
       poses the European Directive 2005/60/EC (the Third Money Laundering
       Directive).




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 17




                       Compliance with the Standards




A. Availability of information



Overview

       34.      Effective exchange of information requires the availability of reliable
       information. In particular, it requires information on the identity of owners
       and other stakeholders as well as information on the transactions carried out
       by entities and other organisational structures. Such information may be kept
       for tax, regulatory, commercial or other reasons. If such information is not
       kept or the information is not maintained for a reasonable period of time, a
       jurisdiction’s competent authority5 may not be able to obtain and provide it
       when requested. This section of the report describes and assesses Spain’s
       legal and regulatory framework on availability of information. It also assesses
       the implementation and effectiveness of this framework.
       35.      In general, information about the owners and other stakeholders of
       an entity or arrangement and information on the transactions carried out by
       any entity or arrangement subject to registration and tax obligations in Spain
       is available at any time either from the public authorities (e.g. tax administra-
       tion, Commercial Register) or directly from the entities (register of sharehold-
       ers) or regulated third parties (banks, public notaries), and some information
       is also publicly available.


5.     The term “competent authority” means the person or government authority desig-
       nated by a jurisdiction as being competent to exchange information pursuant to a
       double tax convention or tax information exchange agreement.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
18 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      36.      The Spanish tax administration possesses a very comprehensive data-
      base that contains extensive information on taxpayers, thanks to the annual
      tax returns filed by the taxpayers themselves, but also periodic tax information
      returns sent by third parties like the Commercial Register, public notaries and
      banks.
      37.       The tax administration knows the identity of the founding partners of
      commercial companies and it annually receives information on the identity
      of shareholders holding 5% or more of shares in the capital of commercial
      companies (1% for listed companies). It may also obtain the identity of all
      the shareholders of a SA (public limited companies) either from the company
      itself (registry of shareholders) or from the financial institution that manages
      its shares. Companies, like all other commercial entities, must keep their
      accounting documents and underlying documentation for at least four years
      under tax law and six years under the Commercial Code.
      38.     Spanish law allows public limited companies to issue bearer shares.
      There may be a few cases in which the tax administration may not be aware
      of the owners of these shares, but their issuance and transfer has been strictly
      regulated for more than 75 years (except from the period 1989-1998), and cur-
      rently no one can derive income or capital gains from bearer shares without
      being identified by the tax administration.
      39.      The most common entities in Spain are by far limited liability com-
      panies (SRL), followed by public limited companies (SA). The other types
      of commercial entities are less commonly used (e.g. partnerships). It is not
      possible to establish a trust or a private foundation under Spanish law. A trust
      cannot be regarded as the owner of assets and if a trustee of a foreign trust
      invests or wishes to acquire assets in Spain for the trust, the trustee will be
      in Spain the exclusive owner of the assets and taxed accordingly. The trustee
      resident in Spain must declare and is taxable on all Spanish source income
      as well as foreign source income obtained by the trusts for which he/she acts
      as trustee. Foundations must pursue a public interest purpose and are strictly
      regulated by the authorities.
      40.     Banks and other financial institutions have know-your-customer
      obligations and must keep information about transactions carried out by their
      customers for at least ten years.
      41.      In practice, Spain’s partners are satisfied with the Spanish responses
      to their information requests and no partner noted that a particular type of
      information was unavailable in Spain.




                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 19



A.1. Ownership and identity information
 Jurisdictions should ensure that ownership and identity information for all relevant
 entities and arrangements is available to their competent authorities.


       42.       The following section will consider the legal and regulatory frame-
       work relating to companies, bearer shares in joint-stock companies, partner-
       ships and other legal entities (trusts, foundations, etc.), as well as enforcement
       provisions to ensure compliance with the laws on the ownership of relevant
       entities.
       43.     Under article 116 of the Commercial Code, a commercial company
       or partnership is established by two or more individuals or legal persons
       who agree by contract to appropriate property or their industry to a common
       undertaking with a view to sharing the benefit which may result therefrom.
       In certain cases provided for by statute, the company or partnership may be
       established by only one person.
       44.      The commercial nature of an entity is determined by its purpose
       (commercial activity) or by the statute pursuant to which the entity is incor-
       porated (the Commercial Code and the Corporate Enterprises Act govern
       general partnerships, limited partnerships, limited liability companies,
       public limited companies). In addition, the Commercial Code defines as
       “businesspersons” or “traders” the persons carrying on commercial activities
       on a regular basis. “Trader” (comerciante) is a key notion in Spanish com-
       mercial law. A trader is any person having a commercial activity – and hence
       governed by the Commercial Code – from a grocer to a bank. Under the
       Commercial Code and the Corporate Enterprises Act, commercial companies
       and merchants (together “businesspersons”) are bound by a number of obliga-
       tions, including registration in the Commercial Register and the requirement
       to keep accounting records for a minimum of six years.
       45.      Spanish “companies” and “partnerships” are both legal persons and
       the distinction between them is based on the deciding factor in the creation
       of the entity: either the members’ capital contribution (in companies), or
       the personality of the members, in which case the management falls to the
       members and equity in the entity cannot be passed freely to third parties (in
       partnerships). Sociedades civiles (civil companies/partnerships) are entities
       incorporated pursuant to the Civil Code and that do not trade on a regular
       basis.
       46.    The tax administration maintains an important amount of identity
       and ownership information in its database, through a network of information




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
20 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      returns that taxpayers and third parties must file periodically,6 the complete
      structure of all companies being maintained by the companies themselves.
      47.     The Spanish authorities indicate that most requests concern compa-
      nies and individuals. They are not able to provide statistics though, because
      the IT application by which EOI requests are managed does not specify the
      type of entity concerned by the requests. No EOI partner of Spain indicated
      that they had not received the information requested because this type of
      information was not available.

      Companies (ToR7 A.1.1)
      48.     Companies (compañías or sociedades de capital) are incorporated
      pursuant to the Commercial Code and the Corporate Enterprises Act. There
      are three types of companies (article 1 of the Corporate Enterprises Act):
              the sociedad de responsabilidad limitada (SRL or SL for sociedad
              limitada, Limited Liability Company) is a commercial company
              formed by one or several members not personally liable for the com-
              pany’s debts; they only bear losses up to the amount of their contri-
              bution. The personality of the members matters (intuitu personae) in
              that the transfer of the shares is not done freely. The minimum capital
              is of EUR 3 000 (articles 1, 4 and 12 of the Corporate Enterprises
              Act). This is the most common type of entity in Spain;
              the sociedad anónima (SA, Joint Stock Company or Public Limited
              Company) is constituted between one or more shareholders not per-
              sonally liable for the company’s debts; they only bear losses up to the
              amount of their contribution. Shares are represented by certificates
              or book entries, and where share certificates are issued, by-laws
              must specify whether they represent registered or bearer shares and
              whether the issue of multiple share certificates is envisaged (see
              Section A.1.2 below). The minimum capital is EUR 60 100 (articles 1,
              4, 12 and 23 of the Corporate Enterprises Act). The shares of an SA
              can be listed on an official securities market (section 495); and
              the sociedad comanditaria por acciones (S.Com. por A. or SCA,
              Partnership Limited by Shares) is formed by one or more general
              partners, who are traders and are indefinitely and jointly liable for

6.    Every tax form has to be passed by a ministerial order and therefore signed by
      the Spanish Economy and Finance Minister and then published in the Official
      State Gazette (BOE). See section 30 of the General Regulation on Tax Auditing.
      Any modification of the tax form must follow the same procedure.
7.    Terms of Reference to Monitor and Review Progress Towards Transparency and
      Exchange of Information


                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 21



                 the partnership’s debts, and limited partners, who are shareholders
                 and bear losses only up to the amount of their contributions (article 1
                 of the Corporate Enterprises Act). This type of company is scarcely
                 used (none have been created over the last four years).
       49.      In addition, European companies are governed by Council Regulation
       (EC) No 2157/2001 of 8 October 2001 on the Statute for a European Company,
       transposed into Spanish law in the Corporate Enterprises Act (sections 455 to
       494). A European company can operate in all EU Member States in a single
       legal form common to all Member States and defined in EU law. Under arti-
       cle 10 of the Regulation, the rules that apply to European companies are those
       for public limited-liability companies, and the registration rules applicable
       to Spanish SA are thus applicable to European companies (section 457). A
       European company’s head offices must correspond to the place where it has
       its central administration, i.e. its real headquarters.
       50.     Most companies incorporated in Spain are limited liability compa-
       nies (mainly small and medium-size enterprises). In 2008, the Commercial
       Register of Spain counted around 83% of SRLs and 16.8% of SAs. The 0.2%
       remaining represents SCAs and partnerships. The tax administration counted
       almost 2.16 million registered SRLs and 437 675 registered SAs. In 2010,
       there were 2.29 million SRLs and 412 203 SAs.
       51.     All companies domiciled in Spain are considered Spanish entities
       subject to the Corporate Enterprises Act, notwithstanding their place of
       incorporation (section 8 of the Corporate Enterprises Act). A company whose
       principal place of business is situated in Spain shall be domiciled in Spain.
       Foreigners and companies incorporated abroad may engage in business in
       Spain (section 15 of the Commercial Code). In 2008, 12 000 permanent estab-
       lishments of foreign companies and other foreign entities were registered in
       Spain.
       52.     The incorporation of a company entails some registration and publi-
       cation requirements, and companies hold up-to-date information identifying
       their owners.

       Information held by the Spanish authorities
       53.     The identity of all the founding members of a company is disclosed
       in the deed of incorporation it submits to the Commercial Register (Registro
       Mercantil) within two months of its creation (the company is considered to
       be a general partnership until it is registered).8 The deed must also include the

8.     Sections 19 and 20 of the Corporate Enterprises Act and section 19 of the
       Commercial Code. See also the Commercial Register Regulation, section 114 for
       SA, section 175 for SRL, and section 213 for SCA, which require that the Register


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
22 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      contributions made by each of the founders (whether individuals or corpora-
      tions), and their respective number of shares.9 The company must provide
      the Register with its tax identification number, after having provisionally
      registered with the tax administration (see below).10
      54.       The deed needs not to be amended on a change of shareholders except
      in the case of a SCA, whose managing partners, as members indefinitely and
      jointly liable for the SCA’s debts, must always be identified (section 23 of the
      Corporate Enterprises Act). This information is maintained by the company
      itself, and the tax administration also maintains ownership information (see
      below).
      55.      A key element of the Spanish tax system is the tax identification
      number (TIN, Spanish acronym NIF) that all legal entities, unincorporated
      entities and individuals must have in order to undertake professional or
      business activities or activities involving withholding taxes.11 The TIN is
      mandatory for all persons above 14 years old, or before when special events
      occur, such as opening a bank account. It is also the national identity number
      of natural persons. The TIN is used for different purposes. For instance it is
      mandatory for corporations and businesspersons to put this number on all
      their business correspondence.
      56.     All natural and legal persons that plan to engage in an activity which
      has tax implications must have a TIN and be registered in the Tax Registry
      of Entrepreneurs, Professionals and Withholders, which form part of the Tax
      Registry of Taxpayers. SRL, SA and SCA are therefore required to register
      with the tax administration to obtain a TIN, and to declare any changes to

      receives the name of all the founders, together with the deed of incorporation. The
      Registry is a public office supervised by the Ministry of Justice and controlled
      by the courts. It is regulated by articles 16 to 24 of the Commercial Code, and
      the Royal Decree 1784/1996, of 19 July, leading to approval of the Commercial
      Register Regulation. Information is centralised with the Central Commercial
      Register in Madrid.
9.    Section 32 of the Corporate Enterprises Act. The corporate by-laws must indicate
      the registered office of the company, which must be the location of their actual
      administrative and management activities or their main business establishment
      or operation. Those of SCA must also include the identity of the general partners
      (sections 22 and 23). The promoters of publicly subscribed joint stock companies
      must also submit the name, nationality and address of all the promoters to the
      National Securities Market Commission (section 42). The Commercial Register
      may be consulted at www.rmc.es/.
10.   Sections 84 and 86 of the Business Registry Regulations.
11.   Additional Provision Six to the General Tax Law and sections 18 ff of the
      General Regulation on Tax Auditing.


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 23



       their fundamental corporate arrangements, i.e. their company name, legal
       form, principal activity, registered office and principal place of business. The
       name and TIN of all the founders must also be provided.12
       57.      There is no obligation for companies to declare a change of share-
       holder, but they are required to identify by name and TIN all persons owning
       at least 5% of their capital in their annual Corporate Income Tax return (form
       nº200). The threshold is 1% if the company is listed.13
       58.      In addition, the transfer of shares is reported to the tax administration
       by the person having facilitated this transfer (e.g. bank or other member of the
       secondary market, public notary) in an annual information tax return (return
       n°198), regardless of the percentage of shares transferred.14 This covers the
       transfer of all shares of SRL and listed companies, as well as the transfer of
       shares of all general partners of SCA. For the registered shares of non listed
       companies, the certificates of which have been printed, the involvement of
       these intermediaries is not mandatory and the Spanish authorities may not
       obtain ownership information through this way (but can access the share regis-
       ter in any event; see the subsection on Information held by companies below).
       59.      In practice, the Spanish competent authority exchanges ownership
       and identity information, such as information on shareholding (composition
       and evolution), transmissions of shares, directorship and deed of incorpora-
       tion of companies, but also information such as the existence of a permanent
       establishment and the substance of the undertaking.
       60.     It can happen that the competent authority requests information of
       a Commercial Registry but ownership information is mostly contained in
       the tax database, which allows the competent authority to trace a chain of
       owners. First the database contains the name of owners holding at least 5%
       of the shares (1% if companies are listed), provided that the company, the
       ownership of which is sought, is Spanish or otherwise resident in Spain. In
       addition, companies must report the identity of the shareholders to which
       they paid dividends (in relation to the corresponding withholding tax). The
       database contains hyperlinks: clicking on them takes the person consulting
       the database from the file on the company to the file on the company that
       owns the shares. As a result, the competent authority does not usually need
       to request the information from companies.

12.    The taxpayer (individual or entity) must file a “census statement” pursuant to sec-
       tion 29(2) and Additional Provision Five to the General Tax Law; sections 7 to 17 of
       the General Regulation on Tax Auditing. The corresponding tax returns n°036 and
       037 are regulated by Order EHA/1274/2007 of 27 April, as subsequently amended.
13.    Order EHA/1338/2010, of 13 May
14.    These operations are taxed pursuant to section 108 of Act 28/1988 on the
       Securities Market.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
24 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      Foreign companies
      61.      As indicated above, all natural and legal persons must have a TIN
      for any activity in which they engage that has tax implications. Therefore, a
      foreign company that operates in Spain must apply for a TIN and registra-
      tion in the Tax Register for Entrepreneurs, Professionals and Withholders.
      In addition, when a non-resident legal person or entity operates in Spain,
      using permanent establishments that each undertakes a distinct activity and
      which is each managed separately, each permanent establishment must apply
      for a different TIN than that assigned to the non-resident entity. They must
      nominate a tax representative who is resident in Spain and submit a document
      that proves the existence of the entity. It can be the deed of creation of the
      company registered with an official registry in its jurisdiction of origin, or the
      certification from a public notary or tax authority.
      62.      The Spanish tax register of entrepreneurs indicates the jurisdiction of
      residence of the foreign entity, its nationality and legal status (section 8 of the
      General Regulation on Tax Auditing). Foreign companies must fill in the same
      tax return as domestic companies, i.e. form 200, and therefore provide informa-
      tion on all persons owning at least 5% of their capital (1% if companies are listed).

      Information held by companies
      63.     The rules are different for shares of SRLs, and shares of SA and SCA.
      64.       SRLs must keep a shareholders ledger that contains records of the
      original shareholders and subsequent share transfers, as well as the creation of
      rights ad rem or other encumbrances thereon. Only the parties entered in such
      ledger are acknowledged by the company to be shareholders. The ledger must
      indicate their identity and address (section 104 of the Corporate Enterprises
      Act). Unless otherwise provided in the company´s by-laws, shares are freely
      transferable between company members and between them and members of
      their families or companies of the same group as the transferor, but they cannot
      be freely transferred to other persons. Rules of transfers are governed by the by-
      laws of the company and the Corporate Enterprises Act. For instance a member
      wishing to transfer some shares must inform the managers of the company
      in writing and obtain the authorisation of the general assembly. Members of
      a SRL are therefore aware of any transfer of shares. The ledger must be kept
      throughout the lifetime of the company, and the ledger of liquidated companies
      is sent to the Commercial Register. SRLs cannot issue bearer shares.
      65.      Shares of SA (joint-stock companies) and SCA (partnerships limited
      by shares) are represented by certificates of title or book entries (i.e. dema-
      terialised or immobilised), and where share certificates are issued, by-laws
      must specify whether they represent registered or bearer shares and whether
      several share certificates may be issued.


