Minutes of the meeting

Large Companies Forum

MINUTES OF THE PLENARY SESSION 1/2017

Vice-President of the Large Companies Forum

Director General of the State Agency for Tax Administration

Mr. Santiago Menéndez Menéndez

Members representing the Tax Agency

Director of the Tax Management Department

Mr. Rufino de la Rosa Cordon

Director of the Department of Financial and Tax Inspection

Mr. Luis Maria Sanchez Gonzalez

Director of the Department of Aduanas and Excise Duties

Ms. Mª Pilar Jurado Borrego

Central Delegate of Large Taxpayers

Mr. Ignacio Huidobro Arreba

Deputy Director General of Coordination and Management - of the Collection Department

Mr. Miguel Lorenz Falomir

Members representing Large Companies

ACERINOX

Head of Consolidation and Financial Reporting

Ms. Esther Camós García

ACS

Director of Tax Advisory

Mr. Jose Miguel Moreno Perez

AMADEUS IT GROUP SA

Deputy Secretary of the Board of Directors

Mr. Jacinto Esclapés Diaz

BANCO SANTANDER

Tax Advisor

Mrs. Carmen Alonso Peña

BANKIA

Director of Tax Advice – Tax Advisory Department

Mr. Javier Mª Tello Bellosillo

BBVA

Director of Tax Consultancy Spain

Mr. Alberto Marzal Cervantes

LA CAIXA

Director of Tax Advisory

Mr. Manuel Alfonso García Rodríguez

CEPSA

Fiscal Director

Mr. Alberto Martin Moreno

COFARES

Advisory Board of Directors

Mr. Luis Valdeolmos Gonzalez

EL CORTE INGLÉS

Director of Taxes

Ms. Pilar Fernandez Medina

ENDESA

Head of Tax Affairs

Mrs. Maria Muñoz Viejo

FCC

Director of the Tax Department

Mr. Daniel Gómez-Olano González

GAS NATURAL FENOSA

Director of Taxation

Mr. Jaume Menendez Fernandez

GENERALI ESPAÑA

Director of Accounting Department

Mr. Martí Jo Ruiz

IBERDROLA

Fiscal Director

Mr. Fernando Arias Coterillo

IBERIA

Tax Manager

Mrs. Marta Castilla Estebanez

INDITEX

Director of the Tax Department

Mr. Andres Sanchez Iglesias

MAPFRE

Tax Advice Director

Mr. Antonio Lafuente Gonzalez de Suso

MERCADONA

Fiscal Director

Mr. Rafael Hilario Lopez Villanueva

MICHELIN

Fiscal Manager

Mrs. Rosa María Peña García

NORFIN HOLDER

Fiscal Director

Mr. Jose Antonio Gibello Saiz

RENAULT ESPAÑA

Director of Tax and Customs Affairs

Mr. Felix Ruiz Madarro

REPSOL

Director General of Economic and Fiscal Affairs

Mr. Luis Lopez-Tello and Diaz Aguado

SEAT

Head of Fiscal Consolidation

Mrs. Marta Camprubí Rabinat

SIEMENS

Director of Taxes

Mrs. Ana Maria Moreda Galante

TELEFÓNICA

Tax Director Latin America

Mr. Miguel Iglesias San Martin

VODAFONE

Tax Advice Director

Mr. Javier Viloria Gutierrez

Technical Secretariat of the Large Companies Forum

Technical secretary

Mr. Ángel Rodríguez Rodríguez

In Madrid, on June 13, 2017, the fourteenth plenary session of the Large Companies Forum was held, attended by the people mentioned above, and in accordance with the following: 

AGENDA

1. Session opening

2. Approval of the minutes of the meeting held on December 20, 2016

3. Large Companies Forum: Current situation

4. Results of the different working groups of the Forum

5. Next call

6. Other considerations, requests and questions

1. Session opening

The session was opened by the Director General of the State Tax Administration Agency, Mr. Santiago Menéndez Menéndez, who welcomed the attendees and thanked them for their presence and support of this Forum, while ratifying the commitment of the Ministry of Finance and Public Administration, as well as that of the Tax Agency, to continue working in the search for maximum cooperation, transparency and trust in the relations between the tax administration and large companies.

