Minutes of the meeting

Large Companies Forum

MINUTES OF THE PLENARY SESSION 2/2019

Vice-President of the Large Companies Forum

Director General of the State Agency for Tax Administration

Mr. Jesus Gascon Catalan

Members representing the Tax Agency

Director of the Tax Management Department

Mr. Gonzalo David García de Castro

Director of the Department of Financial and Tax Inspection

Mr. Javier Hurtado Puerta

Director of the Revenue Department

Mr. Guillermo Barros Gallego

Director of the Department of Aduanas and Excise Duties

Ms. Mª Pilar Jurado Borrego

Central Delegate of Large Taxpayers

Mr. Manuel Trillo Alvarez

Members representing Large Companies

ACS

Director of Tax Advisory

Mr. Alfonso Moreno Garcia

AMADEUS IT GROUP SA

Deputy Secretary of the Board of Directors

Mr. Jacinto Esclapés Diaz

BANCO SANTANDER

Group Executive Vice President

Mrs. Carmen Alonso Peña

BBVA

Director of Tax Advisory Services for Spain

Mr. Alberto Marzal Cervantes

LA CAIXA

Director of Direct Taxation

Mr. Gonzalo Mendizábal Carredano

CEPSA

Fiscal Director

Mr. Alberto Martin Moreno

COFARES

Advisory Board of Directors

Mr. Luis Valdeolmos Gonzalez

EL CORTE INGLÉS

Assistant Manager

Mr. Jose Roberto Barroso Duke

ENDESA

Head of Tax Affairs

Mrs. Maria Muñoz Viejo

FCC

Director of the Tax Department

Mr. Daniel Gómez-Olano González

GENERALI

Director of Accounting Area

Mr. Martí Jo Ruiz

IBERDROLA

Global Director of Tax

Mrs. Begoña Garcia-Rozado Gonzalez

IBERIA

Spanish Tax Lead

Mrs. Cristina Santana Negrin

INDITEX

Director of Tax Advisory

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

Director of Tax Advisory

Mr. Jose Antonio Gibello Saiz

RENAULT

Director of Tax and Customs Affairs

Mr. Felix Ruiz Madarro

SEAT

Head of Transfer Pricing

Mrs. Susana Sanchez Arenas

SIEMENS

Director of Taxes

Mrs. Ana Maria Moreda Galante

TELEFÓNICA

Fiscal Director

Mr. Angel Martin Gomez

VODAFONE

Tax Advice Director

Mr. Javier Viloria Gutierrez

Technical Secretariat of the Large Companies Forum

Technical secretary

Mrs. Rosa Maria Prieto del Rey

In Madrid, on November 19, 2019, the nineteenth plenary session of the Large Companies Forum is held, attended by the people mentioned, and in accordance with the following

AGENDA

1. Opening of the session.
2. Approval of the minutes of the meeting held on June 18, 2019.
3. Results of the different working groups of the Forum.
4. Next call.
5. Other considerations, requests and questions.

1. Session opening

The session is opened by Mr. Jesús Gascón Catalán, General Director of the State Tax Administration Agency and Vice President of the Large Business Forum, who, after thanking those attending for their presence, comments that, under the 5th point of the agenda, “Other considerations, requests and questions”, the Strategic Plan of the Tax Agency 2020-2023 and the European Centralized Office will be discussed.

Mr. Jesús Gascón then gave way to the second point on the agenda.

2. Approval of the minutes of the meeting held on June 18, 2019

Mr. Jesús Gascón gives the floor to Ms. Rosa María Prieto, Director of the Planning and Institutional Relations Service, who points out that the minutes of the 18th session of the Plenary Session of the Forum were sent to its members and adds that, since 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 June 18, 2019 are declared definitively approved.

3. Results of the different working groups of the Forum

At this point on the agenda, the Director General of the State Tax Administration Agency gives the floor to Mr. Javier Hurtado Puerta, Director of the Department of Financial and Tax Inspection, who will comment on the activity of the working group on the Analysis of Tax Regulations and the Reduction of Conflicts.

