Minutes of the session

MINUTES OF THE PLENARY SESSION 1/2024

Minutes of the joint plenary meeting of the Forum of Small and Medium-Sized Enterprises and the Forum of Federations and Associations of Self-Employed Workers
held on March 13, 2024

President of the Forum of Small and Medium-Sized Enterprises

Director General of the State Agency for Tax Administration

Ms. Soledad Fernandez Doctor

Members representing the Tax Agency

Director of the Tax Management Department

Mrs. Rosa Maria Prieto del Rey

Director of the Department of Financial and Tax Inspection

Mr. Manuel Trillo Alvarez

Director of the Collection Department

Mrs. Virginia Muñoz Fernández

Director of the Tax Information Technology Department

Mr. Jose Borja Tome

Deputy Director General of Planning and Information Coordination and Assistance of the Planning and Institutional Relations Service

Mrs. M.ª Jesús Gallego Camarena

Members representing Small and Medium Enterprises

Spanish Confederation of Small and Medium-sized Enterprises (CEPYME)

Director of Economics and Sectoral Policies

D. Francisco Vidal Yuguero

Confederación Española de Organizaciones Empresariales (CEOE)

Head of Tax Department

Mr. Bernardo Soto Siles

Members representing Federations and Associations of Self-Employed Workers

National Federation of Associations of Self-Employed Workers (ATA)

Director of the Taxation Department

Mr. Jesús Salido Gusi

Union of Self-Employed and Entrepreneurial Workers Associations (Unión de Asociaciones de Trabajadores Autónomos y Emprendedores - UATAE)

Head of Institutional Relations

Mr. Miguel Vila Gómez

Technical Secretariat of the Forum of Small and Medium Enterprises

Deputy Director General of External Communications - Planning and Institutional Relations Service

Mrs. Maria Dolores Carreno Beltran

On March 13, 2024, the fourth plenary session of the Forum of Small and Medium-sized Enterprises and the Forum of Federations and Associations of Self-Employed Workers will be held jointly, with the attendance of the aforementioned persons, and in accordance with the following:

AGENDA

1. Opening of the session.

2. Approval by the members of the Small and Medium-Sized Enterprises Forum of the minutes of the 3rd plenary session held on March 13, 2023.

3. Approval by the members of the Forum of Federations and Associations of Self-Employed Workers of the minutes of the 3rd plenary session held on March 13, 2023.

4. General guidelines of the Annual Tax and Customs Control Plan for 2024.

5. Summary of the joint meeting of the working group on Regulatory Analysis and Digitalisation Project of both Forums.

6. Rectifying self-assessments: processing status.

7. Simplification of language and assistance in seizure matters.

8. Next call: dates and topics to be discussed.

9. Other considerations, requests and questions.

1. Session opening

The Director of the Tax Agency opened the session and, after welcoming and thanking the attendees for their presence, began the first joint session of the ordinary sessions of the SMEs Plenary Session and the Plenary Session of the Forum of Federations and Associations of Self-Employed Workers.

On another note, the Director announced the appointment of Mr. Manuel Trillo as the new Director of the Inspection Department, replacing Mr. Javier Hurtado.

Ms. Soledad Fernández then moved on to the second item on the agenda and gave the floor to Ms. M. Dolores Carreño Beltrán, Deputy Director General of External Communications of the Planning and Institutional Relations Service and Technical Secretary of this Forum.

2. Approval by the members of the Small and Medium-Sized Enterprises Forum of the minutes of the 3rd plenary session held on March 13, 2023

The Deputy Director General of External Communications of the Planning and Institutional Relations Service then stated that the minutes of March 13, 2023, were sent to the representatives of the SMEs.

Ms. M. Dolores Carreño reports that CEPYME's observations were received and incorporated, and the minutes were therefore sent again.

Since no new comments were received and no objections were raised, the minutes of the third plenary session held on March 13, 2023, are hereby declared approved.

3. Approval by the members of the Forum of Federations and Associations of Self-Employed Workers of the minutes of the 3rd plenary session held on March 13, 2023

Likewise, since there were no comments from the representatives of the self-employed workers, the Deputy Director General of External Communications also declared the minutes of the plenary session held on March 13, 2023, approved.

4. General guidelines of the 2024 Annual Tax and Customs Control Plan

The Director of the Tax Agency then gave the floor to Ms. María Jesús Gallego, who gave a presentation summarizing the guidelines of the Annual Tax and Customs Control Plan. These guidelines were published in the Official State Gazette on February 29, 2024.

Regarding the basic guidelines, the implementation of an integrated information and assistance model stands out, in which citizens choose their preferred service channel through a broad catalog of services.

Secondly, regarding the Renta web application, citizens are now able to correct errors in their income tax returns prior to a possible audit by the Tax Agency.