2. Approval of the minutes of the meeting held on December 20, 2016

Mr. Santiago Menéndez Menéndez gives the floor to the head of the Technical Secretariat of the Forum, Mr. Ángel Rodríguez Rodríguez, who points out that the minutes of the 13th session of the Plenary of the Forum were sent to the members of the same and adds that no observations have been received and, if there were none at this time, it would be definitively approved. As no observations were made by those present, the minutes of the plenary session of December 20, 2016 are hereby declared definitively approved and will be published in the space reserved for the Forum on the Tax Agency's website.

3. Large Companies Forum: Current situation

At this point, the Director General of the State Tax Administration Agency briefly presents the work carried out in the different Working Groups during the first half of 2017.

Working Group on Tax Regulation Analysis and Conflict Reduction

Regarding the Working Subgroup created to analyze the new obligations derived from the presentation of the so-called “Country by Country Report”, at the meeting on June 7, the lines of work open in the Working Groups of the were presented. OECD ##1##in which the Tax Agency is present. It also reports that within the scope of the Tax Administrations Forum, there is participation in a Working Group that studies issues related to the analysis of information risks Country by Country and that, in addition, the Agency assists the Working Group created ad hoc to reach a consensus on the treatment to be given to the Country by Country Report, whose lines of work are:

• Definition of the terms used in the Report, which are included in the Implementation Guide of the Country by Country Report (CbCR), last updated in April 2017.

• Appropriate use of the Country by Country Report, for which a guide is being prepared on the appropriate use of the information contained therein CbCR .

Finally, Mr. Santiago Menéndez points out that the meeting discussed the information exchange policy, as well as other doubts raised by the companies and they were asked to submit an inventory of issues that require a more detailed study. in case it is appropriate to raise them in the OECD Working Group.

Working Group for the Analysis and Rationalization of Indirect Tax Burdens

Mr. Santiago Menéndez explains that within the framework of the Subgroup Working on “Formal Obligations in Corporate Tax”, which met on March 16, 2017, issues raised by companies in their writings to the Technical Secretariat of the Forum were addressed, among which the following can be highlighted:

• Regarding the advance publication of the Corporate Tax forms, it was indicated that it was hoped to advance, as far as possible, both the manual and the specifications of the aid program, once the Ministerial Order had been published.

• It was also reported that a more in-depth analysis would be carried out on the possible simplification of models 200 and 220, with the intention of not replicating existing models, respecting the information required for statistical purposes. The companies pointed out that coordination with the regional treasuries would be desirable and, in addition, in order to advance the analysis, they undertook to conduct a survey on whether a modification of the models was really desired, which could not be optional.

• It was also noted that attempts had been made to correct the deficiencies detected in previous years.

Working Group on Immediate Supply of Information (SII)

The Director General of the Tax Agency points out that this Working Group has held a meeting during this first semester, specifically on May 31, and that at the meeting, information was provided on the two regulatory milestones that had occurred since the last meeting in December 2016: the publication on May 15 of Ministerial Order 417/2017, of May 12, which contains regulatory and technical specifications on the maintenance of VAT record books through the Electronic Office of the Tax Agency, and the publication on May 27 of Royal Decree 529/2017, of May 26, which modifies the VAT Regulations.

Mr. Santiago Menéndez went on to say that during the meeting, the company representatives highlighted the great efforts they have made to be able to reach 1 July in the best possible conditions. The Tax Agency expressed its gratitude for the work carried out by all companies, recognising that the quality of the information received would progressively improve. Finally, it was indicated that from July 1, communication channels, both forums and FAQs, would be maintained.