                              PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 25



       66.      Registered shares must be entered in a ledger, which records subse-
       quent share transfers, including the name, surname, company name, national-
       ity and address of subsequent holders (section 116 of the Corporate Enterprises
       Act). The managers of the company must enter the transfer of shares in the
       ledger immediately (section 120).
       67.      Shares of SA and SCA can also be represented in the form of book
       entries (i.e. dematerialised) maintained by financial intermediaries, in which
       case they are governed by the provisions of the securities market regulations.
       The financial intermediary must maintain the identity of the account owners
       (sections 118 and 497 of the Corporate Enterprises Act).15 In addition, share-
       holders of SA and SCA that are listed on the Stock Exchange are obliged to
       communicate the acquisition or transfer of significant amounts of shares to
       the issuer and the National Securities Market Commission (CNMV), i.e. when
       the percentage of shares reaches, exceeds or goes below certain thresholds,
       starting from 3%.16
       68.     All members of a SRL and shareholders of a SA or SCA can consult
       the ledger of shareholders or registered shares (sections 105 and 116 of the
       Corporate Enterprises Act).

       Nominees
       69.     The concept of nominee that exists in some jurisdictions, in particu-
       lar common law jurisdictions, does not exist in Spanish law. Where a person
       purports to hold property for the benefit of a third person, that third person
       would have no rights under Spanish law to claim the property. Consequently,
       shares issued by companies registered in Spain are in principle held by their


15.    The institution charged with the maintenance of the book entries is designated in
       the Commercial Register (section 94(8) of the Commercial Register Regulation).
       It must provide the central depository (Iberclear) with the identity of the holders
       of the accounts in order to be submitted to the issuers that have asked for such
       information with the aim of drawing up the list of natural person or legal entities
       authorised to participate in the shareholders’ general meetings. The information
       to be provided shall include the addresses and any contact details at the avail of
       the institution enabling the issuer to correspond with its shareholders. No regu-
       lation has yet laid down technical and formal arrangements through which the
       issuer may exercise this right.
16.    Other thresholds are 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%,
       60%, 70%, 75%, 80% and 90%. See section 23 of Royal Decree 1362/2007, dated
       19 October, in which section 53 of the Law on Securities Market, on the requisites
       for transparency relative to information about shares from issuers that are being
       traded on an official secondary market or another market regulated by the EU.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
26 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      beneficial owner, whose identity is known (or accessible) to the issuer, with
      the exception of some bearer shares (see below).

      Service providers
      70.     The formation of SRL, SA and SCA requires a public deed regis-
      tered in the Commercial Register. It therefore requires the intervention of
      a public notary, who usually takes care of registering the company with the
      Commercial Register and the tax administration, even though that obligations
      remains on the founders and managers who are jointly liable for damages
      caused by them for breach of this obligation.
      71.      Public notaries must periodically (monthly and annually) inform the
      tax administration when new companies register, and each time the deed
      of incorporation of a company changes or a general partner of a SCA or a
      member of an SRL changes. Indeed, section 42(1) of the General Regulation
      on Tax Auditing requires that public notaries report annually the transfer of
      SRL shares, specifying the full name, domicile and TIN of buyers and sell-
      ers, shares involved in the transaction, date and amount of the transaction and
      income derived.17
      72.      In addition, public notaries and Commercial Registries are subject
      to the Anti-Money Laundering Act 10/2010 and are therefore subject to its
      provision on beneficial ownership. Indeed, the scope of persons subject to
      know-your-customer and data conservation requirements for their usual cus-
      tomers, and in some cases occasional customers, covers all persons engaged
      in a financial activity, plus a number of non-financial professions such as the
      legal professions (except in the case of court proceedings or legal advice),
      accountants and auditors. Notaries are required to identify the beneficial
      owner (above 25% of the capital), whenever a legal person is constituted. In
      addition, public notaries should not intervene in any act when they are not
      able to ascertain the ownership and control structure of the legal person.18
      73.     Overall, the very comprehensive obligations in company and tax
      law ensure the availability of ownership information for companies, and the
      know-your-customer obligations imposed by the anti-money laundering act
      have only a theoretical impact on information exchange for tax purposes,
      since the competent authority has never used this source of information.


17.   Forms 036, 038 (section 50 General Regulation on Tax Auditing) and 197. The
      tax administration also signed a tax information exchange agreement with the
      Notary Council in 2007.
18.   Section 4 of Act 10/2010. See also FATF Mutual Evaluation of Spain – Follow-Up
      Report, October 2010.


                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 27



       Bearer shares (ToR A.1.2)
       74.     Shares of SA (joint-stock companies) and SCA may be represented
       by bearer shares (sections 23 and 113 of the Corporate Enterprises Act).19
       Although bearer shares might be issued according to the 2010 Corporate
       Enterprise Act, and there is no amendments envisaged in this regard, since
       1936 their issuance and transfer is strictly regulated (except during the period
       1989-1998).20 First, the names of all founders of companies must be included
       in the deed of the company, even in the case of bearer shares. Second, the
       subscription or transfer of bearer shares cannot be made by the mere transfer
       of the paper-share but requires the intervention of a public notary. Finally, if
       a company distributes dividends to the shareholder, it must identify its share-
       holders and inform the tax administration on an annual basis, in the same
       way as for registered shares.
       75.      Since 1998, the transfer of bearer shares of unlisted company has to
       be performed through (1) a notary, (2) a securities company, or (3) a credit
       institution, for the ownership transfer to be valid (Additional Provision Three
       of Act 24/1988 on the Securities Market). Notaries, securities companies and
       credit institutions must keep records of the transaction and supply this infor-
       mation annually to the tax administration. They must supply the complete
       identification of the buyers and sellers (their name or business name, address
       and tax identification number), as well as the type and number of shares, and
       the amount, date and, if any, earnings for each transaction (section 42 of the
       General Regulation on Tax Auditing). Notaries also send this information to
       a centralised database of the Council of Public Notaries every month. If a
       transfer is not valid, then the purported transferee would have no rights as a
       shareholder, e.g. to receive dividends or vote.
       76.     Similarly, since 1998, the transfer of bearer shares of a listed com-
       pany is possible only after they have been dematerialised in book entries
       (as they cannot be traded on the stock market, section 496 of the Corporate
       Enterprises Act).
       77.     In addition, the AML law prohibits the institutions and persons cov-
       ered by this Act to enter into, or continue, business relations with companies

19.    SRL cannot issue bearer shares because their shares (participaciones sociales)
       may not take the form of bonds or accounting entries. Therefore, the statutory
       provisions governing bearer shares cannot be applied to shares in a SRL.
20.    A Decree of 1936 prohibits the transfer of securities without the mediation of a
       stock market trader, stock broker or notary. The enforceability of this decree was
       confirmed by the Law of 23 February 1940, which in turn was repealed with
       the entry into force of the Law 24/1988 on the Securities Market that introduced
       some measures of liberalisation. An amendment to this law passed in 1998 rein-
       troduced the intervention of third parties in the transfer of bearer shares.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
28 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      whose shares are represented by bearer securities, unless they determine by
      other means their structure of ownership and control. This prohibition does
      not apply to the conversion of bearer shares into registered securities or book-
      entry securities (section 4(4) of Act 10/2010).
      78.      In conclusion, the issuance and transfer of bearer shares has been
      strictly regulated for 75 years (except the period 1989-1998), and currently
      no one can derive income or capital gains from bearer shares without being
      identified by the tax administration. The only legacy issue relates to bearer
      shares issued before 1936 or from 1989 to 1998, that have not been trans-
      ferred or for which the owners have not received any dividends since then. In
      practice, bearer shares are extremely rarely used and limited to small entities,
      considering the existing constraints. The Spanish competent authority does
      not recall having ever answered an EOI request related to bearer shares. Spain
      should take necessary measures to ensure that appropriate mechanisms are in
      place to identify the owners of bearer shares in all instances.

      Partnerships (ToR A.1.3)
      79.      A Spanish partnership is a legal person to which each member agrees
      to participate taking into consideration each other member in their personal
      capacity (intuitu personae). As a result, each member’s shares can be trans-
      ferred only with the other members’ consent, and the articles of association
      must be amended when a transfer occurs. There are two types of commercial
      partnerships in Spanish law (section 122 of the Commercial Code), as well as
      sociedades civiles.
              a compañía colectiva (general partnership) is a commercial entity
              with at least two members (who are traders) who are jointly, person-
              ally and severally liable for the partnership’s debts (sections 125-144
              of the Commercial Code);
              a compañía en comandita simple (limited partnership) is a commer-
              cial entity that only partly fulfils the criteria for unlimited liability
              entities since it comprises two classes of members: general partners,
              who are jointly and severally liable for the partnership’s debts, and
              limited partners, who incur no liability for the partnership’s debts
              and whose risk is limited to the amount of their contribution (they are
              essentially financial backers). Limited partners may not carry out any
              external act of management, even by virtue of a power of attorney
              (sections 145-150 of the Commercial Code); and
              all entities not otherwise defined are sociedaded civiles (sections 1665-
              1708 of the Civil Code) except for joint ventures (comunidad de




                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 29



                 bienes).21 There are 231 322 sociedades civiles in Spain. (They are
                 considered below in the subsection on other entities).
       80.     Partnerships are seldom used in Spain. 2 877 general partnerships
       and 490 limited partnerships (both simple and by shares) are registered with
       the tax administration, representing less than 0.2% of the entities registered
       by the tax administration.

       Information held by the Spanish authorities
       81.    The Commercial Register and tax administration have in their files
       the names of all the partners of general and limited partnerships.
       82.     The names of all the partners of a general partnership and limited
       partnership must appear in the deed of incorporation of partnerships, which
       must be amended every time a partner changes. The deed must also include
       the contributions made by each of the founding partners (whether individuals
       or corporations), and their respective interests in the partnership (sections 125
       and 145 of the Commercial Code).
       83.      All commercial entities, including general and limited partnerships,
       must register with the Commercial Register and provide their deeds of incor-
       poration within a month of their creation and once they have been allocated
       a tax identification number. The same rules applicable to companies apply to
       partnerships.22 The tax obligations of commercial partnerships are the same
       as those of companies (see above).

       Information held by the partnership and service providers
       84.      In the case of limited and general partnerships, all the partners must be
       identified in the deed of incorporation, as noted above. It is impossible to trans-
       fer stakes without the consent of all the partners (section 143 of the Commercial
       Code). As a result, all partners know the identity of the other partners.

       Trusts (ToR A.1.4)
       85.     The concept of “trust” does not exist under Spanish Law, and Spain
       has not signed The Hague Convention of 1 July 1985 on the Law Applicable
       to Trusts and on their Recognition. There is, however, no obstacle in Spanish

21.    Tax transparent entities without legal personality; sections 392-406 of the Civil
       Code.
22.    Sections 210 and 213 of the Commercial Register Regulation. See also article 119
       of the Commercial Code and articles 81 to 86 of Royal Decree 1784/1996, dated
       19 July, leading to approval of the Commercial Register Regulation.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
30 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      domestic law that prevents a Spanish resident from acting as a trustee, or for
      a trustee of a foreign trust to invest or acquire assets in Spain.
      86.     As regards the availability of information on settlors, trustees and
      beneficiaries of trusts, the Spanish law does not require the registration of
      foreign trusts or to inform the tax administration before starting operating in
      Spain. However, if real estate property is involved, the previous and new legal
      owners must be disclosed in front of a notary public.

      Tax obligations
      87.      The Spanish tax laws do not contain specific provisions on the taxa-
      tion of the assets or income derived from foreign trusts with a link to Spain.
      These assets and income are subject to tax as any other assets or incomes of
      the trustee and any benefit distributed to beneficiaries must be declared in
      their tax returns.
      88.      The Spanish tax administration maintains some information if the pro-
      fessional trustee is resident in Spain, the trust is administered in Spain or some
      assets are located in Spain. In particular, a professional trustee is subject to the
      tax obligations related to his/her main profession, which allow the tax adminis-
      tration to collect all information related to the trust that may be his/her client.
      89.     The tax administration can use all the procedures at its disposal to
      seek and request any information not already in its possession. The Spanish
      authorities may ask the trustee or the beneficiaries for all information neces-
      sary to determine the amount of taxable income or assets.
      90.     Trustees resident in Spain (professional or not) are subject to record-
      keeping requirements for the determination of their income, as is any person
      resident in Spain. Thus, all records that are necessary for determining his/
      her income must be kept (section 29 of the General Tax Law). This typically
      includes the trust deeds and therefore the names of the settlors and named
      beneficiaries of the trust, and the nature of the assets in the trust that have
      generated the income.
      91.      Therefore, because general tax requirements in Spain require that all
      taxpayers be able to provide information to the tax authorities whenever tax-
      able income must be determined, a trustee resident in Spain must be able to
      provide the tax authorities with information on the settlors and beneficiaries
      of trusts that he/she administers.

      Money laundering rules
      92.     Lawyers and accountants acting as trustee, as well as trust service
      providers such as financial institutions, are subject to anti-money laundering



                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 31



       requirements, whoever their clients are. In particular, any person who oper-
       ates or manages a trust is subject to the law, pursuant to section 2(1) of
       Act 10/2010. Section 7(4) provides that “the institutions and persons covered
       by this Act shall apply the due diligence measures set forth in this Chapter
       [on due diligence] to trusts and other legal arrangements or patrimonies
       without legal personality which, despite lacking legal personality, may act in
       the course of trade”. In particular, section 3 of Act 10/2010 requires that “all
       the participants” be identified. The Spanish authorities indicate that the term
       “participant” includes the trust as customer, but also the persons representing
       it, in this case the trustee.23
       93.      Subjected persons must also identify “the natural person(s) who hold
       or exercise control over 25% or more of the assets of an instrument, or legal
       persons who administer or distribute funds, or, if the beneficiaries are yet
       to be determined, the class of persons in whose benefit the legal person or
       arrangement has been created or primarily acts”. For the purposes of a for-
       eign trust, the beneficial owner of a transaction is the natural person(s) who
       is the settlor (rights holder) or beneficiary (section 4(2)(c) of Act 10/2010).
       94.     The anti-money laundering obligations, together with the obligation
       to maintain and submit information to the tax authorities, ensure that infor-
       mation regarding the settlors, trustees and beneficiaries of trusts is available
       to Spain’s tax authorities.

       Practical consequences and conclusion
       95.      In practice, the Spanish authorities indicate that the trustees of
       foreign trusts are very rarely residents in Spain and foreign trusts are very
       rarely administered in Spain. Several factors would explain this situation. In
       particular, the fact that Spain does not recognise the concept of trusts creates
       a legal risk for the persons involved in a trust. The assets transferred to a trust
       are considered to be owned by the trustee, and therefore part of his/her assets,
       for example for income tax purposes; in case of death (for inheritance pur-
       poses); concerning potential actions of creditors; or for wealth tax purposes.
       96.      In addition, Spain has not received any request for information about
       a foreign trust in the last three years, which appears to confirm that, given the
       volume of information exchanged by Spain, the presence of trusts is insig-
       nificant. Comments from Spain’s peers do not indicate that in any instance the
       Spanish authorities may not been able to provide information on trusts.