Mr. Javier Hurtado begins his presentation by pointing out that before commenting on the issues discussed at the last meeting of the working group, held on November 7, he would like to highlight the climate of cordiality and trust in which the meetings are held, giving rise to a positive and constructive environment, where everyone can openly express their positions, which allows progress to be made in mutual understanding and in cooperative relations.

Below, Mr. Javier Hurtado reports on the points discussed at the working group meeting:

1. Council Directive (EU) 2018/822 of 25 May 2018 (Directive on Fiscal Intermediaries or DAC 6): The working group included the participation of the Deputy Assistant Director General of the General Directorate of Taxes, who commented that the prior public consultation process for the transposition of DAC 6 ended in January and that numerous opinions had been gathered from the affected subjects, many of which had been taken into account in the transposition of the Directive. He added that in June the regulatory texts for the transposition of the Directive, the modification of the LGT and the General Regulations on actions and procedures for tax management and inspection and the development of common rules for procedures for the application of taxes were submitted to a public hearing and information, having received the opinion of the CGPJ and pending the report of the Technical General Secretariat. He also reported that DAC 6 provides for a transitional regime, which will determine the obligation to declare cross-border mechanisms whose first phase of implementation takes place between 25 June 2018, the date of entry into force of the Directive, and 30 June 2019, the date of entry into force of the internal regulations for transposition. He noted that these mechanisms should be declared in July and August 2020.

   For its part, the General Subdirectorate of Tax Technique of the Tax Management Department reported on the three models that were going to be implemented:

   • General obligation to report cross-border tax planning arrangements: Model 234
   • Obligation to update information on marketable cross-border mechanisms: model 235
   • Obligation to report the use of cross-border tax planning mechanisms in Spain: model 236

   During the meeting, the companies raised the following questions:

   • Identification of the obligated party when within a group there is a subsidiary company, of another nationality, which is responsible for legal or tax advice, the latter being the one that carries out the information mechanism for other states: It was replied that the issue had been discussed by the G5 (Spain, France, Italy, Germany and the United Kingdom), but without reaching a clear conclusion, and that it was therefore being analysed by the Ministry of Finance in order to establish a criterion.
   • Concern in the banking sector about the fact that they could be considered intermediaries for the purposes of DAC 6, with the consequent obligation to provide information, in the case of granting financing: It was reported that each case would have to be studied, since, in certain cases, when the financial institution had knowledge of all the details of the cross-border mechanism at the time of granting the credit, it could be considered to be an intermediary for the purposes of the Directive and, therefore, would have the obligation to provide information. However, it is normal for the financial institution to have broad but partial knowledge when granting financing for a tax planning mechanism, so it does not seem that, in any case, it has to be obliged when granting financing for a mechanism that others have designed. However, it was clarified that this matter was also being analysed by the Ministry.

   For its part, the Technical Secretariat of this Forum urged participants to submit in writing all issues of concern, so that they could be analyzed by the General Directorate of Taxes and the Tax Agency, allowing the creation of a communication system through frequently asked questions (FAQ). Mr. Javier Hurtado indicates that the Tax Agency is considering the convenience of implementing a “frequently asked questions” section, where the doubts that arise are collected, so that the completion of the corresponding forms can have clear rules.

   To conclude this point, the Director of the Department of Financial and Tax Inspection highlights that the objective of DAC 6 is to avoid aggressive tax planning aimed at tax avoidance and that, of all the communications expected to be received, these are fundamentally those that interest the tax authorities.

2. Application of the VAT equivalence surcharge regime: It was pointed out that this VAT regime is liberating for the retail trader, who fulfills his obligation by bearing the surcharge passed on to him by the wholesaler. In this regard, it was reported that the Tax Agency had detected a certain laxity in the fulfilment of this obligation by some wholesalers, who claimed to be unaware of the retail nature of their clients. In order to avoid these situations, it was indicated that the General Subdirectorate of Tax Technique was working on the implementation of a consultation application where by entering the NIF of the client, the wholesaler could know if he was dealing with a retailer and thus, apply the corresponding surcharge. Finally, it was stressed that the correct application of the equivalence surcharge, in addition to being a measure to prevent tax fraud, was also a further step in the fight against unfair competition.