Excise Tax Working Group

The Director General notes that this Working Group has met once in the last six months, discussing the following issues:

• Regarding the management of the Tax on the Value of Extraction of gas, oil and condensates, the assumption was raised in which the percentage of participation of the concessionaire in the concession of an exploitation does not coincide with the percentage of participation in the volume extracted, and it should be the General Directorate of Taxes that should rule on this matter.

• It was reported that, by means of various rulings at the end of 2016, the Constitutional Court agreed not to admit the questions of unconstitutionality raised by the Supreme Court in relation to several articles of the Law regulating the Tax on the Value of the Production of Electric Energy.

• The possibility of introducing regulatory changes to allow the circulation of liquefied petroleum gas returns to establishments under a suspension regime was raised, when it is not technically possible to unload them in their entirety at their destination.

• The interpretation of section 4 of article 28 of the Excise Tax Regulations was discussed.

Cooperative Relations Working Group

The Director General of the Tax Agency explains that this Working Group has held a meeting this semester, specifically on June 7, and during it the pilot project was addressed ICAP (International Compliance Assurance Programme) emerged within the framework of the Forum of Tax Administrations of the OECD . It was noted that the final objective of the project is to establish a new multilateral cooperation tool, different from mutual agreement procedures, that allows giving legal certainty to companies in various jurisdictions thanks to the analysis of the new information they have to provide, an analysis that will be developed based on an established manual.

Mr. Santiago Menéndez goes on to say that at the meeting it was reported that a pilot test would be carried out with several companies from the eight participating countries and that an invitation had been sent to six Spanish multinationals, with headquarters in Spain, presence in the other participating countries, belonging to the Forum of Large Companies and adhering to the Code of Good Tax Practices. The Director General adds that, once the companies have accepted, the information they submit and their presence in the other states will be analysed, and 3 or 4 will be chosen to be analysed by the rest of the tax administrations in the test, in order to choose one that will participate in the project, which will run between October 2017 and 2018 and will focus on the early detection by all participating administrations of risk areas, thanks to the analysis of the information provided by the companies.

To conclude his speech on the work carried out by the Working Groups, the Director General comments that he wants to highlight the activity of the Immediate Supply of Information Group, given the current circumstances, as well as that of the Cooperative Relations Group and, specifically, what is related to the project ICAP  of the OECD , in which the Spanish Administration is very proactive and has a high degree of involvement. Mr. Santiago Menéndez goes on to point out that the cooperative relationship is based on mutual trust, transparency and legal certainty and that, within this framework, control tasks, rather than being carried out a posteriori, are carried out a priori, with the companies providing the appropriate explanations. The Tax Agency also reiterates its willingness to continue making progress in the area of cooperative relations.

Mr. Santiago Menéndez then opened the floor for the representatives of the Forum's member companies to make any comments they deemed appropriate.

Ms. Carmen Alonso Peña, representative of Banco de Santander and Collaborator of the Technical Secretariat of this Forum on behalf of the companies, takes the floor and states that, as the Director General of the Agency has already pointed out, at the meeting of the Subgroup of the so-called “Country by Country Report”, concepts and documents from the OECD were reviewed and it was agreed that companies would prepare an inventory with the issues that needed further analysis. detailed, in order to send it, where appropriate, to the OECD Working Group. Ms. Carmen Alonso goes on to point out that, given that it was the first time that they were going to have to submit this report, with the exception of financial institutions and companies in some other sectors, flexibility was also requested when interpreting the concepts and that all the necessary clarifications and explanations could be specified in section 3 of the model.

In relation to the Sub-Working Group on “Formal Obligations in Corporate Tax”, the Commission appreciates that the publication of the models has been brought forward, however, it states that there are still repetitions of information and that what is requested is that they be simplified, and in the event of repetition of data, these can be transferred from one to the other more easily. He added that greater coordination with the regional treasuries was also requested, but not only in corporate tax but also in indirect taxes.