23.    Section 3(2): “Before entering into the business relationship or executing any trans-
       actions, the institutions and persons covered by this Act shall verify the identity of
       the participants using documentary evidence”.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
32 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      Foundations (ToR A.1.5)
      97.     There is no provision for private-interest foundations in Spanish law.
      Foundations are non-profit entities established by individuals, legal entities
      or State public sector entities, exclusively for listed public-interest purposes.
      The law expressly prohibits the creation of foundations whose main aim is to
      provide benefits to the founder, board members, and their relatives down to
      the fourth degree of kinship (article 3(3)).
      98.     Foundations are strictly regulated by the Foundations Act 50/2002,
      of 26 December 2002, registered in a public Registry of Foundations, super-
      vised by a “protectorate” of the General State Administration, and the assign-
      ment of assets to a foundation is irrevocable, i.e. if a foundation is dissolved,
      the assets are devolved to one or more public or public-interest entities whose
      purpose is to pursue public benefit purposes (article 33).
      99.      To constitute a foundation, the deed of constitution must include,
      among other aspects, the full name, age and marital status of the founder(s),
      if individuals – the business name or title in the case of corporations – their
      nationality, address and TIN (article 10). The deed of constitution must be
      registered in the Foundations Register, as set out in article 13 of Act, so that it
      is possible to find out who are its founders.
      100.    In practice, Spain has not received any information request relating
      to a Spanish foundation in the last three years.

      Other entities

      Sociedades civiles
      101.     Non-commercial entities with legal personality are sociedades
      civiles. They are formed by two or more persons that contribute money,
      equipment or labour with the goal of sharing the profits amongst themselves.
      Profits and losses are shared according to the established agreement or pro-
      portionally to the contributions made. Members are personally and severally
      liable for the entity’s debts. They are governed by sections 1665 to 1708 of the
      Civil Code.
      102.    Sociedades civiles are destined for the operation of a business or
      profession that does not need to be constituted formally (through a public
      contract), except in the event of the contribution of real estate, for which a
      public deed before a public notary is required. They are regulated by what is
      established in the contract signed by all the parties, and anything that has not
      been agreed is governed by the Civil Code. They are usually used by farmers
      or professionals (such as lawyers) but their use is decreasing, as most entities
      are today commercial entities.



                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 33



       103.    There is no obligation to register these entities in the Commercial
       Register, but if they are undertaking any economic activity subject to income
       tax, they must apply for a TIN. The entity must provide a copy of the public
       deed or verifiable documentation attesting its constitution. The provisional
       or definitive TIN is not assigned to entities which do not provide at least a
       signed document in which the issuers declare their intention to constitute the
       body, or another document accrediting co-ownership. The issuers must also
       give information on the variations regarding their partners, participants or
       shareholders.
       104.     Sociedades civiles are not liable to taxes. They are transparent, in
       that their incomes are attributed to their members (section 8(3) of the Law
       on Corporation Tax, Non-resident Income Tax and Wealth Tax).24 They
       nonetheless have some tax responsibilities, such as the obligation to fill in
       an annual tax information return indicating the total income and the income
       to be attributed to each member, whether or not they are resident in Spain.
       The return must contain the tax identification number of the members (or
       representative) and include the variations in the composition of the entity
       (members) during the year (form 184, section 90 of the Personal Income Tax
       Act, and section 70 of the Personal Income Tax Regulations of 30 March
       2007). Failure to present this return is subject to a fine between EUR 330 and
       20 000, depending on the amount of missing data, pursuant to section 198 of
       the General Tax Law.

       Enforcement provisions to ensure availability of information
       (ToR A.1.6)
       105.     Spain should have in place effective enforcement provisions to ensure
       the availability of ownership and identity information, one possibility among
       others being sufficiently strong compulsory powers to access the informa-
       tion. This section of the report assesses whether the provisions requiring the
       availability of information with the public authorities or within the corporate
       entities reviewed in section A.1 are enforceable and failures are punishable.
       Questions linked to access are dealt with in Part B.
       106.     All commercial entities must be registered both with the tax admin-
       istration (and given a tax identification number) and with the Commercial
       Register, and these registrations cannot be done separately (the entity needs
       to have a provisional TIN to register with the Commercial Register and be
       registered there to obtain a definitive TIN). Not being registered implies that
       the entity has no liability and the persons conducting commercial activities

24.    The same applies to jointly owned companies, estates and other entities, which do
       not have legal personality, but are comprised of an economic entity or a separate
       asset that is liable to taxation.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
34 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      are jointly and personally liable for the debts of the undeclared entity (arti-
      cle 120 of the Commercial Code and section 36 of the Corporate Enterprises
      Act).
      107.     If registration has not taken place one year after the creation of the
      company, it is then considered to be a general partnership or a non-commer-
      cial organisation (sociedad civil). The Spanish Tax Agency can verify the
      reliability of the data provided by the interested parties in their applications.
      False or incomplete existence returns are punished by a fine of EUR 250
      (article 199 of the Tax Law).
      108.    Breach of obligations relating to the use of a tax identification
      number or of other numbers or codes established by tax or customs laws and
      regulations is a tax offence punishable by a fine of EUR 150 (section 202 of
      the General Tax Law).
      109.     As concerns the annual tax returns that companies and partnerships
      must fill in (and which include some ownership information), section 198 of the
      General Tax Law provides that failure to file a tax return is a tax offence pun-
      ishable by a EUR 200 fine. Filling an incomplete or incorrect return is also an
      offence, the sanction for which depends on the tax consequence of the offence.
      110.    While the Corporate Enterprises Act does not set any administrative
      sanctions for the breach of the obligation to maintain a ledger of shareholders,
      shareholders that are not entered on the ledger are precluded from exercis-
      ing any of their rights vis-à-vis the company. In addition, if the company’s
      managers do not keep the shareholders ledger, they may be held liable for any
      damages (section 236 of the Corporate Enterprises Act).
      111.     The Spanish authorities report that in practice taxpayers comply with
      their duties of tax declaration. In addition, the Spanish tax administration
      has standard proceedings for verifying that taxpayers fill out the tax returns
      correctly (tax returns for entities included) as well as specific campaigns to
      verify this information. There are infringement and sanctions in the case of
      failure to comply with the law in the Taxation Act 2003. It also happens that
      companies or partnerships are removed from the Registry of Companies
      because they failed to perform any of the obligations described in part A of
      that report.
      112.    In conclusion, there are a variety of penalties under Spain’s laws to
      ensure that information required to be maintained is, in fact, maintained.
      The penalties appear to be proportionate and dissuasive enough to insure
      compliance. During the onsite visit, the assessment team found that Spain’s
      competent authority is able to respond to requests for ownership and identity
      information for all relevant legal entities and arrangements. Information
      received from partner jurisdictions with an exchange of information relation-
      ship with Spain confirms this.


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 35



                   Determination and factors underlying recommendations

                                        Phase 1 determination
        The element is in place.

                                              Phase 2 rating
        To be finalised as soon as a representative subset of Phase 2 reviews is
        completed.


A.2. Accounting records

         Jurisdictions should ensure that reliable accounting records are kept for all
         relevant entities and arrangements.

       113.      A condition for exchange of information for tax purposes to be effec-
       tive, is that reliable information, foreseeably relevant to the tax requirements
       of a requesting jurisdiction is available, or can be made available, in a timely
       manner. This requires clear rules regarding the maintenance of accounting
       records. The obligation to maintain reliable accounting records are found in
       most of the laws governing the various types of entities covered by this report,
       and in the Income Tax Act. The sources of Spanish accounting law are the
       Commercial Code, the General Accounting Plan25 and the General Tax Law.

       General requirements (ToR A.2.1)
       114.     The Commercial Code requires that all businesses (sole traders and
       commercial companies) keep orderly accounts, appropriate to the business’s
       activities, that allow chronological monitoring of all their operations, as well
       as periodic preparation of balance sheets and inventories. Professional trus-
       tees are covered by these obligations including in respect of trust income on
       which they are taxable. Notwithstanding the terms set forth in the laws or
       special provisions, a Book of Inventories and Annual Accounts and a Journal
       must be maintained (sections 25 and 28 of the Commercial Code):
                 the Book of Inventories and Annual Accounts opens with a detailed
                 initial balance for the company. The totals and trial balances are
                 entered at least every three months. The inventory at year-end clos-
                 ing and the annual accounts are also entered in this book. Annual


25.    The General Accounting Plan is defined by Accounting Regulation RD 1515/2007
       of 16 November 2007. It codifies how accounts are to be kept with the aim of set-
       ting general rules for all firms or a category of firms.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
36 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

              accounts must include the balance sheet, profit and loss account, a
              statement of changes in equity, a cash-flow statement (unless other-
              wise regulated), and the notes. These documents form a single unit
              (sections 34 to 37 of the Commercial Code); and
              the Journal records on a daily basis all the operations related to the
              activities of the company. Joint entry of the totals of operations for
              periods no longer than one month can be recorded, with the condition
              that the detail appears in other concordant books or registers.
      115.     All the accounting books and documents must be kept with clarity, by
      order of dates, without blank spaces, interpolations, crossings out or erasures
      (section 29 of the Commercial Code). The Book of Inventories and Annual
      Accounts and the Journal must be submitted to the Commercial Register for
      certification (section 27). Therefore SA, SRL and SCA must deposit their
      annual accounts to the Commercial Register, and companies that omit doing
      so are reminder of their duties and ultimately sanctioned (section 365ff of the
      Commercial Register Regulation).
      116.    In addition to the above-mentioned commercial law rules, all tax-
      payers have a general obligation to keep and maintain books of account and
      records (section 29 of the General Tax Law).

      Underlying documentation (ToR A.2.2)
      117.    The Commercial Code specifies that businesses must keep not only
      the books, but also correspondence, documentation and receipts related to
      their business, duly ordered (section 30).
      118.     In addition, if tax returns are filed electronically, the taxpayer must
      keep copies of the original data underlying the accounting statements filed.
      Taxpayers also have an obligation to preserve invoices, documents and evi-
      dence related to tax obligations. Not doing so is an offence punishable by a
      fine (sections 29 and 200 of the General Tax Law).
      119.    Finally, Spain being an EU Member State, and hence part of the intra-
      community VAT system, Spanish companies must fulfil specific requirements
      regarding documentary evidence of transactions performed. They must in
      particular keep all invoices issued and received (section 62 of the Act 37/1992
      on Value Added Tax).
      120.   These various requirements ensure that the accounting requirements
      of Spanish companies include the requirement of keeping supporting docu-
      mentary evidence for the transactions performed.




                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 37



       5-year retention standard (ToR A.2.3)
       121.     The Commercial Code requires that accounting books and underly-
       ing documentation be kept by the business entity itself or with any authorised
       person for six years (sections 25 and 30 of the Commercial Code). This reten-
       tion period is not altered with the death of the business person, the cessation
       of activities or the dissolution of the company (section 30).
       122.    In practice, the tax administration keeps information indefinitely, and
       the local Commercial Register keeps all accounting information it receives
       for longer than the legal 6 years retention period (section 377 of the of the
       Commercial Register Regulation).

       Accounting information exchanged in practice
       123.     Spain exchange information on contracts and commercial operations
       among companies, accounting documents such as annual accounts, financial
       statements and balance sheets, accounting entries such as payments and
       receipts, bills, analysis of patterns of intra-group financing (tax relevance in
       relation to interests), and the purchase and rent of moveable and immoveable
       properties possessed in Spain. Information exchanged also encompasses rel-
       evant documentation and information on the methods of payments.
       124.   No EOI partner of Spain indicated that they had not received the
       information requested because this type of information was not available.

                   Determination and factors underlying recommendations

                                        Phase 1 determination
        The element is in place.

                                              Phase 2 rating
        To be finalised as soon as a representative subset of Phase 2 reviews is
        completed.



A.3. Banking information
         Banking information should be available for all account-holders.

       125.     Access to banking information is of interest to the tax administra-
       tion only if the bank has useful and reliable information about its customers’
       identity and the nature and amount of financial transactions.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
38 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      126.     In Spain, financial institutions have full identity information on their
      clients, as noted above, in application of the anti-money laundering law. They
      also keep full records of their financial transactions.

      Record-keeping requirements (ToR A.3.1)
      127.    Financial institutions, as any commercial entity, are subject to the
      accounting requirements of the Commercial Code, including the obligation
      to keep books, correspondence, documentation and receipts related to their
      business for six years.
      128.   In addition, section 25 of Act 10/2010 on Combating Money
      Laundering and Terrorist Financing imposes know-your-customer obligations
      on banks and requires them to keep documents relating to the transactions
      performed by their customers for ten years.
      129.     The tax administration itself possesses in its central database a
      certain amount of banking information periodically provided by banks
      in tax information returns. First, banks and credit institutions must annu-
      ally provide the tax administration with the list of all the opened bank
      accounts.26 The information returns also indicate the balance of the account
      on 31 December and the average balance over the last quarter of the year.27
      They must subscribe another annual information return that lists all the loans
      provided above EUR 6 000 and all cash deposits above EUR 3 000 with
      details of the dates and bank accounts involved.28 These annual returns must
      include the complete identification of the account holders, authorised persons
      and beneficiaries, i.e. name and surname of natural persons, full name of
      legal entities, as well as their tax identification number.


26.   They must also provide information on accounts opened in Spanish banks abroad,
      except for accounts opened by non Spanish tax residents and without a permanent
      establishment in Spain.
27.   Section 37 of the General Regulation on Tax Auditing; the corresponding tax
      returns n°196 and 291 are regulated by Order EHA/3300/2008 of 7 November
      (BOE of 18 November) and Order EHA/3202/2008 of 31 October (BOE of
      10 November) respectively.
28.   Section 38 of the General Regulation on Tax Auditing; the corresponding tax
      return n°181 is regulated by Order EHA/3514/2009 of 29 December (BOE or
      31 December). The tax administration also receives annual returns informing
      them of the use by businesspersons and professionals or a credit or debit card
      for more than EUR 3 000, pursuant to section 38bis and the corresponding form
      n°170 (Order EHA/97/2010 of 25 January (BOE of 30 January). Banks must also
      annually inform the tax administration of some checks above EUR 3 000 (sec-
      tion 41 General Regulation on Tax Auditing).


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 39



       130.     In some cases, the information must be provided quarterly. For
       instance, a person who wishes to open a bank account (or otherwise enter
       into a relationship with financial institutions in Spain)29 must present a TIN
       within 15 days of the operation, and no transaction can be carried out until
       the TIN is provided (or the passport and tax residence certificate for foreign-
       ers). Financial institutions are required to report on a quarterly basis to the
       tax administration the clients that have not provided a TIN, or provided it
       after 15 days.30
       131.    In addition, Spanish law requires banks to annually inform the tax
       authorities of the interests they paid and to whom, any income paid by banks
       and from any foreign securities when these institutions have received them
       in deposit or to operate them as account managers, the issuing and transfer
       of securities including public debt, and the transfer of mortgage securities in
       which credit institutions intervene.
       132.    Finally, sections 45 to 49 of the General Regulation on Tax Auditing
       regulate the obligations on information regarding certain income obtained
       by individuals resident in other Member States of the European Union, in
       application of Council Directive 2003/48/EC of 3 June 2003 on taxation of
       Savings Income in the form of Interest Payments. As a result, Spain automati-
       cally exchanges at least once a year information about the income obtained by
       individuals resident in other Member States.
       133.    As a result, the tax administration knows to which bank account
       number a taxpayer relates.31 In practice all those tax returns are filled in and
       transmitted electronically to the tax administration, which consolidates the
       information into its database.

       Banking information requests in practice
       134.    In practice, many of Spain’s treaty partners have indicated that they
       have received the banking information requested. These include bank state-
       ments and information on interests, transfers, transactions, but also simple
       questions such as whether an individual holds a bank account in Spain.


29.    This obligation applies to Spanish financial institutions as well as foreign institu-
       tions operating in Spain through branches or under the freedom to provide services.
30.    Additional Provision Six to the General Tax Law and sections 28 and 40 General
       Regulation on Tax Auditing. The corresponding tax return n°195 is regulated by
       Order of 21 December 2001 (NOE of 29 December).
31.    If the information sought refers to a period that has not yet been informed in the
       tax declarations referred to above, the tax administration can specifically request
       the information from the bank.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
40 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

      135.    When the supposed account holder is an individual, Spain has on
      some occasions been unable to locate the person with the few identification
      elements provided, especially because many persons in Spain have the same
      names and surnames. Spain’s EOI partners have indicated that on those occa-
      sions Spain’s tax authorities asked for more information and tried to locate
      the person.

               Determination and factors underlying recommendations

                                  Phase 1 determination
      The element is in place.

                                       Phase 2 rating
      To be finalised as soon as a representative subset of Phase 2 reviews is
      completed.