Furthermore, the Tax Agency is implementing a unified prevention and control model aimed at encouraging voluntary compliance by taxpayers and avoiding the transfer of indirect burdens to them. Likewise, control over foreign operators selling through e-commerce platforms will be expanded.

In customs matters, the Port Security Plan will be promoted within the context of European initiatives focused on combating drug trafficking by sea. Finally, the anticipation of tax collection analysis will be based on coordination between departments and the use of advanced data processing tools.

Having discussed the basic lines of the guidelines, the main lines to be highlighted in each of the three main blocks of the guidelines are presented.

First, in the information and assistance block, a new information and assistance model was implemented, extending telephone support to the afternoon hours and providing taxpayers with a catalog of assistance services.

Likewise, as part of the progress made in the Code of Good Tax Practices for Tax Professionals, specialized appointments for this group will be implemented in 2024.

On the other hand, in the area of Non-Resident Income Tax, new assistance tools will be created, such as an informant, a chat, the possibility of submitting inquiries through INFORMA+, and the establishment of a telephone channel with an appointment to handle information requests.

Also highlighted is the existence of new virtual assistance tools in the customs sector that will facilitate the preparation of both import and export declarations.

In the second block, relating to the promotion of voluntary compliance and fraud prevention, five lines of action stand out:

• the necessary adaptation of computer systems to new electronic invoicing services.

• The implementation of preventive campaigns focused on non-filers of Personal Income Tax, which will also extend to the area of information returns.

• An incident correction assistance service that allows taxpayers to file a supplementary income tax return when the Tax Agency has detected an incident and the taxpayer agrees.

• The new reporting obligations that have been created for 2024, such as the reporting obligation regarding virtual currencies, the one regarding cross-border payments, the one regarding platform operators, and the information declaration regarding the Canary Islands Special Zone.

• In the area of fraud prevention, the project to simplify administrative documents stands out, which began with documents related to Personal Income Tax and collection documents, such as salary and wage garnishment orders and credit garnishment orders.

In the third block, the control block, the Tax Agency has implemented a prevention and control model that focuses on promoting voluntary compliance by taxpayers.

On the other hand, the effects of the Constitutional Court's ruling of January 19, 2024, which declared some of the measures established by Royal Decree Law 3/2016 unconstitutional, have also been reflected. These measures relate to the limitation of offsetting negative tax bases and the application of the deduction for double taxation for large companies, as well as the obligation to automatically include impairment losses on shares in the tax base, which affects any taxpayer who pays Corporate Tax.

On the other hand, regarding VAT control, the most important are the control of cross-border operations, the control of investment goods fraud, and also the special control that will be carried out when related legal entities are used to allow the deductibility of VAT-incurred amounts.

Likewise, the operational criteria for applying the sanctioning regime will be reviewed, and e-commerce platforms and so-called neobanks will be monitored. Regarding money laundering, new control measures will be implemented, both on cash movements and virtual currencies.

Finally, in terms of tax collection, improvements have been made by obtaining information on the ownership of POS terminals and electronic seizures. Furthermore, this includes the need to promote civil actions as a debt recovery mechanism, as well as the creation of a new protocol for preventive actions that will take into account the coordinated actions of all areas of the Tax Agency.

Once the presentation was concluded, the Director of the Agency asked if there were any questions related to the above.

Mr. Bernardo Soto refers to the case of fraud affecting VAT on fuels in cases where VAT is not collected on fuel sales. He also asked whether the amendment to Royal Decree 8/23, which aims to tighten conditions for purchasing goods from bonded warehouses, has been forwarded to the Agency, and what the Tax Agency's opinion is on the matter.

Ms. Soledad Fernández responds that the Agency is the first interested party in putting an end to this fraud and that the amendment will be carefully studied since, although numerous joint actions have been carried out by the Inspection and Collection Departments, the problem, although to a lesser extent, persists and needs to be eradicated.

Mr. Manuel Trillo adds that on March 28th, a transitional period will end, which aims to eliminate the many intermediaries currently involved in the wholesale hydrocarbon distribution business.

In his opinion, there are several solutions. One would be to establish a guarantee, although managing that guarantee presents some challenges for its effectiveness. Other solutions would be tougher, such as requiring payment upon departure from the warehouse, just as with the Special Tax. Finally, the Director of the Inspection Department argues that a regulatory change would greatly help curb this form of fraud.

On another note, Mr. Jesús Salido asks whether the review of the sanctioning regime's criteria is a step toward recognizing the taxpayer's right to make mistakes.

The Director of the Management Department points out that the review is aimed at taking into account certain circumstances in taxpayers' compliance history, as the Tax Agency has been working for some time to better adapt the circumstances of culpability.