Ms. Carmen Alonso continues, and in relation to the Cooperative Relations Working Group, she explains that the document that was distributed at the meeting on June 7 will be sent to all the representatives of the companies in this Forum, "INTERNATIONAL COMPLIANCE ASSURANCE PROGRAMME (ICAP) - Revised ICAP operating manual", so that everyone can analyze and evaluate it. He added that what companies are asking for is that any instrument used to increase the cooperative relationship should at the same time offer greater legal security in the development of business activity. He goes on to point out that companies are also beginning to prepare transparency reports within the framework of the Code of Good Tax Practices and proposes the creation of a Working Subgroup to analyse and study the application of the Code and the possible improvements that could be introduced, or to do so through the Monitoring Committee.

Regarding the Immediate Supply of Information, Ms. Carmen Alonso states that, as the General Director has commented, at the meeting of the Working Group the companies stated that they were making their best efforts to try to be prepared on July 1, but that, nevertheless, they were concerned about the quality of the data and the use that will be made of the information. He goes on to express his gratitude for the fact that the Tax Agency is going to be flexible in these first moments of application of the system in terms of the quality of the data, and adds that it would also be appreciated if a formula were found that would give certainty to companies in terms of said flexibility, since it is being seen that, although the suppliers of software were initially very agile, today they have been delayed and some entities doubt that they will be able to arrive on time.

Mr. Santiago Menéndez then took the floor to state that in terms of cooperative relations, the Tax Agency always keeps in mind the search for instruments that increase the confidence of companies. The Director General goes on to point out that he thinks it is a good idea to proceed with the assessment of the parties' behaviour with respect to the Code of Good Tax Practices.

Regarding corporate tax, Mr. Santiago Menéndez points out that in his opinion not only should the models be simplified, but also the tax itself. However, he adds that, at the moment, progress will have to be made in simplifying the models and in coordinating with the regional treasuries, although there are certain limitations in this regard.

The General Manager goes on to say that, with regard to the SII , he wants to highlight two things: Firstly, we would like to thank the companies for the effort they have made to carry out the project and, secondly, with regard to the quality of the data provided, we would like to inform you that the Tax Agency, at this time, is focused as a whole, as an organisation, on the implementation of the system, and therefore its lines of action are concentrated on the tasks of assistance, help and dissemination. In this regard, he said that a virtual interactive assistant will be launched on the website to handle technical and tax queries in real time. Likewise, and in relation to the request made by the representative of the companies in this Forum regarding greater certainty regarding the flexibility of the AEAT in the first moments of application of the SII , he points out that the way to be able to do it in writing is being studied, but insists that, as he has already indicated several times throughout this Plenary Session, the activity of the Agency is focused on helping taxpayers and not on the application of the sanctioning regime.

4. Results of the different working groups of the Forum

The Vice President of the Forum then asks if there are any further interventions and, as none are made, he gives the floor to Mr. Luis María Sánchez González, Director of the Department of Financial and Tax Inspection, who begins his presentation by commenting that a very important concern of companies has been the completion of the Country by Country Report (CbC Report). Prosigue aclarando que esta preocupación no es exclusiva de las empresas españolas, ya que no hay que olvidar que el CbC Report es una obligación tributaria de carácter internacional, que se tiende a simplificar entendiéndola normalmente como una obligación directa de la empresa con el país en el que tiene su matriz. Prosigue recalcando que los países de la UE han tenido que modificar su derecho interno a fin de trasponer la Directiva y el resto de países ha tenido que hacerlo para adaptarse a los compromisos de  BEPS. The Spanish Administration has therefore undertaken intensive internal work to establish its scope for action in implementing this international obligation. He adds that the novelty of this issue is not that the information will be received in a new format, but that it will be exchanged in the terms in which the model has been defined at an international level, that is, the important thing is not how the Spanish Administration receives and evaluates it, but the treatment that the information will be given by the Administration with which it is exchanged. This is why it is so necessary for standards to be adequately defined at the international level, with national administrations having little room for interpretation.