                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                        COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION – 41




B. Access to information



Overview

       136.    A variety of information may be needed in a tax enquiry and jurisdic-
       tions should have the authority to obtain all such information. This includes
       information held by banks and other financial institutions as well as infor-
       mation concerning the ownership of companies or the identity of interest
       holders in other persons or entities, such as partnerships and trusts, as well
       as accounting information in respect of all such entities. This section of the
       report examines whether Spain’s legal and regulatory framework gives the
       authorities access powers that cover all relevant persons and information
       and whether rights and safeguards are compatible with effective exchange of
       information. It also assesses the effectiveness of this framework in practice.
       137.     The Spanish authorities have much information for identifying the
       owners of legal entities in its database, thanks to annual statements filed by
       taxpayers and periodic declarations from third parties. The competent author-
       ity can thus respond to 40% of the requests received without resorting to its
       information gathering powers.
       138.     The Spanish authorities make use of their powers available for
       domestic taxation purposes in order to exchange information. The Spanish
       tax administration has broad powers of access to accounting and banking
       information and to data on the ownership of legal entities, pursuant to the
       General Tax Law and the General Regulation on Tax Auditing. In particular,
       these powers allow the authorities to request information from any taxpayer
       and from third parties who may have the information sought. Banking
       secrecy is lifted in tax matters. There are enforcement measures available to
       compel the disclosure of information, but they scarcely need to be used. This
       legal framework allows the Spanish tax authorities to collect the information
       requested by their partners.
       139.    There are no rights of appeal against exchange of information per se,
       although there is a general right of appeal against action of the administration.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
42 – COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

      There is no indication that this right is incompatible with effective exchange
      of information.

B.1. Competent Authority’s ability to obtain and provide information
 Competent authorities should have the power to obtain and provide information that is the
 subject of a request under an exchange of information arrangement from any person within
 their territorial jurisdiction who is in possession or control of such information (irrespective
 of any legal obligation on such person to maintain the secrecy of the information).

      140.    The Spanish competent authority, which handles EOI requests, is
      the head of the Information Office of the Spanish Tax Administration (ECI:
      Equipo Central de Información, see C.5.2 below on resource and organisa-
      tional process). This office gathers information for both domestic and inter-
      national tax purposes.
      141.     In practice, Spain received almost 500 EOI requests in 2010.32 Of
      those, 41% were answered on the basis of the information contained in the tax
      database and files; 25% were answered after ECI requested information to a
      third person (e.g. other public authorities, notaries or banks), and 34% were
      dealt with by local or national tax offices that required the information from
      taxpayers. Whether ECI requires information itself or the task is delegated to
      the tax office that manages the tax situation of the person concerned, they all
      use the same information gathering powers.
      142.     The tax administration can ask any person to provide any type of
      information in connection with the tax obligations of a person or in relation
      to third person. Section 29 of the General Tax Law gives a broad picture of
      the obligations of taxpayers, and clearly indicates, inter alia, that taxpayers
      must fulfil their obligation of providing the tax authorities with such books,
      records, documents or information as the taxpayer is under a duty to pre-
      serve in connection with the performance of his/her own or third parties’ tax
      obligations, and any data, report, background particulars or evidence having
      significance for tax purposes, on demand by the tax authorities or by means
      of periodic returns.
      143.    Section 93(1) of the General Tax Law further defines the “obligation
      of information” as follows: “A natural or legal person, whether public or pri-
      vate, and any entity referred to in article 35(4) of this Act33 is under a duty to
      provide to the tax authority any type of data, reports, background particulars
      and evidence having tax significance in connection with the performance
      of their own tax obligations or linked to their economic, professional or

32.   Spain received 465 EOI requests in 2009, 396 in 2008 and 487 in 2007.
33.   I.e. any entity without legal personality but subject to tax


                                PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                        COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION – 43



       financial relations with others”. Section 93 does not set any deadline or limi-
       tation period for information requests and officials of different tax offices
       met during the visit confirmed that they have the ability ask information on
       the basis of section 93 even though it dates back more than four years (the
       statute of limitations for domestic tax audits). The general principle of sec-
       tion 93(1) is then developed in section 93 for all persons including banks, and
       section 94 for public officials,34 to be read in conjunction with sections 55 to
       57 of the General Regulation on Tax Auditing, dealing respectively with the
       general obligation, obligations for public officials and access to bank infor-
       mation, as set below.

       Ownership and identity information (ToR B.1.1) and Accounting
       records (ToR B.1.2)

       Legal and regulatory framework
       144.    Information on the ownership of corporations (companies and part-
       nerships) and sociedades civiles (non-commercial entities) are often already
       in the tax administration database, thanks to the mandatory declarations
       of information, and annual declarations these entities make, but also to the
       periodic declarations made by third parties such as public notaries and the
       Commercial Registry.35 Similarly, the tax administration has a direct access
       to some accounting information, thanks to its direct access to the Commercial
       Register, including deposited annual accounts of commercial entities (see
       Part A above).
       145.     If more detailed information is requested from the competent author-
       ity, it may use the reporting duty of sections 93 and 94 of the General Tax
       Law that covers “all types of information”, thus including ownership and
       accounting information.


34.    Section 94 sets the same principle of general access to information, but dedi-
       cated to public authorities. It specifies that the requested public authority does
       not need to obtain the consent of the person concerned before providing the tax
       administration with information. In particular, the Spanish FIU must provide the
       tax administration with any information of tax relevant it may request, provided
       that the request comes from the director of the concerned tax department (sec-
       tion 94(4) of the General Tax Law and section 56 of the General Regulation on
       Tax Auditing).
35.    For instance section 50 of the General Regulation on Tax Auditing establishes the
       obligation for the heads of the public registries to present a monthly declaration,
       which includes information on the entities that have been formed, modified or
       dissolved during that period (informative tax return form 038).


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
44 – COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

      146.     Section 55 of the General Regulation on Tax Auditing specifies that
      the tax authorities must indicate the name and tax identification number
      of the person that is requested to provide information, and the time-period
      for answering the request. The tax administration provides a deadline for
      answering the request that cannot be less than 10 working days. Alternatively,
      tax officials can visit the person, without prior notification, when the officials
      simply take note of the documents, elements of information and underlying
      documentation. If, however, these documents are not among those that the
      person must maintain by law, the person must be given a 10 day notice, to
      allow him/her to gather the information requested.

      Practice
      147.     In practice, the Spanish competent authority regularly exchanged
      ownership and identity information, as well as accounting information over
      the last three years. Ownership information is mostly contained in the tax
      database, but on some occasions the competent authority obtained the infor-
      mation from the Commercial Register. The competent authority does not usu-
      ally need to request ownership and identity or accounting information from
      the entities themselves.
      148.     Where the information must be obtained from the entity itself, Spanish
      officials usually make a request in writing and give the person 15 days to
      answer. Occasionally, Spanish officials will visit companies to obtain account-
      ing information, especially concerning small companies for which this way of
      action is simpler than requiring them to gather the information. The competent
      authority indicated that the persons requested generally respect the deadline
      allocated to provide the information.
      149.    When the involvement of a local tax office is required, specifically
      for collecting accounting information, the competent authority generally
      gives the local tax office a four month deadline to send the information.
      150.    No EOI partner of Spain indicated that they had not received the
      information requested because this type of information was not available or
      not accessible in Spain.

      Use of information gathering measures absent domestic tax interest
      (ToR B.1.3)
      151.      The concept of “domestic tax interest” describes a situation where a
      contracting party can only provide information to another contracting party
      if it has an interest in the requested information for its own tax purposes.
      152.     Section 61(3) of the General Regulation on Tax Auditing on the exer-
      cise of powers expressly indicates that the Spanish competent authority must


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                        COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION – 45



       assist treaty partners and exchange the necessary information. This provi-
       sion further expressly provides that the enforcement department of the tax
       administration may carry out actions at the request of the authorities of other
       states. Gathering information for EOI purposes is therefore part of the duties
       of the tax administration, and the competent authority (which belongs to an
       enforcement department) can use all its available powers for EOI purposes.

       Enforcement powers (ToR B.1.4)
       153.   Jurisdictions should have in place effective enforcement provisions to
       compel the production of information. The General Tax Law and the General
       Regulation on Tax Auditing provide for compulsory measures.

       Sanctions for non-disclosure
       154.      Not responding to an information request constitutes the serious tax
       offence of resistance, obstruction, excuse or refusal of the tax authority’s
       operations (article 203 of the General Tax Law). Providing false or incomplete
       non monetary information is punished by a fine of EUR 200 per false data.
       If it relates to monetary information, the minimum fine is EUR 500, plus a
       percentage of the amount concerned (Section 199 of the General Tax Law).
       The same penalties apply whether the information is sought for domestic or
       foreign tax purposes: entities or persons conducting economic activities that
       do not respond to a request for accounting information are punishable by a
       EUR 300 fine after the first refusal, EUR 1 500 after the second refusal, and
       after the third refusal to a fine equivalent to 2% of the sales volume of the
       previous year, not exceeding the limits of EUR 10 000 to 400 000. For other
       persons, the sanctions are respectively EUR 150, 300 and 600.

       Search and seizure
       155.    The Spanish authorities can search business premises and seize
       documents for EOI purposes, in the framework of a domestic tax audit (sec-
       tion 142(2) of the General Tax Law), provided they obtained the consent of
       the person or a judicial order to enter private premises (section 113).
       156.    The Spanish authorities can seize documents, pursuant to section 146
       of the General Tax Law, together with section 181 of the General Regulation
       on Tax Auditing. The tax administration can put under seal, deposit or seize
       documents in the framework of a tax audit, when the measure is necessary to
       prevent the destruction or alteration of evidence of tax obligations.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
46 – COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

      Use of enforcement measures
      157.     The Spanish authorities indicated that in practice taxpayers do comply
      with information requests, and they could not remember cases for which fines
      had to be imposed against persons refusing to provide information.36 They
      also indicated that it happened once, over the last three years, that they opened
      a tax audit for EOI purposes. It more frequently happens that a tax audit is
      already ongoing at the time of receiving an EOI request, in which case the
      responsible tax officials collect information for both domestic and foreign tax
      purposes at the same time. This situation occurs generally in relation to large
      companies, which are more frequently audited than others.

      Secrecy provisions (ToR B.1.5)
      158.    Professional secrecy is protected by the Constitution.37 Professional
      secrecy and privacy are dealt with in section 93(5) of the General Tax Law,
      while bank secrecy is dealt with separately in section 93(3).

      Confidentiality rules – corporate secrecy
      159.     Section 93(5) of the General Tax Law provides: “The obligation of
      other professionals to supply information having tax significance to the tax
      authorities does not extend to non-economic private data known to them
      by reason of the pursuit of their business and the disclosure of which would
      violate the right to honour or personal and family privacy”. Therefore profes-
      sional secrecy is lifted vis-à-vis the tax administration for economic data
      (e.g. assets and wealth) and for non-economic data that would not violate
      the right to honour or personal and family privacy.38 The Spanish authorities
      indicate that as concerns auditors, the tax administration can ask them to pro-
      vide the audit report they have prepared on a company, but not their working
      papers (e.g. informal communications with the client, documented personal
      opinions in non-official papers, etc.).
      160.    The same provision applies with regard to attorney-client privilege:
      the obligation of professionals to supply information having tax significance
      does not “extend to such of their clients’ confidential data as are known to
      them as a result of the provision of professional services of legal advice or
      defence”, which corresponds to the definition of attorney-client privilege in

36.   No data exist as regard the compliance rate for EOI purpose as opposed to
      domestic purposes.
37.   Article 20-1(d). The Constitutional Court recognised professional secrecy of
      attorneys in a decision dated 20 June 1994.
38.   Section 93(5) further provides that “A professional may not rely on professional
      confidentiality to prevent the verification of his own tax position”.


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                        COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION – 47



       Article 7(3) of the Model TIEA. The Spanish authorities indicate that this
       does not cover advice on tax schemes.
       161.    The Spanish competent authority and its EOI partners indicate that
       professional secrecy never caused any problem in practice.

       Bank secrecy
       162.     Bank secrecy in Spain derives from the right to privacy of Article 81.1
       of the Constitution. It is codified in Act 26/1988 requiring financial institu-
       tions to keep client information confidential, with the exception of information
       which the law allows to be communicated.
       163.     Banks and other financial institutions, as is the case with any legal
       person, are covered by the reporting duty of section 93 of the General Tax Law
       on information gathering powers, in addition to the provisions requiring them
       to periodically provide certain types of information to the tax administration
       (see section A.3 above). As discussed in A.3 above, the tax administration’s
       database already contains extensive bank information, including the account
       numbers of all taxpayers. Therefore the Spanish competent authority can, with
       a full account number, provide treaties partners with the name of the holder
       of that account. Should details of a bank account be requested, such as move-
       ments, the tax administration must gather the information from the bank.
       164.     Section 93(3) expressly provides that “banking confidentiality may
       not be relied upon to avoid the performance of the obligations under this arti-
       cle”. Bank secrecy being protected in Spain, section 93(3) further provides
       that requests for information made directly to a bank must be authorised by
       “such organ of the tax authority as regulations may determine” (i.e. the head
       of department of the tax official looking for the information), and based on
       justified reasons. Having received an EOI request based on one of the DTCs
       or TIEAs of Spain is a justified reason.
       165.    Any type of banking information can be requested, including all or
       some of the account movements, financial transactions, supporting docu-
       ments thereof, identity of the holder of the account of origin or destination of
       the movements, cheques, or other debit or credit entries.
       166.    Section 93(3) specifies that “an individual request [to a bank] must
       specify the identifying details of the cheque or payment order in question or
       the transactions under investigation; the taxpayers concerned, the account
       holder or authorised account user; and the period of reference”.
       167.     Information can be requested in writing (usually by electronic means)
       or by a visit to the bank, which cannot take place before a period of 15 days
       after the bank was notified of the request (two reminders are sent before pen-
       alties are applied).


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
48 – COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

      168.    In practice, EOI requests that relate to banking information that the
      tax administration does not already have in its database are sent to a central,
      national office of the tax administration dedicated to the gathering of infor-
      mation from financial institutions (ARES) for both domestic and exchange
      of information purposes. The authorisation of the head of department has
      always been granted in EOI cases. Banking information is not usually
      requested from the taxpayer directly.
      169.     The main difficulty experienced by the Spanish competent authority
      in obtaining information in order to respond to requests from EOI partners
      relates to the identification of the person subject of the request. It is not
      uncommon that several dozen persons have the same name and surname in
      Spain. This difficulty usually does not arise for ownership or accounting
      information, since two legal entities cannot have the same name, but arises
      particularly for bank information or tax information in respect of individu-
      als. The Spanish authorities need another identifying element such as a date
      of birth or address, or, ideally, the tax identification number of the person. A
      number of Spain’s partners indicated that some requests were not answered
      because of this practical problem and acknowledged Spain did its best to
      identify the persons concerned.

                Determination and factors underlying recommendations

                                    Phase 1 determination
      The element is in place.

                                         Phase 2 rating
      To be finalised as soon as a representative subset of Phase 2 reviews is
      completed.


B.2. Notification requirements and rights and safeguards
 The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
 requested jurisdiction should be compatible with effective exchange of information.


      Not unduly prevent or delay exchange of information (ToR B.2.1)
      170.     Rights and safeguards should not unduly prevent or delay effective
      exchange of information. For instance, notification rules should permit excep-
      tions from prior notification (e.g. in cases in which the information request is
      of a very urgent nature or the notification is likely to undermine the chance
      of success of the investigation conducted by the requesting jurisdiction).




                              PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                        COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION – 49



       171.    The Spanish domestic law does not require the notification of the
       person who is the object of an EOI request. In addition, when requesting
       information to a person, the Spanish tax authorities do not have to inform the
       person of the purpose of the request.
       172.     The request for information based on section 93 of the General Tax
       Law may be appealed, in the same way and under the same conditions as any
       other administrative act of the tax administration, pursuant to sections 213-
       249 of the law, for instance if the requested person considers that the official
       having signed the request pursuant to section 93 has no competence to do
       it, or because it violates his/her rights and liberties. This appeal suspends
       the procedure only insofar as the taxpayer expressly requested it and the tax
       office concerned accepted it. The taxpayer cannot appeal against the decision
       of delivering the information to a treaty partner.
       173.    In practice, Spain responds to most EOI requests without informing
       the person concerned. If the information requested is not available in the tax
       administration database, it is requested from the person concerned, and the
       representatives of several tax departments met with during the on-site visit
       indicated that when they collect information with the person concerned, they
       do not inform him/her of the purpose of the request either.
       174.     The practice is different in the Large Taxpayers Department, where
       the tax official usually informs the taxpayer that the request is linked to an
       EOI request (when made directly to the taxpayer), unless the partner jurisdic-
       tion specifically asked to not inform the person. The official may, with the
       prior approval of the requesting partner, show the request letter to the lawyer
       of the taxpayer. This specificity is linked to the fact that large taxpayers are
       very frequently under investigation.
       175.    The Spanish competent authority has not reported having experi-
       enced practical difficulties with the application of rights and safeguards, nor
       have its EOI partners. Very few legal challenges of the use of information
       gathering measures happened in the past, and none was made in an EOI case.