Mr. Bernardo Soto raises the question of whether the rectification of statements on the website will entail a penalty, with Ms. Rosa Prieto clarifying that certain issues are still pending definition, but in principle it would not be a requirement and would not entail a penalty.

There being no further questions and without further delay, the Director General now hands the floor over to the Deputy Director of External Communications to summarize the joint meeting of the regulatory analysis and digitalization project working group held on February 19.

5. Summary of the joint meeting of the working group on regulatory analysis and digitalization project of both Forums

The Deputy Director of External Communications reports that representatives from the General Directorate of Taxes participated in the meeting, as the first item on the agenda was the analysis of the conclusions of the working group on the franchise regime held at the Institute of Fiscal Studies.

In that group, the Deputy Director General of Consumption Taxes at the DGT reported that, although its potential effects were being studied, the implementation of the VAT exemption regime had not yet been decided, as it was a matter of tax policy.

However, I would like to point out that what would come into effect in January 2025 is the possibility for Spanish entrepreneurs to carry out franchise activities in other Member States where they operate and where the franchise regime does exist.

The Deputy Director General of Personal Income Tax then spoke about the possible objectification of deductible expenses, noting that studies were underway to increase legal certainty.

Within the working group, Ms. Mercedes Jordán addressed the disaggregation of the contribution regularization data, noting that this was data provided by Social Security and asking about the need to have this disaggregated data. None of the attendees in that group defended the need for the data, so it was ultimately decided that the data was not necessary.

On the other hand, Mr. Enrique Tarrats expressed his positive assessment of the request to unify the figures for small and large entities. However, a regulatory change and a budget estimate would be necessary because the modification could have a significant impact, affecting multiple regulations and budgets.

In the second item on the working group's agenda, Ms. Mercedes Jordán discussed the new information contained in the information declarations for platform operators (form 238) and cross-border payments (form 379). First, in Form 238, which is derived from DAC 7, platform operators are required to report on sellers who carry out certain activities when they exceed certain limits. Regarding Form 379, this information declaration must be submitted by payment service providers whose home or host Member State is the Kingdom of Spain when they provide more than 25 payment services to the same beneficiary, with certain specific requirements. It was also clarified that a payment is considered cross-border when the originator is established in one Member State and the beneficiary is in another Member State or a third country.

Finally, in the third point of the agenda, Mr. Javier Hurtado developed what is related to the Verifactu regulation following the approval of Royal Decree 1007/2023 of December 5, reporting on the background and basic objectives of the regulation (security, secularization and immutability of invoicing, promotion of tax awareness and citizen collaboration, administrative simplification, protection of free competition and digitalization, standardization and interoperability).

The regulatory framework and summary of the content were also noted. Regarding the content, the substantive content of the invoice remains unchanged; it continues to be included in the Royal Decree on invoicing obligations.

Regarding the scope of application, it affects all entrepreneurs and professionals, SMEs, and self-employed workers. Those registered with the SII (Institutional Income Tax System), the simplified regime, and the Agricultural regime, as well as those excluded from the obligation to invoice, are excluded. Regarding the territorial scope, it affects the entire Spanish territory, except for the autonomous territories, including Ceuta, Melilla, and the Canary Islands.

On the other hand, security elements are added and two compliance methods are established: the possibility of Verifactu, which involves the effective transmission of billing records to the Tax Agency, and non-Verifactu transmission, which does require keeping all records in the company's own systems, ensuring the unalterability and integrity of the information. Finally, a responsible declaration is established to self-certify that the computer systems meet the conditions specified in the Royal Decree.

The CEPYME representative expresses concern about what is happening with R&D&I, believing that the legislator's measures are affecting the economy and growth. Secondly, the representative insists on homogenizing certain definitions such as large taxpayer and small company.

Mr. Manuel Trillo clarifies that the Tax Agency, in its audits, never questions the qualification given by the Ministry. A separate issue is that the Corporate Tax Law determines that once a project has been qualified as eligible for a deduction, the expenses included in the project must be analyzed.

The Tax Agency does not question the quality of the project as R&D or IT; what it does is apply the rule that determines that there are only four types of expenses that can be classified as a basis for deduction, the most paradigmatic example being programming, which is an expense associated with the project, but which is not part of the basis for deduction.

According to the Director of the Department of Financial and Tax Inspection, there are many interested parties, both public and private, in increasing R&D figures, and the Tax Agency is the most interested. It is a different matter whether not all R&D expenditure is eligible for the deduction.

The issue focuses mainly on technological innovation and, above all, on software issues. A Supreme Court ruling on a financial institution is also pending. However, the Director points out that, to date, the rulings that have addressed the merits of the matter have sided with the Tax Agency.