Mr. Luis María Sánchez continues by clarifying that the system for adopting agreements within the OECD is, basically, the consensus minus one and, therefore, in the issues in which there is no get the agreement, the rule is flexibility. Clarifies that the guide (Guidance on the Implementation of Country-by-Country Reporting) va ya por su tercera actualización y que esto va a continuar así, ya que se irán incorporando a la misma las cuestiones que se vayan analizando y delimitando. Comenta también el Director del Departamento de Inspección Financiera y Tributaria que en la reunión del Subgrupo se repartió un documento que recogía los distintos conceptos que se han ido discutiendo en el Grupo ad hoc, así como la solución que, en su caso, se había acordado. Por ello, como ya ha señalado D.ª Carmen Alonso se convino que las empresas preparasen un documento en el que se recogiesen aquellas propuestas o dudas que necesariamente deberían solventarse en el marco de la OCDE, a fin de fijar la posición española y, así, en caso de no llegar a un consenso, dichas cuestiones quedarían dentro del ámbito de la flexibilidad. Prosigue D. Luis María Sánchez aclarando que el CbC es un mínimo estándar, es decir, que todos los países comprometidos con el proyecto  BEPS o que quieran estarlo en un futuro, lo tienen que aplicar y que, de momento, ya son casi cien países. Asimismo, añade que la vocación del proyecto es la internacionalidad y por ello se ha creado en el Comité de Asuntos Fiscales de la OCDE un órgano, el Inclusive framework, comprometiéndose todo país que quiera estar incluido a aplicar el mínimo estándar de  BEPS, lo que significa que va a cumplir los requisitos de confidencialidad, que va a implantar la normativa interna necesaria y que va a poner en marcha los mecanismos a fin de recabar los informes en su ámbito respectivo. Además, el Inclusive framework establece un mecanismo de revisión, el peer review, with three large areas:

• Domestic administrative and legal framework

• Information exchange framework (of the   CbC )

• Confidentiality and appropriate use of the Report   CbC .

Through this peer review process, each area will be studied in a structured manner in three different phases depending on the years and subject to be reviewed.

Next, Mr. Santiago Menéndez asks if anyone wants to make any comments and, as none are made, Mr. Rufino de la Rosa Cordón, Director of the Tax Management Department, takes the floor and explains that the relationship model between the tax administration and taxpayers is changing in the interest of a more cooperative and transparent relationship. He goes on to point out that the Administration is currently debating and studying proposals that come to it from different areas with greater fluidity and dynamism. As an example of this, in relation to the work of the Subgroup “Formal Obligations of Corporate Tax”, he cites the proposals received from companies regarding the advance in the publication of the models, manual and assistance program of Corporate Tax, which the Tax Agency found reasonable, having been advanced this year, with the exception of the assistance program, by almost a month. On the other hand, it clarifies that the increase in cooperation with the regional treasuries exceeds the powers of this Forum and that it is a concern that the Tax Agency shares with companies.

Regarding the Immediate Supply of Information, the Director of the Tax Management Department points out that, since the project was announced three years ago, work has been carried out in a very cooperative, open and transparent manner with companies. The Agency also reiterates what the Director General has already said, namely that a formula is being sought to ensure companies flexibility in terms of the quality of information in these initial stages, as the Agency believes that this is also a very reasonable concern. Finally, Mr. Rufino de la Rosa thanks the companies for their collaboration, as he is aware that the implementation of SII has required great reorganization efforts.

