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Guide to mutual agreement procedures

c.5 Identification of the tax or settlement periods concerned

The request must clearly indicate the financial years in relation to which the initiation of the procedure is requested.

As a general rule, the tax periods for both personal income tax and corporation tax in Spain end on 31 December.Therefore, if the tax periods for which the mutual agreement procedure is requested end on a different date, that date must be expressly stated.

The mutual agreement procedure will not be initiated in relation to fiscal years that have not been expressly requested, even if taxation that is not in accordance with a convention has been applied those years.

Example:

A Spanish company is tax audited resulting in tax adjustments in its corporation tax for fiscal years 2011 to 2014 regarding transactions with a French subsidiary, resulting in an adjustment to the tax base of 1.000.000,00 €.

In France, that French subsidiary is tax audited resulting in tax adjustments in its French corporation tax for fiscal years 2013 to 2016 regarding transactions with the Spanish parent company, resulting in an adjustment to the tax base of 2.500.000,00 €.

If the taxpayers wish to use a mutual agreement procedure to eliminate the double taxation which both the Spanish and French tax assessments could give rise to, it would be a good idea to submit two requests for initiation:

A request for initiation to eliminate the double taxation arising from the Spanish adjustment of €1,000,000 for fiscal years 2011 to 2014.

A second request for initiation to eliminate the double taxation arising from the French adjustment of €2,500,000 for fiscal years 2013 to 2016.