On the other hand, the figures refute the idea that the Agency is a hindrance to R&D growth in this country, as this magnitude grows every year. The Director of the Department of Financial and Tax Inspection insists that the Agency does not question whether a project is R&D or not, nor does it question the binding report.

Mr. Francisco Vidal clarifies that what most concerns them is the minimum taxation on the tax base, adding Mr. Manuel Trillo that this is a matter of tax policy.

Once the round of interventions has concluded, the Director of the Tax Agency moves on to the next item on the agenda, which is corrective self-assessments.

6. Rectifying self-assessments: processing status

Ms. Rosa Prieto clarifies that the project originally had multiple objectives, the most important of which was to facilitate the correction of certain material errors by taxpayers in order to streamline the procedure, thereby avoiding certain financial burdens and avoiding delays in collecting refunds.

However, some media outlets have reported that one of the reform's objectives was to penalize taxpayers in cases of self-assessment corrections. This has been denied by the Director of the Management Department, who clarifies that previously, no penalties were imposed when a request for self-assessment correction was submitted, and that now penalties will continue to be waived unless serious fraudulent conduct exists.

Regarding the processing status of the project, the General Tax Law 58/2003 has already been amended through the approval of Law 13/2023 of May 24, as well as the amendment of the five implementing regulations for some taxes through Royal Decree 117/2024.

The General Tax Law was amended to allow for the gradual establishment, through regulatory modifications for each tax, of the possibility or obligation to use corrective self-assessments. To this end, both Article 120 and Article 122 were amended and a new Additional Provision 26 was created.

In short, the new form of corrective self-assessment, when so determined by the tax regulations, would generally replace the existing dual system, while maintaining the current system for cases such as those in which a potential violation of a higher regulation is alleged.

Royal Decree 117/2024 has amended the regulations on VAT , personal income tax, corporate tax, excise taxes, and the tax on fluorinated greenhouse gases, with the ministerial order pending.

As for the timeline, it is expected to begin for VAT, specifically for Form 303. The technical adaptations are practically complete and the goal is to begin between June and September 2024. Once VAT has been implemented and everything has been verified to be working correctly, the plan is to implement it next year for Personal Income Tax (IRPF) 2024 and for Corporate Income Tax (CIT) 2024.

Finally, Ms. Rosa Prieto adds that the ministerial order may request the reasons for the corrective self-assessment, so that if it were a discrepancy of opinion, it could not, under any circumstances, give rise to a sanctioning procedure.

There being no questions, Ms. Soledad Fernández gives the floor to Ms. Virginia Muñoz who presented the next item on the agenda.

7. Language simplification and assistance with foreclosures

In the area of tax collection, two documents have begun to be simplified: the wage and salary garnishment order and the credit garnishment order. These are the most common orders issued to citizens.

The Director of the Tax Collection Department explains that the purpose of the simplification is to reduce the administrative burden on citizens, who inevitably have to seek advice to understand the content of the documents. Given the widespread nature of these two documents, it has been understood that an ever-increasing effort must be made to reach the average citizen in a more direct and accessible manner. A better understanding of the document by the contributor also contributes, in the opinion of Ms. Virginia Muñoz, to an increase in voluntary compliance.

Along with the simplification, the Director of Tax Collection explains that taxpayer assistance services have also been expanded, whether through the ADI (Taxpayer Assistance Service), chat, or telephone appointments.

Regarding the structure of the credit seizure proceedings and the salary and wage seizure proceedings, there are three main parts: The first is a one-page summary, using simpler language, which provides information on what is being received, why it is being received, and the assistance offered for its care.

The second part is the content of the administrative act, which has also been simplified to 700 characters.

As for the third part, it is made up of an appendix that has gone from having 11 pages to 6 pages, greatly simplifying its content.

Regarding the garnishment of wages and salaries, the volume of the text has not been reduced significantly because the aim is to make it more understandable, distinguishing between salaries and wages, to which the limits of Article 607 of the Civil Procedure Law apply.

Mr. Bernardo Soto intervened to express his gratitude for both the effort to simplify the documents and the very existence of the Forum.

There being no further questions, the Director also thanked the Revenue Department for its efforts and continued with the agenda.

8. Next call: dates and subjects to deal with

The Agency Director states that the next joint plenary session will be held in March 2025, although extraordinary meetings may be held at the request of any party if there are issues of interest.

9. Other considerations, requests and questions

Mr. Jesús Salido asks if the 2022 performance data will be published, so that it can be compared with 2019 data and thus be able to analyze the post-pandemic recovery.

The Agency Director responds that the existence of such data will be analyzed and, if available, the information will be communicated and forwarded.

Finally, Ms. Soledad Fernández thanked all attendees for their collaborative work and closed the meeting.