                   Determination and factors underlying recommendations

                                        Phase 1 determination
        The element is in place.

                                              Phase 2 rating
        To be finalised as soon as a representative subset of Phase 2 reviews is
        completed.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 51




C. Exchanging information



Overview

       176.    Jurisdictions generally cannot exchange information for tax purposes
       unless they have a legal basis or mechanism for doing so. A jurisdiction’s
       practical capacity to effectively exchange information relies both on having
       adequate mechanisms in place as well as an adequate institutional frame-
       work. This section of the report assesses Spain’s network of EOI agreements
       against the standards and the adequacy of its institutional framework to
       achieve effective exchange of information in practice.
       177.    Spain has a wide network of agreements that provide for exchange of
       information in tax matters that cover a total of 99 partner jurisdictions. These
       include 89 double tax conventions, 7 tax exchange of information agreements,
       EU instruments and a multilateral convention (see annex 2). Spain continues
       negotiating new DTCs and TIEAs. Spain is also negotiating a number of
       protocols or new treaties with its current partners with a view to modernise
       or upgrade the EOI provisions of its existing treaties.
       178.     Spain has never refused to negotiate an EOI agreement with another
       member of the Global Forum, but has difficulties signing with some non-
       sovereign jurisdictions. Spain is discussing with these jurisdictions and the
       jurisdiction assuming international obligations on their behalf, to find a prag-
       matic solution.
       179.    All EOI mechanisms and the Spanish law include confidentiality
       provisions. These provisions apply equally to the information and documents
       contained in any request received by Spain as they do to the replies actually
       sent to the partner. Moreover, the treaties and TIEAs concluded by Spain
       guarantee that the parties involved will not be obliged to reveal information
       regarding an industrial, business or professional secret, or confidential com-
       munications between a client and an attorney, or to disclose information that
       would be contrary to public policy (ordre public).




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
52 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

      180.     In practice, one third of these instruments have been used over the last
      three years for purposes of obtaining information from Spain: Over the last
      three years Spain has received 1 371 exchange of information (EOI) requests
      from 39 of its treaty partners, with the majority being from France and the
      United Kingdom (together accounting for 54% of the received requests),
      followed by Germany, Portugal and Sweden. These five partners represent
      together 70% of the requests received by Spain, and all exchange information
      to the standard. Spain has not yet received EOI requests based on a TIEA.
      181.     Treaty partners of Spain indicated that Spain is a very good EOI part-
      ner, although, when the competent authority is not in a position to respond
      within 90 days, it advises requesting jurisdictions of the status of their
      requests only when expressly reminded.

C.1. Exchange of information mechanisms
 Exchange of information mechanisms should allow for effective exchange of information.

      182.    The EOI instruments signed by Spain indicate that the competent
      authority is the Minister of Finance or his authorised representative. The
      Spanish delegated competent authority is the head of the Information Office
      of the Spanish Tax Administration (Equipo Central de Información, ECI).
      183.    Spain can exchange information on several bases: double tax con-
      ventions (DTCs), Tax Information Exchange Agreements (TIEAs), EU
      instruments and a multilateral instrument. Spain has signed 89 DTCs and
      7 TIEAs,39 of which 10 are not in force.
      184.     Spain is able to exchange information with other EU member states40
      under the EU Council Directive 77/799/EEC of 19 December 197741 concern-
      ing mutual assistance by the competent authorities of the Member States in
      the field of direct taxation and taxation of insurance premiums, and Directive
      2011/16/EU of 15 February 2011 on administrative co-operation in the field of

39.   Spain signed TIEAs with Andorra; Aruba; The Bahamas; Curacao; the Netherlands
      as concerns only Bonaire, San Eustache and Saba; Saint Maarten; and San Marino.
      It also initialled TIEAs with Bermuda, the Cayman Islands, the Cook Island, St.
      Lucia, and St. Vincent and the Grenadines.
40.   Austria, Belgium, Bulgaria, Cyprus (see footnote below), the Czech Republic,
      Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
      Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania,
      Slovakia, Slovenia, Spain, Sweden and the United Kingdom.
41.   This Directive came into force on 23 December 1977 and all EU members were
      required to transpose it into national legislation by 1 January 1979. It has been
      amended since that time.


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 53



       taxation, which repeals Directives 77/799/EEC from 2013.42 This is the basis for
       exchange of information with Cyprus43 and Denmark, since Spain has no bilat-
       eral agreements in place with these partners. Spain also heavily relies on this
       instrument to exchange information with other EU members the treaty with
       which may be old and EOI provision not to the standard.44 Spain is also bound
       by the Savings Directive 2003/48/EC and Community Regulation 1798/2003
       on VAT. The Directives do not prejudice the fulfilment of any obligations of the
       Member States in relation to wider administrative co-operation ensuing from
       other legal instruments, including bilateral or multilateral agreements.45
       185.     In 2009 Spain became a signatory to the multilateral Convention on
       Mutual Administrative Assistance in Tax Matters (the Convention), which is
       in force with respect to 17 jurisdictions.46 The Convention provides for all pos-
       sible forms of administrative co-operation between parties in the assessment
       and collection of taxes, in particular with a view to combating tax avoidance
       and evasion. Spain is also a signatory to the protocol to this convention. The
       protocol and the updated convention which entered into force on 1 June 2011
       provide for exchange of information to the standard. Spain’s exchange of infor-
       mation with Azerbaijan and Georgia occurs exclusively under this Convention
       as Spain has no bilateral agreements with these partners.

42.    The new directive entered into force on 11 March 2011. Directive 77/799/EEC is
       repealed with effect from 1 January 2013 and transposition of the new Directive
       must be completed by that date.
43.    Footnote by Turkey: The information in this document with reference to
       “Cyprus” relates to the southern part of the Island. There is no single authority
       representing both Turkish and Greek Cypriot people on the Island. Turkey rec-
       ognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and
       equitable solution is found within the context of United Nations, Turkey shall
       preserve its position concerning the “Cyprus issue”.
       Footnote by all the European Union member states of the OECD and the
       European Commission: The Republic of Cyprus is recognised by all members
       of the United Nations with the exception of Turkey. The information in this
       document relates to the area under the effective control of the Government of the
       Republic of Cyprus.
44.    For instance the EOI provision of the DTC with the Netherlands allows exchange
       of information at the disposal of the tax authorities only, and excludes bank
       information.
45.    A rticle 11 of Directives 77/799/EEC and article 1(3) of the Directive 2011/16/UE.
46.    Azerbaijan, Belgium, Denmark, Finland, France, Georgia, Iceland, Italy, the
       Netherlands, Norway, Poland, Slovenia, Sweden, the Ukraine, the United Kingdom
       and the United States. In addition, Canada, Georgia, Germany, Korea, Mexico,
       Moldova and Portugal have signed but not ratified the Convention, for a total of 23
       signatories as of 21 May 2011.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
54 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

      Other forms of information exchange
      186.    In addition to exchanging information upon request, Spain exchanges
      information automatically and spontaneously. Automatic (or ex officio)
      exchanges take place with 30 partners, including under the Savings Directive.
      This has an impact on the volume and nature of information requests: on one
      hand, exchanging information automatically reduces the number of requests
      by anticipating them. Automatic exchanges can also spark requests that would
      not otherwise have been made, if the information thus supplied allows a for-
      eign tax authority to detect situations that deserve investigation.
      187.     Spain also increasingly exchanges information spontaneously with
      its treaty partners (more than 20 in 2009). Where Spain’s tax authorities
      identify information that is relevant to the administration or enforcement of
      an exchange of information partner (for example, where they find evidence
      suggesting that a tax fraud has been committed in the partner state) they are
      able to transmit this information without the need for a prior request.
      188.     Simultaneous tax examinations are possible within the European
      Union if several Member States have a mutual or complementary interest in
      the situation of one or more taxpayers. In this case each Member conducts
      an examination within its own territory and exchanges the information thus
      obtained. This procedure is used whenever such examinations appear more
      effective than separate investigations.47 Spain also accepts that foreign tax
      officials enter the territory to passively participate in interviews, but this is
      quite rare, and foreign authorities rather send questionnaires to their Spanish
      counterparts.
      189.    Finally Spain recently started to accept requests for service of notifi-
      cations as a result of which its competent authority notifies the addressee of
      instruments and decisions which emanate from foreign tax authorities. This
      type of administrative assistance is also provided for in some of the TIEAs
      signed by Spain recently.

      Foreseeably relevant standard (ToR C.1.1)
      190.     The international standard for exchange of information envisages
      information exchange upon request to the widest possible extent. Nevertheless
      it does not allow “fishing expeditions”, i.e. speculative requests for informa-
      tion that have no apparent nexus to an open inquiry or investigation. The bal-
      ance between these two competing considerations is captured in the standard


47.   Simultaneous audits mainly relate to VAT issues concerning multinational corpo-
      rations (on the basis of EC Regulation 1798/2003), direct taxes (Directive 77/799)
      and excise duties (Directive 2073/2004).


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 55



       of “foreseeable relevance” which is included in paragraph 1 of Article 26 of
       the Model Tax Convention set out below:
                 The competent authorities of the contracting states shall
                 exchange such information as is forseeably relevant to the car-
                 rying out of the provisions of this Convention or to the adminis-
                 tration or enforcement of the domestic laws concerning taxes of
                 every kind and description imposed on behalf of the contracting
                 states or their political subdivisions or local authorities in so
                 far as the taxation thereunder is not contrary to the Convention.
                 The exchange of information is not restricted by Articles 1 and 2.
       191.    Spanish EOI mechanisms either use the words “foreseeably relevant”,
       for the more recent DTCs and TIEAs, or “necessary”. The commentary to
       Article 26 of the Model Tax Convention, paragraph 5, refers to the standard
       of “foreseeable relevance” and states that the Contracting States may agree to
       an alternative formulation of this standard that is consistent with the scope of
       the Article, for instance by replacing “foreseeably relevant” with “necessary”
       or “relevant”. The Spanish authorities confirm that they make no distinction
       between the two terms. All these agreements therefore meet the “foreseeably
       relevant” standard.48
       192.     The treaty with Morocco restricts exchange of information to “carry-
       ing out the provisions of the present Convention”. Therefore it does not cover
       all information that may be foreseeably relevant to the implementation of the
       administration or enforcement of the domestic laws of the parties and Spain
       should renegotiate this treaty.
       193.     The protocol contained in the newly signed DTC with Panama states,
       among other things, that the assistance provided for in Article 26 (Exchange
       of Information) “does not include (i) measures aimed only at the simple col-
       lection of pieces of evidence, or (ii) when it is improbable that the requested
       information will be relevant for controlling or administering tax matters of
       a given taxpayer in a Contracting State (“fishing expeditions”)”. It is unclear
       how these provisions would interact with the “foreseeably relevant” standard
       although Spain indicates that they are not expected to interact negatively.
       In addition, the conditions required by the Protocol are unduly restrictive,
       requiring, inter alia, that the requesting jurisdiction has pursued all means
       available in its own territory to obtain the information, without providing for
       an exception where pursuing all means would give rise to disproportionate
       difficulties.


48.    More generally, some DTCs expressly indicate that the treaty should be inter-
       preted in light of the Commentaries to the OECD Model Tax Convention
       (e.g. DTCs with Albania, Salvador).


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
56 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

      194.     In practice, Spain considers that it very rarely receives EOI requests
      that it may qualify as fishing expeditions. The Spanish competent authority
      could only remember two requests it rejected, because the requesting juris-
      diction had not explained the purpose of the request and asked for informa-
      tion on a category of persons in one case, rather than identified persons.

      In respect of all persons (ToR C.1.2)
      195.     For exchange of information to be effective it is necessary that a
      jurisdiction’s obligation to provide information is not restricted by the resi-
      dence or nationality of the person to whom the information relates or by the
      residence or nationality of the person in possession or control of the infor-
      mation requested. For this reason the international standard for exchange of
      information envisages that EOI mechanisms will provide for exchange of
      information in respect of all persons and paragraph 1 of Article 26 of the
      Model Tax Convention indicates that “The exchange of information is not
      restricted by Article 1” that defines the personal scope of application of the
      Convention.49
      196.    Some DTCs do not contain the sentence indicating that the exchange
      of information is not restricted by Article 1 (persons covered). However,
      Spain advises that they interpret the EOI provision of those treaties as allow-
      ing for exchange of information with respect to all persons, residents and
      non-residents. In no instance has Spain refused to exchange information, or
      been refused the exchange of information by an EOI partner, on this basis.
      197.    The treaty with Morocco, dated 1978, restricts exchange of informa-
      tion to “carrying out the provisions of the present Convention”, i.e. double
      taxation. In this case, exchange of information is limited to residents because
      Article 1 of the treaty indicates that it applies to “persons who are residents
      of one or both of the Contracting States”. The treaty with Morocco does not
      meet the standard.
      198.    The DTC between Spain and Switzerland contains an EOI provi-
      sion that does not provide for exchange of all foreseeably relevant informa-
      tion. However, there is a most favoured nation clause as against the treaties
      concluded by Switzerland with other EU member states, with the result that
      information may be exchanged consistently with the standard in respect of
      element C1 under the Swiss-Spanish agreement.
      199.     The TIEAs signed by Spain contain a provision concerning jurisdic-
      tional scope which is equivalent to Article 2 of the Model TIEA and which



49.   DTCs apply to persons who are residents of one or both of the Contracting States.


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 57



       conforms to the international standard.50 The TIEA with San Marino also
       specifies that information should be exchanged whatever the residence, nation-
       ality or citizenship of the person concerned or who possesses the requested
       information.

       Exchange information held by financial institutions, nominees,
       agents and ownership and identity information (ToR C.1.3)
       200. Jurisdictions cannot engage in effective exchange of information if
       they cannot exchange information held by financial institutions, nominees
       or persons acting in an agency or a fiduciary capacity. Both the Model Tax
       Convention and the Model Agreement on Exchange of Information, which
       are the authoritative sources of the standards, stipulate that bank secrecy
       cannot form the basis for declining a request to provide information and that
       a request for information cannot be declined solely because the information
       is held by nominees or persons acting in an agency or fiduciary capacity or
       because the information relates to an ownership interest.

       Bank information
       201.     The TIEAs concluded by Spain explicitly forbid the requested juris-
       diction from declining to supply the information requested solely because it
       is held by a financial institution, nominee or person acting in an agency or a
       fiduciary capacity, or because it relates to ownership interests in a person, in
       conformity with Article 5(4) of the Model TIEA.
       202. Apart from the recent DTCs, many of Spain’s DTCs currently in
       force do not include a similar provision (equivalent to Article 26(5) of the
       Model Tax Convention). However, the absence of this paragraph does not
       automatically create restrictions on exchange of bank information in Spain.
       The commentary on article 26(5) indicates that whilst paragraph 5 (added to
       the Model Tax Convention in 2005) represents a change in the structure of
       the Article, it should not be interpreted as suggesting that the previous ver-
       sion of the Article did not authorise the exchange of such information. Spain
       has access to bank information for tax purposes in its domestic law (see sec-
       tion B), and pursuant to its treaties is able to exchange this type of informa-
       tion when requested, on a reciprocal basis, i.e. where there are no domestic
       impediments to exchange bank information in the case of the requesting
       party.