The Vice President of the Forum then opened the session for interventions and, as none were made, he gave the floor to Ms. Mª Pilar Jurado Borrego, Director of the Customs and Excise Department, who said that she wanted to highlight two of the issues discussed by the Working Group. Firstly, in relation to the new Tax on the Value of the Extraction of Gas, Oil and Condensates, he comments that a consultation submitted to the General Directorate of Taxes is still pending, since the concessions of the deposits generally belong to more than one concessionaire and there are doubts regarding how the value of the extraction is attributed to each co-owner, whether according to the percentage of participation in the concession or the percentage of participation in the volume extracted. He adds that the amount of the total quotas is the same regardless of whether one or the other criterion is used. Ms. Pilar Jurado goes on to explain that, on the other hand, in relation to the Tax on the Value of the Production of Electrical Energy, the Constitutional Court determined that the Supreme Court should refer a preliminary question to the Court of Justice of the European Union, and that, until there is a legal ruling, the Tax Agency will continue to deny requests for refunds of the Tax.

The Director General of the Tax Agency takes the floor again to open a round of interventions and, as none are made, he gives the floor to Mr. Ignacio Huidobro Arreba, Central Delegate of Large Taxpayers, who begins by explaining that at the meeting of the Working Group on Cooperative Relations, the Spanish participation in an international pilot project was reported, which could be translated as "security or certainty in compliance" (International Compliance Assurance Programme - ICAP). Añade que, en este contexto, cada Administración, de acuerdo con sus posibilidades, sus procedimientos y su marco de actuación, instrumentará, de la manera más idónea, la valoración de determinados casos que se le planteen a efectos de análisis de riesgo. En el caso español habrá que determinar el modo de implementar esta herramienta de acuerdo con nuestros procedimientos y los compromisos asumidos en relación cooperativa. Prosigue indicando que las materias a analizar son precios de transferencia, establecimientos permanentes y otros riesgos relacionados con BEPS which in the draft manual have been called “hybrids”. The pilot project involves carrying out a multilateral and coordinated risk analysis and assessment by certain tax authorities on a small number of multinationals considered to be of low and medium risk.

He adds that the aim is to minimise disputes through early collaboration between companies and tax authorities, which will result in greater legal certainty regarding certain operations and positively induce taxpayer behaviour. It also indicates that another objective is to identify and isolate early key risk areas that require additional attention. As regards the participating Administrations, he points out that they are the United States, the United Kingdom, Germany, the Netherlands, Italy, Australia, Canada and Spain, and, as observers, Japan and France. The project will begin in October of this year and will run throughout 2018, covering the fiscal years 2016 and 2017 and the subjects or cases chosen by the participating Administrations. Once the pilot project is completed, a report must be sent to the OECD on its suitability and validity. Finally, he points out that in the case of Spain, an invitation was sent to six Spanish multinational companies, with headquarters in Spain, presence in the countries participating in the pilot project, belonging to the Forum of Large Companies and adhering to the Code of Good Tax Practices. Once accepted, the information they present and their presence in the other states will be analyzed, and three or four will be chosen to be analyzed by the rest of the tax administrations in the test, in order to choose one that will participate in the project. He added that the Department of Financial and Tax Inspection and the Tax and Customs Control Unit of the Central Delegation of Large Taxpayers will coordinate the entire process and the pilot project.

Mr. Santiago Menéndez then opened a round of interventions, but none were made.

5. Next call

The Vice President said that the 15th meeting would be held in the next semester, probably in November. He then adds that he wishes to reiterate his gratitude to companies for the efforts made in relation to the Immediate Supply of Information, and stresses that he is fully convinced that, for company managers, having all the information organised at the time of invoicing will be of great help in business management.

He then moves on to the last point on the agenda.

6. Other considerations, requests and questions

Mr. Santiago Menéndez proceeds to open a round of interventions.

Ms. Carmen Alonso takes the floor to suggest that the meetings of the Working Groups in the second half of the year be held somewhat further away from the date scheduled for the Plenary meeting.

Mr. Santiago Menéndez replied that he thought it was a very reasonable request and with this commitment to prepare a more spaced-out distribution of the meeting schedule, he concluded the 14th plenary session of the Large Business Forum and said goodbye until the next meeting.