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Guide to mutual agreement procedures

g. Who is the Spanish competent authority for mutual agreement procedures?

It depends on the nature of the matter.

Currently, Article 2 of the Regulation on Mutual Agreement Procedures confers competence for conducting and deciding mutual agreement procedures as follows:

  1. In relation to transfer pricing and the apportionment of profits to permanent establishments, competence solely and exclusively belongs to the Spanish Tax Agency (Agencia Estatal de Administración Tributaria: AEAT).

    Within the AEAT, this function is carried out by the International Taxation Office (Oficina Nacional de Fiscalidad Internacional: ONFI), which forms part of the Financial and Tax Audit Department.

    Consequently, requests to initiate mutual agreement procedures relating solely to transfer pricing and the apportionment of profits to permanent establishments, as well as any matter relating to procedures under way regarding such matters, must be addressed to:


    ONFI Chief Inspector

    Agencia Estatal de Administración Tributaria (AEAT)

    Paseo de la Castellana 147

    Postcode:28046 MADRID

    Telephone:+34 91 7498666 / Fax:+34 91 7498685

    Email:onfi.map@correo.aeat.es


    Both the request for initiation and any other document regarding procedures under way that relate solely and exclusively to transfer pricing and the apportionment of profits to permanent establishments must be submitted through the General Register of the AEAT (https://www.agenciatributaria.gob.es/AEAT.sede/procedimientoini/IZ49.shtml).When the documents are submitted to the AEAT’s electronic register, an acknowledgement of submission will be issued.

    Broadly speaking, cases of transfer pricing and the apportionment of profits to permanent establishments are those provided for in:

    • The equivalent of Articles 7 (business profits) and 9 (associated enterprises) of the OECD Model Convention, as included in the applicable Tax Treaty.

    • Article 4 of the Arbitration Agreement.

  2. In all other cases, to the General Directorate for Taxation (Dirección General de Tributos: DGT), which also has competence to coordinate mixed procedures (that is, those concerning other matters in addition to transfer pricing).

    Within the General Directorate for Taxation, this function is carried out by the Deputy General Directorate for International Taxation.

    Among other matters, the Deputy General Directorate for International Taxation deals with conflicts of residency, the existence or otherwise of a permanent establishment, the classification of income and the interpretation of the clauses of the Tax Treaties.

    Consequently, all requests for the initiation of mutual agreement procedures not relating solely to transfer pricing and the attribution of profits to permanent establishments, or any matter relating to procedures under way regarding such matters, must be addressed to:


    General Management for International Taxation

    Directorate General for Taxes

    Ministry of Finance and Public Administrations

    C/ Alcalá 5

    Postcode: 28014 MADRID

    Telephone:+34 91 595 80 85 / Fax:+34 91 595 80 03

    Email:fiscalidad.internacional@tributos.hacienda.gob.es


    Both the request for initiation and any other document regarding procedures under way that do not relate solely and exclusively to transfer pricing and the attribution of profits to permanent establishments must be submitted through the General Register of the Ministry of Finance and Public Function.

    Examples:

    1. In the case of an individual deemed to have been resident in Spain and in the United Kingdom in fiscal year 2017, to whom should they request the initiation of a mutual agreement procedure?

      In case the mutual agreement procedure is requested to the Spanish competent authority, the request should be submitted to the Deputy General Directorate for International Taxation of the General Directorate for Taxation, because it is not a matter solely relating to transfer pricing.

      The request must be submitted through the Register of the Ministry of Finance and Public Function.

      It would be a good idea if the request was also submitted to the competent authority of the United Kingdom, but it is not mandatory.

    2. In the case of a Spanish subsidiary, whose expense has been deemed not to have been valued in accordance with the arm’s length principle, where the corresponding income has been included in the profits of the German parent company, to whom should it the Spanish subsidiary request the initiation of a mutual agreement procedure?

      The request should be submitted to the International Taxation Office, because it is a matter solely and exclusively relating to transfer pricing.

      The request must be submitted through the General Register of the AEAT.

      It would be a good idea to send the request to the German competent authority as well, even though it would only be necessary if the intention was to conduct the procedure under the Directive and none of the exceptions under Article 57 of the Regulation on Mutual Agreement Procedures was applicable.

    3. In the case of the German tax administration has tax audited a German subsidiary concluding a expense has not been assessed in accordance with the arm’s length principle and the corresponding income has been included in the profits of the Spanish parent company, to whom should the Spanish parent company request the initiation of a mutual agreement procedure?

      Despite of deriving of a foreign tax adjustment, the Spanish parent company can request the initiation of the mutual agreement procedure in Spain, submitting its request to the International Taxation Office, because it is a matter solely relating to transfer pricing.

      The request must be submitted through the General Register of the AEAT.

      It would be a good idea to send the request to the German competent authority as well, even though it would only be necessary if the intention was to conduct the procedure under the Directive and none of the exceptions under Article 57 of the Regulation on Mutual Agreement Procedures was applicable.

    4. To whom should a Spanish company direct a request for the initiation of a mutual agreement procedure to eliminate double taxation when the French tax authority has deemed that the Spanish company has a permanent establishment in France to which it has attributed some profits?

      The request should be submitted to the Deputy General Directorate for International Taxation of the General Directorate for Taxation, because, as it not only necessary to attribute profits to a permanent establishment, but also to determine whether or not such an establishment exists, it is not a matter falling within the exclusive competence of the Spanish Tax Agency.

      The request must be submitted through the Register of the Ministry of Finance and Public Function.

      It would be a good idea to submit a request to the French competent authority as well, even though it would only be necessary if the intention was to conduct the procedure under the Directive and none of the exceptions under Article 57 of the Regulation on Mutual Agreement Procedures was applicable.

    5. In the case of the Spanish tax administration has deemed that a French company has a permanent establishment in Spain, to which it has attributed some profits, to whom should the French company request the initiation of a mutual agreement procedure to eliminate double taxation?

      The Spanish competency to resolve a mutual agreement procedure to determine the existence or not of a permanent establishment and the attribution of profits to the said permanent establishment is shared by the Deputy General Directorate for International Taxation of the General Directorate for Taxation and the International Taxation Office, being the Deputy General Directorate for International Taxation in charge of the coordination of the procedure.

      In the case the French company requests the initiation of the mutual agreement to determine the existence or no of a permanent establishment and the attribution of profits to the said permanent establishment under the Directive, the request shall be submitted simultaneously to the Deputy General Directorate for International Taxation and the French competent authority, unless any of the exceptions under Article 57 of the Regulation on Mutual Agreement Procedures was applicable. In that case, the request shall be exclusively submitted to the French competent authority.

      In the case the French company requests the initiation of the mutual agreement under the Spain/France Tax Treaty, the request shall be submitted to the French competent authority

      Finally, it should be highlighted that the determination of the existence or not of a permanent establishment is not covered under the Arbitration Convention, notwithstanding this Convention covers the attribution of profits to the said permanent establishment. Because of that, a mutual agreement procedure to determine the existence or no of a permanent establishment cannot be requested under the Arbitration Convention.It is possible to apply simultaneously under both the Tax Convention and the Arbitration Convention, in which case the Arbitration Convention procedure will be initiated once the existence of the permanent establishment has been established.