Global Daily Tax News, Spain Consults On Pillar Two Tax Regulations, (Dec 16, 2024)

The Spanish Government has released regulations on the implementation of a 15-percent minimum top-up tax on large domestic groups and multinational enterprises for consultation until December 26, 2024.

Legislation for the introduction of the regime was approved by the lower house of parliament last month and passed to the Senate for approval.

The regulations are intended to govern elements of the regime and incorporate the new administrative guidance released by the OECD in December 2023 and June 2024.

The legislation and the regulations are intended to implement into national law the provisions of the EU Minimum Tax Directive. The rules apply to any group, both domestic and international, with a parent company or a subsidiary situated in an EU member state, if the group's combined annual turnover is at least EUR750m, beginning for fiscal years from January 1, 2024.

If the minimum effective rate is not imposed by the country where the subsidiary company is based, there are provisions for the member state of the parent company to apply a "top-up" tax.

To ease the initial administrative burden for multinational enterprises, the legislation includes the safe harbor provisions, which, among other things, provide that a group may rely on simpler calculations, based on CbC report data, to demonstrate taxation at a sufficiently high corporate tax rate or that minimal tax is at stake.

In January, Spain was one of nine member states challenged by the European Commission for failing to transpose the directive into law by the December 31, 2023, deadline, alongside Cyprus, Estonia, Greece, Latvia, Lithuania, Malta, Poland, and Portugal.

The regime is expected to affect about 125 groups with a Spanish parent company and about 700 multinational groups with a foreign parent company and Spanish subsidiaries.