50.    Model Article 2: “A requested party is not obligated to provide information which
       is neither held by its authorities nor in the possession or control of persons who
       are within its territorial jurisdiction”. This sentence is also included in the proto-
       col to the DTC with the United Arab Emirates.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
58 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

      203.    The DTC with Saudi Arabia does not contain an equivalent of
      Article 26(5) but its protocol provides that “as long as the domestic laws of
      the parties so allow, both shall exchange any information held by a bank,
      other financial institution, etc”. It therefore expressly conditions exchange of
      bank information to reciprocity. Also a protocol to the DTC with Costa Rica
      provides that bank information will be exchanged, using the information
      gathering measures at the disposal of the competent authority concerning their
      residents and, where needed, upon a court decision. It is unclear whether Costa
      Rica and Saudi Arabia have full access to bank information and whether Spain
      could refuse to provide them information, based on reciprocity.
      204. Until July 2011, Belgium could not exchange bank information
      absent full paragraph 5 and the treaty is therefore not to the standard. Spain
      already signed a protocol to the Belgian treaty that meets the standard.51 The
      protocol to the DTC with the Netherlands expressly excludes exchange of
      information from banks and insurance companies. In these cases Spain and
      the Netherlands exchange information on the basis of the EU Directives.
      205.     The DTC with Switzerland restricts exchange of bank information
      to the cases of tax fraud and is therefore more restrictive than the standard.
      It also contains a “most favoured nation” clause and Switzerland has signed
      more favourable EOI instruments since then, in particular a DTC with France
      that does not limit exchange of bank information to cases of tax fraud.
      206. In practice, when Spain receives an EOI request from a jurisdiction,
      with whom the treaty does not contain Article 26(5), the tax authorities check
      whether this jurisdiction would be able to provide banking information on the
      basis of reciprocity.

      Absence of domestic tax interest (ToR C.1.4)
      207.      The concept of “domestic tax interest” describes a situation where a
      contracting party can only provide information to another contracting party
      if it has an interest in the requested information for its own tax purposes. An
      inability to provide information based on a domestic tax interest requirement
      is not consistent with the international standard. Contracting parties must use
      their information gathering measures even though invoked solely to obtain
      and provide information to the other contracting party.
      208.    Apart from the recent DTCs, many of Spain’s DTCs currently in force
      do not include the provision contained in Article 26(4) of the OECD Model
      Tax Convention, which states that the requested party “shall use its informa-
      tion gathering measures to obtain the requested information, even though

51.   Belgium amended its domestic law on 1 July 2011 and may be able in future to
      exchange bank information with Spain on the basis of reciprocity.


                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 59



       that [it] may not need such information for its own tax purposes”. However,
       the absence of a similar provision in other treaties does not in principle create
       restrictions on exchange of information provided there is no domestic tax
       interest impediment to exchange information in the case of either contracting
       party (see Commentary 19.6 to the OECD Model Tax Convention).
       209.     Spain’s domestic powers to access relevant information are not con-
       strained by a requirement that the information must be required for a domes-
       tic tax purpose. In addition, the Spanish authorities indicated that in practice
       they do not exercise reciprocity on this basis and therefore do not question
       whether a requesting party knows a domestic tax interest. No issue has ever
       arisen in practice.
       210.   All of the TIEAs concluded by Spain explicitly permit the infor-
       mation to be exchanged, notwithstanding that it may not be required for a
       domestic tax purpose.

       Absence of dual criminality principles (ToR C.1.5)
       211.      The principle of dual criminality provides that assistance can only be
       provided if the conduct being investigated (and giving rise to an information
       request) would constitute a crime under the laws of the requested jurisdic-
       tion if it had occurred in the requested jurisdiction. In order to be effective,
       exchange of tax information should not be constrained by the application of
       the dual criminality principle. There are no dual criminality provisions in the
       Spanish DTCs and TIEAs52 and no issue linked to dual criminality arose in
       practice.

       Exchange of information in both civil and criminal tax matters
       (ToR C.1.6)
       212.    Information exchange may be requested both for tax administration
       purposes and for tax prosecution purposes. The international standard is not
       limited to information exchange in criminal tax matters but extends to infor-
       mation requested for tax administration purposes (also referred to as “civil
       tax matters”). All of the EOI article in DTCs signed by Spain may be used to
       obtain information to deal with both civil and criminal tax matters.
       213.    Some recent DTCs contain the explicit wording of Article 26(1)
       of the OECD Model Tax Convention, which refers to information foresee-
       ably relevant “for carrying out the provisions of this Convention or to the

52.    While DTCs are usually silent on this issue, the protocols to a few recent DTCs
       expressly provide that dual criminality does not apply (e.g. Jamaica, Panama,
       United Arab Emirates, Trinidad and Tobago, and Uruguay).


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
60 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

      administration and enforcement of the domestic [tax] laws”. The TIEAs
      make express provision to this effect in their article 1. Most DTCs refer
      more broadly to information necessary for carrying out the provisions of
      the Convention or of the domestic laws concerning taxes covered by the
      Convention, without excluding either civil nor criminal matters.53
      214.    The only jurisdiction with which information in civil and criminal
      matters could not be exchanged is Morocco, the DTC with which limits
      exchange of information to the application of the Convention, i.e. to civil
      matters.

      Provide information in specific form requested (ToR C.1.7)
      215.     In some cases, a Contracting State may need to receive information
      in a particular form to satisfy its evidentiary or other legal requirements.
      Such forms may include depositions of witnesses and authenticated copies
      of original records. Contracting States should endeavour as far as possible to
      accommodate such requests. The requested State may decline to provide the
      information in the specific form requested if, for instance, the requested form
      is not known or permitted under its law or administrative practice. A refusal
      to provide the information in the form requested does not affect the obligation
      to provide the information.
      216.    All of the TIEAs concluded by Spain allow for information to be
      provided in the specific form requested, to the extent allowable under the
      requested jurisdiction’s domestic laws, on the basis of Article 5(3) of the
      Model TIEA.
      217.    On the other hand, most of Spain’s treaties do not expressly address
      this question but they do not contain any restrictions either, which would pre-
      vent Spain from providing information in a specific form, so long as this is
      consistent with its own administrative practices. As an exception a few recent
      DTCs are accompanied by a protocol that reproduces some of the provisions
      of the Model TIEA, including the formalism with which information can be
      provided (e.g. Jamaica, Panama, Trinidad and Tobago, United Arab Emirates,
      and Uruguay).
      218.    In practice, Spain does authenticate copies of original records when
      specifically requested by the requesting jurisdiction.




53.   In addition, the EOI article in some DTCs specifically mentions that the informa-
      tion exchange will occur including for the prevention of fraud and/or evasion in
      relation to taxes (criminal matters).


                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 61



       In force (ToR C.1.8)
       219.     Exchange of information cannot take place unless a jurisdiction has
       EOI arrangements in force. Where EOI arrangements have been signed, the
       international standard requires that jurisdictions must take all steps necessary
       to bring them into force expeditiously.
       220.  Spain has EOI arrangements in force with 87 jurisdictions. The latest
       DTCs entered into force between one and two years after having been signed.
       Ten DTCs are signed but not yet in force.
       221.    Spain signed TIEAs with seven jurisdictions and initialled TIEAs
       with five others over the last three years. Five TIEAs are already in force and
       two will enter into force in August 2011.

       Be given effect through domestic law (ToR C.1.9)
       222. For information exchange to be effective the parties to an EOI
       arrangement need to enact any legislation necessary to comply with the terms
       of the arrangement. For a DTC or TIEA to have effect, its ratification must
       be authorised by the Parliament and performed by the King, and its text must
       be published in the Official Gazette. Once a DTC or TIEA comes into force,
       Spain does not need to take additional measures to make it effective.

                   Determination and factors underlying recommendations

                                        Phase 1 determination
        The element is in place.

                                              Phase 2 rating
        To be finalised as soon as a representative subset of Phase 2 reviews is
        completed.


C.2. Exchange of information mechanisms with all relevant partners
         The jurisdictions’ network of information exchange mechanisms should cover
         all relevant partners.

       223.     Ultimately, the international standard requires that jurisdictions
       exchange information with all relevant partners, meaning those partners who are
       interested in entering into an information exchange arrangement. Agreements
       cannot be concluded only with counterparties without economic significance. If
       it appears that a jurisdiction is refusing to enter into agreements or negotiations
       with partners, in particular ones that have a reasonable expectation of requiring



PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
62 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

     information from that jurisdiction in order to properly administer and enforce
     its tax laws it may indicate a lack of commitment to implement the standards.

     224.     Spain has a very broad network of tax treaties and TIEAs covering all
     its significant partners. In particular, it is an EOI partner of all its neighbours
     and of all members of the European Union. Spain is linked to EOI arrange-
     ments with 99 jurisdictions of which 89 are in force. The oldest treaty was
     that signed with Austria in 1965 and the most recent ones are with Singapore
     and Hong Kong, China in 2011 (see Annex 2). Spain is also actively negotiat-
     ing a number of new EOI instruments.
     225.   So far, a priority of the Spanish authorities is to modernise the net-
     work by renegotiating agreements signed in the 1960s and 1970s in order
     to modernise them in general, or bring them to the standard of exchange of
     information (e.g. Belgium, Luxembourg and Switzerland).
     226.     Spain is also seeking to expand its network and it has offered to open
     negotiations with a number of jurisdictions in Asia and the Caribbean in par-
     ticular. The negotiation of a dozen of new EOI mechanisms is ongoing.
     227.     In no case has a member of the Global Forum reported that, after
     contacting Spain in order to negotiate an agreement or a protocol, it received
     no response or a negative response. The Spanish authorities confirm that they
     are willing to sign an EOI agreement with any jurisdiction that so requests. In
     particular, Spain has participated in all the multilateral negotiations programs
     of the OECD with the Pacific islands and the Caribbean.
     228.     While Spain has never refused to enter into negotiations with any juris-
     diction, an issue has been reported as concerns the conclusion of some treaties
     with a number of Overseas Territories and Crown Dependencies of the United
     Kingdom. Spain maintains that, according to the law of treaties, the treaty
     making power pertains to a sovereign State as a subject of international law.
     Consequently, Spain prefers to conclude exchange of information agreements
     directly with the UK on behalf of these jurisdictions instead of concluding the
     agreements directly with the jurisdictions. Accordingly, the TIEAS concluded
     by Spain with the former Netherlands Antilles and with Aruba have been con-
     cluded between the Kingdom of Spain and the Kingdom of the Netherlands
     on behalf of those jurisdictions. However, the United Kingdom view is that
     the UK Overseas Territories and Crown Dependencies have been entrusted
     by the United Kingdom to conclude such agreements and that it would not be
     appropriate for the UK to conclude tax exchange information agreements on
     behalf of these jurisdictions. Accordingly, the Overseas Territories and Crown
     Dependencies have concluded agreements with a number of jurisdictions on the
     authority of the letter of entrustment and without the intervention of the United
     Kingdom. As a consequence of the above mentioned different views the conclu-
     sion of some exchange of information agreements has been stalled for reasons


                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 63



       not linked to exchange of information for tax purposes. The Spanish authorities
       indicated during the on-site visit that they are working together with the United
       Kingdom to solve this issue in a pragmatic fashion.

                    Determination and factors underlying recommendation

                                        Phase 1 determination
        The element is in place, but certain aspects of the legal implementation
        of the element need improvement
                   Factors underlying
                   recommendations                                 Recommendations
        The negotiation of some exchange of     Spain should continue to develop its
        information agreements has been stalled EOI network to the standard with all
        for reasons not linked to exchange of   relevant partners.
        information for tax purposes.

                                              Phase 2 rating
        To be finalised as soon as a representative subset of Phase 2 reviews is
        completed.


C.3. Confidentiality
         The jurisdictions’ mechanisms for exchange of information should have adequate
         provisions to ensure the confidentiality of information received.

       229.    Governments would not engage in information exchange without the
       assurance that the information provided would only be used for the purposes
       permitted under the exchange mechanism and that its confidentiality would
       be preserved. Information exchange instruments must therefore contain
       confidentiality provisions that spell out specifically to whom the information
       can be disclosed and the purposes for which the information can be used.
       In addition to the protection afforded by the confidentiality provisions of
       information exchange instruments, tax jurisdictions generally impose strict
       confidentiality requirements on information collected for tax purposes.

       Information received: disclosure, use, and safeguards (ToR C.3.1)

       Exchange of information mechanisms
       230.     The provisions governing confidentiality are based on Article 26(2)
       of the Model Tax Convention (in its successive versions, depending on the
       date of signature of the treaty in question) or on Article 8 of the Model TIEA.



PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
64 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

              Any information received by a Contracting State shall be treated
              as secret in the same manner as information obtained under the
              domestic laws of that State and shall be disclosed only to per-
              sons or authorities (including courts and administrative bodies)
              concerned with the assessment or collection of, the enforcement
              or prosecution in respect of, or the determination of appeals in
              relation to, the taxes covered by the Agreement. Such persons
              or authorities shall use the information only for such purposes.
              They may disclose the information in public court proceedings
              or in judicial decisions.
      231.     The majority of Spanish treaties as well as the EU Directives, the
      OECD/COE multilateral Convention and all the TIEAs provide that the infor-
      mation obtained in the course of a request for assistance shall be accessible
      only to persons directly “concerned with” or “involved in” the assessment of
      taxes, or the administrative control of that assessment, etc. Only the use of
      the first term encompasses the taxpayers or their representatives. However,
      the Spanish versions of the instruments indistinctly refer to the persons
      charged with tax duties (las personas encargadas de la gestión o recaudación
      de los impuestos). The Spanish authorities indicate that their treaties follow
      the official translation of the Model DTC, which does not make a differ-
      ence between the two English terms, and therefore information may also be
      communicated to the taxpayer, his/her proxy or the witnesses, as stated in
      Commentary 12 to the Mode Tax Convention.
      232.    While an instrument may allow information to be disclosed to the
      taxpayer, it does not oblige the competent authority to do this. In fact, there
      may be cases where the information is given in confidence to the requesting
      party and the source of the information may have a legitimate interest in pre-
      venting its disclosure to the taxpayer (see chapter B.2 above).
      233.     Only a few treaties substantially depart from this model text. The
      provisions of the DTCs with Brazil, Canada, Japan and Tunisia restrict the
      disclosure of information to the authorities concerned with the assessment or
      collection of taxes, and do not cover, in particular, disclosure of information
      in public court proceedings or in judicial decisions.54
      234.     All the TIEAs and some DTCs of Spain allow the disclosure of
      information exchanged for other purposes with the consent of the requested
      party, in accordance with Article 8 of the Model TIEA and Commentary 12.3
      to the Model Tax Convention.55 The TIEAs all provide that “information

54.   Similarly, the DTC with former-USSR provides that information shall be dis-
      closed only to the authorities concerned with the application of the DTC.
55.   “Contracting States may wish to allow the sharing of tax information by tax
      authorities with other law enforcement agencies and judicial authorities on


                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 65



       provided to the competent authority of the requesting party may not be used
       for any purpose other than for the purposes stated in Article 1 without the
       prior express written consent of the requested party”. The treaties use the
       formulation of Commentary 12.3: “Notwithstanding the foregoing, informa-
       tion received by a Contracting State may be used for other purposes when
       such information may be used for such other purposes under the laws of both
       States and the competent authority of the supplying State authorises such
       use”.
       235.     In addition, Article 7(4) of the EU Directive 77/799 provides that
       “Where a competent authority of a Member State considers that information
       which it has received from the competent authority of another Member State
       is likely to be useful to the competent authority of a third Member State, it
       may transmit it to the latter competent authority with the agreement of the
       competent authority which supplied the information.” Spain indicates that
       it has happened in rare occasions that information received from one EU
       country has been shared with another country where authorisation has been
       sought and obtained from the first country.
       236.     Many of the treaties require the information exchanged to be treated
       as secret “in the same manner as information obtained under the domestic
       law”. Spain’s domestic law contains relevant confidentiality provisions under
       section 95 of the General Tax Law (see below). The confidentiality provisions
       of the DTCs with a few jurisdictions do not refer to the confidentiality provi-
       sion of the domestic laws of the Contracting States. In the case of Spain, this
       does not prevent the enforcement of the confidentiality duty since informa-
       tion received from partner jurisdictions are received on the basis of a treaty
       signed in application of the Income Tax Act, and therefore the domestic pro-
       vision assessed below will apply.

