Code of Best Tax Practices
Drawn up and approved by the Large Enterprises Forum to foster a mutually co-operative relationship between the Tax Agency and the companies subscribing it.
Conclusions regarding the development and follow-up of the implementation of the Code of Good Tax Practice within the framework of corporate relations between the Tax Agency and Companies, approved in the plenary session of 2/11/2015
Introduction
This document of conclusions aims to advance the development of the cooperative relationship model between the State Tax Administration Agency (AEAT) and the companies covered by the Code of Good Tax Practices (CBPT) through the voluntary assumption of certain commitments and attitudes by both. parties that promote improvements in the effective application of the postulates and recommendations established in the Code.
The experience of applying the Code has been, until now, useful and fruitful and has constituted an effective instrument for improving the relationship between the AEAT and the companies affiliated to it, aimed at compliance with tax obligations, providing it with a greater degree of predictability. and legal security.
However, it is considered that actions aimed at producing significant and effective advances in the implementation and development of the Code should be addressed.
These actions, of a voluntary nature, are especially aimed at granting greater virtuality and effectiveness to the application of the Code on two levels: that of the bilateral relationship between the AEAT and the companies; and that which affects external assessment and reputational improvement, undoubtedly associated with better knowledge by society of the assumption and application of the commitments and recommendations contained in the Code.
These conclusions, which are incorporated as an annex to the Code itself, focus on the aspects explained below, and derive from the commitments and recommendations provided for therein.
Conclusions related to the development and monitoring of the application of the Code of Good Tax Practices
1. Monitoring and evaluation of behavior in compliance with the Code
The purpose of this first part of the annex is the following actions:
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Concrete a form or synthetic catalog of behaviors that allow verifying effective compliance with the Code by the AEAT and by companies.
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Determine permanent monitoring and evaluation practices of compliance with the recommendations of the Code during the development and completion of tax application procedures.
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Define treatment practices for cases of compliance and non-compliance with the recommendations of the Code in tax application procedures.
A) Catalog of conduct to verify effective compliance with the Code
There is no doubt that both the AEAT and the companies that have assumed the CBPT must follow the recommendations contained in the Code since they have voluntarily adhered to it.
Well, in this regard, it is considered necessary to specify the practices whose observance by the parties will allow them to affirm that they are adequately complying with the Code.
A.1) Catalog of compliance behaviors by companies:
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The tax strategy of the entity that has been established by the Board of Directors, or equivalent body, is documented and is known by the company's senior managers.
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The Board of Directors, or equivalent body, has approved the operations and investments of special tax risk
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The company's risk management policy has contemplated measures to mitigate the identified tax risks and has established internal corporate governance rules in this matter whose compliance can be verified.
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The company has not used opaque structures for tax purposes.
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The company has collaborated in the detection and search for solutions regarding those fraudulent tax practices that it has detected in the markets in which it operates or with which it maintains relevant relationships.
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The company has used effective information and internal control systems for tax risks in that their design and operation is fully integrated into the general internal control systems of the business it develops.
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The company has provided the AEAT with truthful information on the above points.
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The company has sought to reduce conflicts arising from the interpretation of the applicable regulations.
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At the beginning of the inspection procedure, the company has expressed to the AEAT the maintenance of the commitments that its adherence to the content of the Code entails.
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At the beginning of the inspection procedure, the company, in order to facilitate better knowledge by the Inspection of the operation of its business, has proceeded to present, in the form it considers most convenient, a description of its activity with special mention of the incidence of the tax aspects thereof.
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In the course of the inspection procedure, the company has provided the information and documentation requested by the AEAT quickly and completely in the terms agreed with it and, in any case, preferably using electronic means when possible.
A.2) Catalog of compliance behaviors by the AEAT:
A.2.1) General procedure scope:
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In its actions, the AEAT has ensured that administrative precedents are taken into account and has applied administrative and jurisprudential criteria in its actions, in the terms of Section 2.1 of the Code. The Department Directors of the Tax Agency will inform the Permanent Management Committee of the same of those interpretative criteria that they intend to apply in their actions or that may generate significant controversies with taxpayers and in which there is no criterion established by the General Directorate of Taxes. , the Central Economic Administrative Court or the Courts of Justice
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The criteria applied by the AEAT have been made clear, in due time, on the website referred to in letter d) of point 3 of this annex to the CBPT. Likewise, the AEAT has attempted to respond with the necessary speed to comply with the needs of the company in the approaches expressed by it in order to achieve correct cooperative compliance.
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The AEAT has sought to reduce conflicts arising from the interpretation of the applicable regulations.
A.2.2) Scope of inspector procedure:
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In its verification actions, the AEAT has applied the administrative and jurisprudential criteria included in the communication channel indicated in the previous point (2).
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The AEAT has defined as much as possible the purpose of the requirements made to the company during the inspection procedure.
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The AEAT has provided the company, as soon as possible, with knowledge of the facts that may be regularized.
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With the aim of promoting the reduction of litigation, the AEAT has made the company aware of the relevant factual issues for the liquidation and the correlative evidentiary activity, thereby facilitating the appropriate discussion of the same during the inspection actions, and establishing in each case the communication formula with the most appropriate company to ensure this circumstance.
In particular, it is considered a good practice of the AEAT in this sense to hold meetings, prior to the disclosure of the file, between the tax officials of the company and those of the AEAT (Heads of the Teams or Units that have carried out the actions and contact persons in the companies referred to in the document of conclusions of the Cooperative Relations Working Group approved on 10/29/2013), in which the main conflictive issues and potential tax contingencies that have arisen during the processing of the inspection procedure, so that in order to avoid possible conflicts, the taxpayer can, where appropriate, provide additional information to those responsible for the tax verification related to the conflictive issues raised.