       Spanish legislation
       237.     The maintenance of secrecy in the Contracting State receiving infor-
       mation is a matter of domestic laws (whether it is the requested or the request-
       ing jurisdiction). Sanctions for the violation of such secrecy in that State are
       governed by the administrative and penal laws of that State. Spain’s domestic
       legislation contains relevant confidentiality provisions under section 95 of
       the General Tax Law: “The data, reports or background particulars obtained
       by the tax authority in the performance of its duties is confidential, and may
       be used only for the effective application of the taxes or resources under its

       certain high priority matters (e.g. to combat money laundering, corruption, ter-
       rorism financing). Contracting States wishing to broaden the purposes for which
       they may use information exchanged under this Article may do so by adding a
       specific provision.”


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
66 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

     management and for the purpose of imposing applicable penalties, such that
     they may not be assigned or disclosed to third parties”.
     238.     Exceptions to this rule include the disclosure of information to other
     tax authorities for the purpose of the performance of tax obligations in their
     remits, i.e. to other competent authorities for EOI purposes (section 95(1)(b)).
     Other exceptions cover courts and prosecutor’s office, Labour and Social
     Security Inspectorate, Financial Intelligence Unit, etc. that conform to the
     standard.
     239.     The breach of confidentiality duty is a very serious disciplinary
     offence, without prejudice to the criminal or civil liability that may exist.
     Pursuant to the Public Employee Charter Act 2007, the magnitude of the
     disciplinary penalty will vary from an admonishment to the removal from
     office, depending on the degree of intentionality or negligence, the harm done
     to the public interest, the repetition of the offence and the degree of involve-
     ment in the facts.

     All other information exchanged (ToR C.3.2)
     240.     Confidentiality rules should apply to all types of information
     exchanged, including information provided in a request, information trans-
     mitted in response to a request and any background documents to such
     requests. Section 95 of the General Tax Law expressly covers “background
     particulars” and any information obtained by the tax authority “in the perfor-
     mance of its duties”. Information provided in a request is therefore confiden-
     tial in Spain.
     241.    In practice, all information received in an EOI request is scanned and
     entered into the IT system of the Spanish competent authority. Different levels
     of access are given to the tax officials that could be involved in exchange of
     information. Access to files is periodically monitored. Spain and its treaty
     partners never faced a problem of breach of confidentiality by the Spanish tax
     administration.

               Determination and factors underlying recommendations

                                 Phase 1 determination
      The element is in place.

                                      Phase 2 rating
      To be finalised as soon as a representative subset of Phase 2 reviews is
      completed.




                           PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 67



C.4. Rights and safeguards of taxpayers and third parties
         The exchange of information mechanisms should respect the rights and
         safeguards of taxpayers and third parties.

       242.     The international standard allows requested parties not to supply
       information in response to a request in certain identified situations where an
       issue of trade, business or other legitimate secret arises.

       Exceptions to requirement to provide information (ToR C.4.1)
       243.     All of Spain’s DTCs ensure that the parties are not obliged to provide
       information which would disclose any trade, business, industrial, commercial
       or professional secret or information the disclosure of which would be con-
       trary to public policy (ordre public), in a manner consistent with Article 26(3)
       (c) of the Model Tax Convention.56
       244. The TIEAs of Spain contain similar provisions (based on the Model
       TIEA), as well as an express reference to the professional secrecy duties of
       lawyers (legal privilege), based on Article 7, paragraphs 2 and 3, of the Model
       TIEA.57
       245.     The Spanish General Tax Law does not contain any specific prohibi-
       tion linked to the abovementioned reasons, apart from rules on professional
       secrecy and attorney secrecy discussed at section B.1.5 of the present report.
       246. The Spanish competent authority has so far not received any request
       to which no answer was provided because an issue of trade, business or other
       legitimate secret arose.

                   Determination and factors underlying recommendations

                                        Phase 1 determination
        The element is in place.

                                              Phase 2 rating
        To be finalised as soon as a representative subset of Phase 2 reviews is
        completed.




56.    The DTC with former USSR does not cover public order.
57.    A few protocols to DTCs also reproduce this provision, e.g. Trinidad and Tobago,
       Uruguay.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
68 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

C.5. Timeliness of responses to requests for information
       The jurisdiction should provide information under its network of agreements
       in a timely manner.

     Responses within 90 days (ToR C.5.1)
     247.    In order for exchange of information to be effective it needs to be
     provided in a timeframe that allows tax authorities to apply the information
     to the relevant cases. If a response is provided but only after a significant
     lapse of time, the information may no longer be of use to the requesting
     authorities. This is particularly important in the context of international
     cooperation as cases in this area must be of sufficient importance to warrant
     making a request. Thus, jurisdictions should be able to respond to requests
     within 90 days of receipt by providing the information requested or offering
     an update on the status of the request.
     248.     The procedure for exchange of information set forth in Spanish law
     and regulations appear to permit the competent authorities to gather and
     exchange information in a proper timeframe. In particular, no provision would
     prevent the Spanish authorities from responding to requests within 90 days of
     receipt, or at least providing a progress report concerning the procedure.
     249.     The Spanish TIEAs require the provision of request confirmations,
     status updates and the provision of the requested information, within the
     timeframes set in Article 5(6)(b) of the OECD Model TIEA: the requested
     party should confirm receipt of the request in writing and notify any defi-
     ciencies in the request within 60 days. It should in any event answer as
     promptly as possible and at least provide a detailed update of the status of the
     request, be it because it encounters obstacles in furnishing the information
     or it refuses to furnish the information. The DTC with Barbados, Jamaica,
     Panama, Trinidad and Tobago, Uruguay and EU Directive 2011/16 impose
     similar or tighter deadlines (article 7, whereas Directive 77/799 only requires
     answering “as swiftly as possible”).
     250.    As indicated by many EOI partners, the Spanish authorities often
     respond within 90 days of the request, but they also often fail to advise
     their partners of the status of their requests when they have not responded
     within this deadline. Spain advises the requesting jurisdiction of the status
     of the ongoing procedure only upon express request. The Spanish authorities
     acknowledge that they do not systematically provided updates.
     251.    The Spanish authorities do not have statistics on their average
     response time. The only statistical data they have relate to whether informa-
     tion was provided within 180 days or afterwards.




                           PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 69



                                     Information provided             Information provided in
                 Year                   within 180 days                 more than 180 days
                 2008                           240                            231
                 2009                           270                            249
                 2010                           358                            139


       252.     Response time varies greatly, depending on the complexity of the
       request (the number of persons involved, the number of questions) and on
       whether the information is already in the tax administration’s databases or
       has to be obtained through information gathering measures taken by local
       tax offices. EOI requests that typically take longer than others relate to infor-
       mation not at the direct disposal of the tax authorities and that require the
       involvement of local tax authorities, such as some accounting information.
       Local offices are given a first four month deadline to collect information, but
       it often takes longer in practice, although rarely more than a year. Another
       type of request that takes longer to deal with concerns natural persons that
       are difficult to identify, for which Spain made unfruitful research and has to
       wait for additional information from the requesting party. Finally, Spain’s
       customary partners have confirmed that response times vary with the com-
       plexity of their requests and that they are generally satisfied.
       253.     Recent DTCs and TIEAs contain further provisions on the timeliness
       of responses. The TIEAs with Curacao and St Maarten and the protocols
       to the DTCs with Barbados, Costa Rica, Jamaica, Panama, Trinidad and
       Tobago and Uruguay provide that “In the event that the Requested Party has
       not provided the information within 6 months of the receipt of the request,
       it shall inform the Applicant Party of the progress made in obtaining the
       requested information and provide the Applicant Party with its best estimate
       within what period of time the request can be complied with. If the Requested
       Party is unable to comply with the request it will so inform the Applicant
       Party, while providing the reasons for its inability. The Applicant Party shall
       subsequently decide whether or not to rescind its request. If it decides not to
       rescind its request the Parties shall informally and directly, through Mutual
       Agreement or otherwise, discuss the possibilities to achieve the purpose of
       the request and consult with each other the manner in which to achieve that
       objective.”
       254.    These TIEAs and DTCs are all very recent and no EOI requests were
       received by Spain on this basis, so it was not possible to assess how Spain
       implements these new deadlines in practice.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
70 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

     Resources and Organisational process (ToR C.5.2)
     255.    Spain’s DTCs indicate that the competent authority for the exchange
     of information for tax purposes is the Minister of Finance or his author-
     ised representative. There is a delegation of power by the Minister to the
     Director General of the Spanish Tax Administration (Agencia Estatal de
     Administración Tributaria, AEAT), who delegates to the Director General
     of Inspection, who delegates to the head of the Information Office (Equipo
     Central de Información, ECI). In practice, treaty partners are given the coor-
     dinates of the latest delegated person, who receives all EOI requests.
     256.    The ECI counts nine officers in charge of all EOI requests received
     and sent by Spain in direct taxation matters. In addition, Spain has cross-
     border agreements with France and Portugal that delegate authority to certain
     border directorates, allowing them to exchange information directly. This
     encourages informal contacts and better understanding among partners.
     Spain reports that these agreements have proven very useful, although in
     VAT matters more than direct taxation.

     Resources
     257.    The ECI counts nine persons, i.e. one head, six professionals and two
     assistants, dealing with an average of 460 EOI requests received every year.
     Staff members have belonged to ECI for three years on average and all have
     been trained in the Spanish Public School of Tax and received basic training
     on exchange of information. Every year they receive some training on audits
     and other relevant matters. Languages being key in exchange matters, the
     office counts two officers dealing with French-speaking jurisdictions and
     two others dealing with English-speaking jurisdictions and other jurisdictions
     using English in their requests. A similar team exists to deal with spontane-
     ous and automatic information sent and received by Spain. A third team deals
     with VAT issues within the EU.
     258.     The ECI has not developed any manual or guidelines on how to
     handle EOI requests, but relies on its dedicated IT application. This appli-
     cation, developed in 2005, guides the officer between the various possible
     options he/she has to deal with the request. This application, called INTER,
     is the system through which all requests are managed. It allows knowing in
     real time at which stage of the procedure an EOI request is.

     Organisational process
     259.    The typical routing of a request is as follows: the competent authority
     (ECI) receives the EOI request, makes a new entry into the IT system INTER
     and scans all the documents received. It then confirms its admissibility and



                           PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                     COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 71



       acknowledges receipt within one or two days by mail post or secured e-mail
       system within the EU. It informs the EOI partner of the allocated reference
       number of the request, to ease future communications on the request.
       260.     If there is any ambiguity in the request, or if details essential to find
       the information are missing (typically if the person cannot be identified in
       the tax databases), ECI contacts its counterpart. Many EOI partners of Spain
       declared that communication with ECI was easy, and prompt responses were
       received.
       261.     The official assigned to the handling of a request analyses its content
       and decides whether to collect the information him/herself from available
       databases, or to refer it to another central or local tax office (for instance as
       concerns banking information), depending on the content of the request and
       the person concerned (especially for large taxpayers). If part of the informa-
       tion is in the tax databases or other accessible databases, this is sent to the
       requesting authority with a note indicating that the rest of the request is being
       processed.
       262.     Local tax offices are given four months to collect the information. All
       correspondence is done through the IT system. Responses are checked by the
       head of the local office before being sent on to the ECI office, which again
       verifies the responses. The head of the team verifies that the elements neces-
       sary to the response have been properly transmitted and that the appropriate
       measures have been taken. The responses are sent the next day to the request-
       ing authority. If there are shortfalls, supplementary measures are requested,
       and at the same time ECI sends a partial response to the requesting authority.

       Absence of restrictive conditions on exchange of information
       (ToR C.5.3)
       263.    There is no provision in Spain’s legislation or in its EOI instru-
       ments that would impose conditions on the exchange of information beyond
       those contemplated in Article 26 of the Model Tax Convention or the Model
       TIEA. It does not appear either that Spain has created any restriction on the
       exchange of information in practice.

                   Determination and factors underlying recommendations

                                        Phase 1 determination
        The assessment team is not in a position to evaluate whether this element
        is in place, as it involves issues of practice that are dealt with in the
        Phase 2 review.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
72 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

                                       Phase 2 rating
      To be finalised as soon as a representative subset of Phase 2 reviews is
      completed.
              Factors underlying
              recommendations                               Recommendations
      Spain advises requesting jurisdictions     Spain should promptly implement
      of the status of their requests when       a system for advising requesting
      the competent authority is not in a        jurisdictions of the status of their
      position to respond within 90 days,        requests, when the competent
      only when reminded by the requesting       authority is not in a position to
      jurisdiction.                              respond within 90 days.




                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                    SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 73




            Summary of Determinations 58 and Factors
                Underlying Recommendations


                                       Factors underlying
  Determination/rating                 recommendations                         Recommendations
 Jurisdictions should ensure that ownership and identity information for all relevant entities
 and arrangements is available to their competent authorities. (ToR A.1)
 Phase 1
 determination: the
 element is in place
 Phase 2 rating: To be
 finalised as soon as a
 representative subset
 of Phase 2 reviews is
 completed.
 Jurisdictions should ensure that reliable accounting records are kept for all relevant entities
 and arrangements. (ToR A.2)
 Phase 1
 determination: the
 element is in place
 Phase 2 rating: To be
 finalised as soon as a
 representative subset
 of Phase 2 reviews is
 completed.




58.    The ratings will be finalised as soon as a representative subset of Phase 2 reviews
       is completed.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
74 – SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS

                                 Factors underlying
  Determination/rating           recommendations                         Recommendations
Banking information should be available for all account-holders. (ToR A.3)
Phase 1
determination: the
element is in place
Phase 2 rating: To be
finalised as soon as a
representative subset
of Phase 2 reviews is
completed.
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Phase 1
determination: the
element is in place
Phase 2 rating: To be
finalised as soon as a
representative subset
of Phase 2 reviews is
completed.
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Phase 1
determination: the
element is in place
Phase 2 rating: To be
finalised as soon as a
representative subset
of Phase 2 reviews is
completed.




                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                    SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 75



                                       Factors underlying
  Determination/rating                 recommendations                         Recommendations
 Exchange of information mechanisms should allow for effective exchange of information.
 (ToR C.1)
 Phase 1
 determination: the
 element is in place
 Phase 2 rating: To be
 finalised as soon as a
 representative subset
 of Phase 2 reviews is
 completed.
 The jurisdictions’ network of information exchange mechanisms should cover all relevant
 partners. (ToR C.2)
 Phase 1                         The negotiation of some                Spain should continue to
 determination: the              exchange of information                develop its EOI network to
 element is in place but         agreements has been stalled            the standard with all relevant
 certain aspects of the          for reasons not linked to              partners.
 legal implementation            exchange of information for tax
 of the element need             purposes.
 improvement
 Phase 2 rating: To be
 finalised as soon as a
 representative subset
 of Phase 2 reviews is
 completed.
 The jurisdictions’ mechanisms for exchange of information should have adequate provisions
 to ensure the confidentiality of information received. (ToR C.3)
 Phase 1
 determination: the
 element is in place
 Phase 2 rating: To be
 finalised as soon as a
 representative subset
 of Phase 2 reviews is
 completed.




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
76 – SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS

                               Factors underlying
  Determination/rating         recommendations                         Recommendations
The exchange of information mechanisms should respect the rights and safeguards of
taxpayers and third parties. (ToR C.4)
Phase 1
determination: the
element is in place
Phase 2 rating: To be
finalised as soon as a
representative subset
of Phase 2 reviews is
completed.
The jurisdiction should provide information under its network of agreements in a timely
manner. (ToR C.5)
Phase 1
determination: The
assessment team is
not in a position to
evaluate whether this
element is in place, as
it involves issues of
practice that are dealt
with in the Phase 2
review.
Phase 2 rating: To be     Spain advises requesting              Spain should promptly imple-
finalised as soon as a    jurisdictions of the status           ment a system for advising
representative subset     of their requests when the            requesting jurisdictions of the
of Phase 2 reviews is     competent authority is not in         status of their requests when
completed.                a position to respond within          the competent authority is not
                          90 days, only when reminded           in a position to respond within
                          by the requesting jurisdiction.       90 days.




                           PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                                  ANNEXES – 77




      Annex 1: Jurisdiction’s Response to the Review Report 59


           Spain would like to express a deep appreciation for the work done by the
       assessment team in evaluating Spain for this combined review. Spain wants to
       thank also the members of the Peer Review Group and the other exchange of
       information partners for their valuable contribution to the review.
            Spain agrees with the findings of the report.




59.    This Annex presents the jurisdiction’s response to the review report and shall not
       be deemed to represent the Global Forum’s views.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
78 – ANNEXES




      Annex 2: List of all Exchange-of-Information Mechanisms
                               in Force



Multilateral agreements

           Spain is a party to the:
               EU Council Directive 77/799/EEC of 19 December 1977 concerning
               mutual assistance by the competent authorities of the Member States
               in the field of direct taxation and taxation of insurance premiums.
               The current EU members, covered by this Council Directive, are:
               Austria, Belgium, Bulgaria, Cyprus,60 Czech Republic, Denmark,
               Estonia, Finland, France, Germany, Greece, Hungary, Ireland,
               Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,
               Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United
               Kingdom. EU Council Directive of 15 February 2011 concerning
               administrative cooperation in tax matters will strengthen this directive.
               The deadline for transposition of the directive into the national laws of
               the member states is 1 January 2013.
               EU Council Directive 2003/48/EC of 3 June 2003 on taxation of
               savings income in the form of interest payments. This Directive
               aims to ensure that savings income in the form of interest payments

60.    Footnote by Turkey: The information in this document with reference to
       “Cyprus” relates to the southern part of the Island. There is no single authority
       representing both Turkish and Greek Cypriot people on the Island. Turkey rec-
       ognizes the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and
       equitable solution is found within the context of United Nations, Turkey shall
       preserve its position concerning the “Cyprus issue”.
       Footnote by all the European Union member states of the OECD and the
       European Commission: The Republic of Cyprus is recognized by all members
       of the United Nations with the exception of Turkey. The information in this
       document relates to the area under the effective control of the Government of the
       Republic of Cyprus.


                              PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                                   ANNEXES – 79



                  generated in an EU member state in favour of individuals or residual
                  entities being resident of another EU member state are effectively
                  taxed in accordance with the fiscal laws of their state of residence. It
                  also aims to ensure exchange of information between member states.
                  Council of Europe and OECD Convention on Mutual Administrative
                  Assistance in Tax Matters, which is currently in force with respect
                  to 17 jurisdictions: Azerbaijan, Belgium, Denmark, Finland, France,
                  Georgia, Iceland, Italy, the Kingdom of the Netherlands, Norway,
                  Poland, Slovenia, Spain, Sweden, the Ukraine, the United Kingdom
                  and the United States.61 The Protocol amending this Convention has
                  been signed by 20 jurisdictions, including Spain. It entered into force
                  on 1 June 2011 with respect to Denmark, Finland, Georgia, Norway
                  and Slovenia.

Bilateral agreements

           List of information exchange agreements (TIEA) and tax treaties (DTC)
       signed by Spain as of June 2011. For jurisdictions with which Spain has several
       agreements, a reference to the multilateral agreement is placed in parentheses
       (EU or OECD/COE treaty). When the date of signature is followed by a date
       in parentheses, the latter refers to signature of the agreement, while the former
       refers to signature of the protocol. The text of the DTCs and TIEAs is available
       on the website of the Spanish Ministry of Economy (mainly in Spanish).

                                       Type of EoI
           Treaty partner             arrangement               Date signed    Date in force
 1    Albania                               DTC                  02/07/2010     04/05/2011
 2    Algeria                               DTC                  07/10/2002     06/07/2005
 3    Andorra                              TIEA                  14/01/2010     10/02/2011
 4    Argentina                             DTC                  21/07/1992     28/07/1994
 5    Armenia                               DTC                  16/12/2010          -
 6    Aruba                                TIEA                  24/11/2008     27/01/2010
 7    Australia                             DTC                  24/03/1992     10/12/1992
 8    Austria                           DTC (EU)                 24/02/1995     02/10/1995
 9    Azerbaijan                       COE/OECD                  12/11/2009     01/12/2010
 10   Barbados                              DTC                  1/12/2010           -


61.    Canada, Germany, Korea, Mexico, Mexico, Moldova and Portugal have signed
       but not yet ratified the Convention.


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
80 – ANNEXES

           qdf62 qdf63            Type of EoI
         Treaty partner          arrangement               Date signed              Date in force
      Belarus (former
 11                                    DTC                  01/03/1985                07/08/1986
      USSR)
                                DTC (EU, COE/
                                                            14/06/1995                25/06/2003
 12   Belgium                      OECD)
                                                           02/12/2009 62                   -
                                   Protocol
 13   Bolivia                          DTC                  30/06/1997                23/11/1998
      Bosnia and
 14                                    DTC                  05/02/2008                04/01/2011
      Herzegovina
 15   Brazil                           DTC                  14/11/1974                03/12/1975
 16   Bulgaria                      DTC (EU)                06/03/1990                14/06/1991
 17   Canada                           DTC                  23/11/1976                26/12/1980
 18   Chile                            DTC                  07/07/2003                23/12/2003
 19   China                            DTC                  22/11/1990                20/05/1992
 20 Colombia                           DTC                  31/03/2005                23/10/2008
 21   Costa Rica                       DTC                  04/05/2004                15/12/2010
 22 Croatia                            DTC                  19/05/2005                20/04/2006
 23 Cuba                               DTC                  03/02/1999                31/12/2000
      Curacao (former
 24                                   TIEA                 2008-06-10                 27/01/2010
      Netherlands Antilles)
 25 Cyprus 63                           EU                     2003                      [2004]
 26 Czech Republic                  DTC (EU)                08/05/1980                05/06/1981
                                                               1977                       1979
 27 Denmark                     EU; COE/OECD
                                                            12/11/2009                 1/12/2010
 28 Ecuador                            DTC                  20/05/1991                19/04/1993
 29 Egypt                              DTC                  10/06/2005                28/05/2006
 30 Estonia                         DTC (EU)                03/09/2003                28/12/2004
                                     DTC                    15/11/1967                30/10/1968
 31   Finland                    Protocol (EU,              22/02/1973                24/04/1973
                                 COE/OECD)                  27/04/1990                28/07/1992
                                DTC (EU, COE/
 32 France                                                  10/10/1995                01/07/1997
                                   OECD)


62.   This Protocol removes old Article 26 (Exchange of information) and introduces
      a new article on exchange of information conform to the standards.
63.   See footnote 60.


                              PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                                   ANNEXES – 81



                                       Type of EoI
           Treaty partner             arrangement               Date signed    Date in force
    Former Yugoslav
 33 Republic of                             DTC                 20/06/2005      01/12/2005
    Macedonia
                                       DTC (COE/                 7/06/2010           -
 34 Georgia
                                        OECD)                    12/10/2010     01-06-2011
 35 Germany                             DTC (EU)                 05/12/1966     14/03/1968
 36 Greece                              DTC (EU)                04/12/2000      21/08/2002
 37   Hong Kong, China                      DTC                  01/04/2011          -
 38 Hungary                             DTC (EU)                 09/07/1984     20/05/1987
                                       DTC (COE/
 39 Iceland                                                     22/01/2002      02/08/2002
                                        OECD)
 40 India                                   DTC                 08/02/1993      12/01/1995
 41   Indonesia                             DTC                  30/05/1995     20/12/1999
 42   Iran                                  DTC                  19/07/2003     30/01/2006
 43 Ireland                             DTC (EU)                 10/02/1994     21/11/1994
 44 Israel                                  DTC                  30/11/1999     20/11/2000
                                     DTC (EU, COE/
 45 Italy                                                        08/09/1977     14/11/1980
                                        OECD)
 46 Jamaica                                 DTC                  08/07/2008     16/05/2009
 47   Japan                                 DTC                  13/02/1974     20/11/1974
                                       DTC (former
                                                                01/03/1985      07/08/1986
 48 Kazakhstan                           USSR)
                                                                02/07/2009           -
                                          DTC
      Kirghizstan (former
 49                                         DTC                  01/03/1985     07/08/1986
      USSR)
 50 Korea                                   DTC                  17/01/1994     21/11/1994
 51   Kuwait                                DTC                 26/05/2008           -
 52   Latvia                            DTC (EU)                04/09/2003      14/12/2004
 53 Lithuania                           DTC (EU)                 22/07/2003     26/12/2003
                                          DTC                   03/06/1986      19/05/1987
 54 Luxembourg
                                      Protocol (EU)             10/11/2009      16/07/2011
 55 Malaysia                                DTC                 24/05/2006      28/12/2007
 56 Malta                               DTC (EU)                 08/11/2005     12/09/2006
 57 Mexico                                  DTC                  24/07/1992     06/10/1994




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
82 – ANNEXES

                                 Type of EoI
        Treaty partner          arrangement               Date signed              Date in force
58 Moldavia                           DTC                  08/10/2007                30/03/2009
59 Morocco                            DTC                  10/07/1978                16/05/1985
                               DTC (EU, COE/
60 Netherlands                                             16/06/1971                20/09/1972
                                  OECD)
61   New Zealand                      DTC                  28/07/2005                31/07/2006
62 Nigeria                            DTC                  23/06/2009                      -
                               DTC (EU, COE/
63 Norway                                                  06/10/1999                18/12/2000
                                  OECD)
64 Pakistan                           DTC                  01/01/2010                      -
65 Panama                             DTC                  07/10/2010                      -
66 Peru                               DTC                 06/04/2006                       -
67 Philippines                        DTC                  14/03/1989                12/09/1994
                               DTC (EU, COE/
68 Poland                                                  15/11/1979                06/05/1982
                                  OECD)
69 Portugal                        DTC (EU)                26/10/1993                28/06/1995
70   Romania                       DTC (EU)                24/05/1979                28/06/1980
71   Russia                           DTC                  16/12/1998                13/06/2000
     Saint Maarten (former
72                                   TIEA                  10/06/2008                27/01/2010
     Netherlands Antilles)
73   Salvador                         DTC                  07/07/2008                13/08/2009
74   San Marino                      TIEA                  06/09/2010                02/08/2011
75   Saudi Arabia                     DTC                  19/06/2007                01/10/2008
76   Senegal                          DTC                  05/12/2006                      -
77 Serbia                             DTC                  09/03/2009                28/03/2010
78   Singapore                        DTC                  13/04/2011                      -
79 Slovakia                        DTC (EU)                08/05/1980                05/06/1981
                               DTC (EU, COE/
80 Slovenia                                                23/05/2001                19/03/2002
                                  OECD)
81   South Africa                     DTC                 23/06/2006                 28/12/2007
                               DTC (EU, COE/
82 Sweden                                                  16/06/1976                21/12/1976
                                  OECD)
                                     DTC                  26/04/1966                 02/02/1967
83 Switzerland
                                   Protocol               29/06/2006                 01/06/2007




                             PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                                   ANNEXES – 83



                                       Type of EoI
           Treaty partner             arrangement               Date signed    Date in force
    Tajikistan (former
 84                                         DTC                  01/03/1985     07/08/1986
    USSR)
 85 Thailand                                DTC                  14/10/1997     16/09/1998
 86 The Bahamas                            TIEA                  11/03/2010     17/08/2011
      The Netherlands,
      Caribbean islands
      (Bonaire, Saint
 87                                        TIEA                 10/06/2008      27/01/2010
      Eustache and Saba,
      former Netherlands
      Antilles)
      Timor Oriental
 88                                         DTC                 30/05/1995      20/12/1999
      (Indonesia)
 89 Trinidad and Tobago                     DTC                 09/03/2009      28/12/2009
 90 Tunisia                                 DTC                  02/07/1982     14/02/1987
 91   Turkey                                DTC                  05/07/2002     18/12/2003
      Turkmenistan (former
 92                                         DTC                  01/03/1985     07/08/1986
      USSR)
      Ukraine (former                  DTC (COE/
 93                                                              01/03/1985     07/08/1986
      USSR)                             OECD)
 94 United Arab Emirates                    DTC                 04/07/2006      02/04/2007
                                           DTC                   21/10/1975     25/11/1976
 95 United Kingdom                       Protocol                13/12/1993     25/05/1995
                                    (EU, COE/OECD)               17/06/1994     25/05/1975
                                       DTC (COE/
 96 United States                                               22/02/1990      21/11/1990
                                        OECD)
 97   Uruguay                               DTC                 09/10/2009      24/04/2011
 98 Venezuela                               DTC                 08/04/2003      29/04/2004
 99 Vietnam                                 DTC                  07/03/2005     22/12/2005




PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
84 – ANNEXES




                Annex 3: List of all Laws, Regulations
                   and Other Relevant Material


         The General Tax Law 2003
         The General Regulation on Tax Auditing
         The Commercial Code
         The Corporate Enterprises Act
         The Civil Code
         The Foundations Act 2002




                          PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
                                                                                ANNEXES – 85




      Annex 4: Persons Interviewed During the On-Site Visit


            The assessment team met with representatives of the following entities:

Ministry of Economy and Finance (Ministerio de Economía y
Hacienda)

            Office of the Secretary of State for Finance and the Budget (Gabinete
                Secretaría de Estado de Hacienda y Presupuestos)
            Office of the General Secretary of Finance (Gabinete SGH) is respon-
                sible of the Fiscal Policy, the Tax System strategy together with the
                General Directorate of Taxation.
            General Directorate of Taxation (Dirección General De Tributos) is
               responsible of the Fiscal Policy, the Tax System strategy together
               with the General Secretary of Finance. The DGT is also responsible
               for Legislation interpretation binding the Tax Agency (AEAT).
                 -    Division of International Tax Affairs (Subdirección General de
                      Asuntos Fiscales Internacionales)
                 -    Division of non-residents (Subdirección General de No Residentes)
                 -    Division of financial operations (S.G. Operaciones Financieras)
                 -    Division of natural persons (S.G. Personas Físicas)
                 -    Division of legal persons (S.G. Personas Jurídicas)
                 -    Division of taxes (S.G. Tributos)
            Tax Agency (AEAT)
                 -    Director’s Office (Gabinete del Director)
                 -    Co-ordinating Unit for International Relations (Unidad de
                      Coordinación de las Relaciones Internacionales)
                 -    Department of Tax and Financial Inspection (Departamento de
                      Inspección Financiera y Tributaria)


PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
86 – ANNEXES

               -   Department of Tax Management (Departamento de Gestión
                   Tributaria)
               -   IT Department (Departamento de Informática Tributaria)
               -   Office for the Planification and Institutional Relations (Servicio
                   de Planificación y Relaciones Institucionales)
               -   Large Taxpayers Department (Delegación Central de Grandes
                   Contribuyentes)
               -   Tax Office of Madrid (Delegación Especial de Madrid)
         Treasury Directorate (Dirección General del Tesoro)
         Institute of Accountants and Auditors (Instituto de Contabilidad y
             Auditoría de Cuentas)

Ministry for Foreign Affairs and Co-operation (Ministerio de Asuntos
Exteriores y Cooperación)


Ministry of Justice (Ministerio de Justicia)

         General Council of Public Notaries (Consejo General del Notariado)

Central Bank of Spain (Banco de España)


Stock Exchange regulator (CNMV)




                            PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – SPAIN © OECD 2011
          ORGANISATION FOR ECONOMIC CO-OPERATION
                     AND DEVELOPMENT
     The OECD is a unique forum where governments work together to address the
economic, social and environmental challenges of globalisation. The OECD is also at the
forefront of efforts to understand and to help governments respond to new developments
and concerns, such as corporate governance, the information economy and the challenges of
an ageing population. The Organisation provides a setting where governments can compare
policy experiences, seek answers to common problems, identify good practice and work to
co-ordinate domestic and international policies.
     The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the
Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland,
Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland,
Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom
and the United States. The European Commission takes part in the work of the OECD.
     OECD Publishing disseminates widely the results of the Organisation’s statistics gathering
and research on economic, social and environmental issues, as well as the conventions,
guidelines and standards agreed by its members.




                        OECD PUBLISHING, 2, rue André-Pascal, 75775 PARIS CEDEX 16
                          (23 2011 62 1 P) ISBN 978-92-64-12674-9 – No. 59657 2011
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, COMBINED: PHASE 1 + PHASE 2
SPAIN
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 100 jurisdictions which participate in the work of the Global
Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must
be provided, including bank information and information held by fiduciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange
of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews.
The ultimate goal is to help jurisdictions to effectively implement the international standards
of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please visit
www.oecd.org/tax/transparency and www.eoi-tax.org.


 Please cite this publication as:
 OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
 Reviews: Spain 2011: Combined: Phase 1 + Phase 2, OECD Publishing.
 http://dx.doi.org/10.1787/9789264126756-en
 This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical
 databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information.




                                                    ISBN 978-92-64-12674-9
                                                             23 2011 62 1 P       -:HSTCQE=VW[\Y^:

								
To top