In the event that these meetings have not been held, the company's tax officials may notify the contact persons referred to in the document of conclusions of the Cooperative Relationship Working Group approved on 10/29/2013 of any relevant information in this regard at any time prior to the disclosure of the file.
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The AEAT has communicated to the taxpayer, in the hearing process prior to signing the inspection minutes, the facts that will influence the regularization proposal, the essential concepts that will be regularized, the nature and amount of the foreseeable proposal. of regularization that would result in accordance with the data available at that time and the other elements necessary for it to be valued by the company.
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The AEAT has incorporated into the motivation of the acts the express assessment of the taxpayer's allegations.
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The AEAT has promoted that the factual issues relevant to instructing a possible sanctioning procedure are known and adequately discussed prior to its resolution, establishing in each case the most appropriate communication formula with the company to ensure this circumstance.
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The AEAT has sought to avoid an excessive duration of the inspection procedure, and this is more intense when companies have put into practice the behaviors described in section A.1 above.
B) Permanent monitoring and evaluation practices of compliance with the recommendations of the Code
In order to ensure adequate monitoring and verification of compliance with the commitments contained in the CBPT, the AEAT and companies may request the evaluation of compliance with the recommendations of the Code.
This request will be made through those responsible for cooperative compliance referred to in section 3.c) of this document.
These monitoring and verification actions may be carried out during the development of any tax application procedure to the extent that it affects it and, preferably prior to the disclosure of the file, or its completion. In general, the company's tax manager, the Head of the Tax and Customs Control Unit or the Head of the affected Inspection Unit and, where appropriate, the corresponding Chief Inspector and the Team Leader must participate in them. o Unit that has been acting.
C) Treatment of cases of compliance or non-compliance with the recommendations of the Code
The AEAT and the companies may agree to record the assessment or evaluation of compliance by both parties with the commitments and recommendations of the CBPT, in the field of tax application procedures.
In the course of said tax application procedures, compliance with all cataloged behaviors that have been necessary/convenient for the correct development and conclusion of the same may also be recorded.
In the case of correct compliance by both parties with the recommendations of the Code, the AEAT may record this (in statistical or general terms) in its Annual Activities Report.
In the field of inspection procedures, cases in which the AEAT or the company considers that non-compliance with CBPT has occurred will be analyzed and assessed within the scope of the DCGC or the special Delegation, with the participation of the Head of the DCTA or the affected Inspection Unit, as well as the Central or Special Delegate and the company representative.
If after this analysis the consideration of the company's non-compliance by the AEAT persists, the Central Delegate of Large Taxpayers or the Special Delegate will raise the matter to the Director General of the Agency who, if deemed necessary, will report the serious non-compliance to the Board of Directors of the Company and the present or future conduct and commitments to be assumed by the company related to the reason for the non-compliance observed that are consistent with the recommendations and postulates of the Code of Good Tax Practices.
If the company continues to consider non-compliance with the AEAT, it may direct the Director of the Department of Financial and Tax Inspection to assess the non-compliance and request that the pertinent measures be adopted to ensure that its problems are corrected. effects.
Likewise, the AEAT and the companies will inform the CBPT Monitoring Commission at least once a year of the cases and the typology of the conduct or factual assumptions that may have been considered non-compliance with the recommendations of the Code.
2. Reinforcement of good corporate tax transparency practices
In order to advance the development of best practices in terms of corporate tax transparency that lead to an improvement in the cooperative relationship between the AEAT and the companies affiliated to the CBPT, promoting a more adequate and earlier knowledge and mutual evaluation of the tax and tax risk management policy, companies adhering to the Code may provide the AEAT with certain information, preferably prior to the end of the regulatory deadline for submitting declarations to the extent that they are available, as provided in the last paragraph of section 3 of the Conclusions approved in 2013 on the following aspects of its actions and decisions in tax matters:
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Presence in tax havens and explanation thereof.
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International tax schemes of the Group (including, among others, financing, management of industrial and intellectual property and management fees) as well as degree of congruence with the principles of the OECD BEPS actions.
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Significant changes in structures holdings and subholdings .
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Explanation of the most significant corporate operations.
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Fiscal strategy of the group approved by the governing bodies.
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Catalog of operations to be submitted or submitted to the Board of Directors.
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Internal instructions regarding the prevention of illicit operations, money laundering or the seizure of assets.
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Information on existing tax disputes.
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Mention of tax compliance in the Management Report or Integrated Report of the entity.
Each company and the AEAT, by mutual agreement, will establish the content and scope of this information, as well as the format in which it must be made available to the Agency.
3. Other commitments that will reinforce compliance with the Code
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Dissemination by the AEAT of the criteria that it applies in its control procedures, as long as they can be applied generally, and articulation of a system of notification to companies adhering to the Code of such criteria.
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Establishment, by the AEAT and the companies, of a standardized format for the provision of documentation that will be provided by companies adhering to the Code in the tax application procedures carried out with the latter.
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Dissemination of the people from the AEAT and the companies that have been designated as responsible for cooperative compliance, as well as the functions to be performed by them.
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Introduction of an informal communication mechanism (secure website) between companies and the AEAT, through which all activity related to the CBPT could be channeled.
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Adoption by the AEAT of periodic internal communication actions to disseminate the commitments of the Code.
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Organization by the AEAT of periodic meetings with companies affiliated to the CBPT, especially with those that are not part of the Large Companies Forum.
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Inclusion in the Annual Activities Report of the AEAT of a section dedicated to the actions carried out in the field of the cooperative relationship.