3. Questions raised by companies:

   • Deductibility of salaries received by directors for the exercise of executive functions: The companies participating in the meeting requested greater clarity in the criteria of the Tax Agency in this matter, since several listed entities had been subject to regularizations because the Administration understood that these remunerations were not deductible, considering them to be gratuities, based on the ruling of the Civil Chamber of the Supreme Court of February 26, 2018, which, in the opinion of the companies, affects non-listed companies. The General Directorate of Taxes urged companies to submit a query in order to establish the Administration's criteria on this matter. The Director of the Department of Financial and Tax Inspection recalls that not all remuneration to an administrator is deductible and adds that within the framework of the Code of Good Tax Practices, several queries have been received on this issue and that the Tax Agency was carefully analyzing the Supreme Court ruling, but that, nevertheless, it was going to subject its actions to the criteria established by the General Directorate of Taxes.
   • Remuneration in kind for the use of vehicles and their taxation in Personal Income Tax and VAT : It was suggested that the use of vehicles for private purposes was an issue that generated permanent conflict, as it was difficult for companies and workers to prove, so it was proposed to establish a more objective criterion through a legislative reform that could provide greater legal security in this area. The Tax Agency indicated that there was a clear and well-known criterion that was being applied by its bodies and that it concerned not so much the actual use of the vehicle as its availability for use. The meeting also recalled the possibility of using advance valuation agreements (APAS) not only for vehicles, but for any other remuneration in kind. It was added that the suggestion would nevertheless be taken into account.
   • Resolution of the Institute of Accounting and Auditing of Accounts (ICAC) of March 2019 for the purposes of taxation of scrip dividend: The companies pointed out that, prior to the Resolution, the receipt of shares by the shareholder in payment of dividends only represented a reduction in the average cost of their portfolio and had not become taxable. However, after the aforementioned Resolution, it is established that said perception generates income. The question that has arisen is whether companies are obliged, as issuers, to make a payment on account and how this is calculated. The Deputy Director General of Taxes on Legal Entities of the General Directorate of Taxes replied that a similar query was in the process of being resolved and that they hoped to issue an opinion on the matter soon.
   • R&D&I deductions: The collaborator of the Technical Secretariat of this Forum, representing the companies, referred to the problems that many companies encounter when applying this deduction. The Department of Financial and Tax Inspection stated that the requirements for applying the deduction were clear, except for certain nuances that could arise with software development projects, classified by MINECO as technological innovation. It was indicated that, in the latter case, the Tax Agency did not dispute the qualification, but what could happen is that it would modify the basis of the deduction by applying article 35.2 b) of the Corporate Tax Law. The General Directorate of Taxes added that they were also in the process of making a statement on this matter. To conclude this point, Mr. Javier Hurtado points out that these tax benefits are being studied by the AIReF (Independent Authority for Fiscal Responsibility), in which the Tax Agency and other public institutions are participating.
   • Own acts and principle of legitimate trust: The companies provided a document analysing this principle, which is being studied by the Tax Agency. Companies were asked to submit specific cases and it was announced that an attempt could be made to reach an agreed position at the next meeting.

4. Finally, the Department of Financial and Tax Inspection reported that the procedures for the recovery of state aid, relating to the Tax Lease. The calculation method would be the one established at the time by the General Directorate of Taxes. However, its provisional status was noted given that it was pending a decision by the Court of Justice of the EU .

Mr. Jesús Gascón thanks Mr. Javier Hurtado Puerta for his intervention and gives the floor to Mr. Gonzalo García de Castro, Director of the Tax Management Department, in order for him to comment on the activity of the working group for the Analysis and Rationalization of Indirect Tax Burdens.

Mr. Gonzalo García de Castro indicates that at the meeting of this working group on October 29, the following issues were discussed, some concurrent with what was already stated by the Director of the Department of Financial and Tax Inspection, as is the case of the Transposition of Council Directive (EU) 2018/822 of 25 May 2018 (Directive on Fiscal Intermediaries or DAC 6):

1. Regulatory and technical changes for the next 2019 information declaration campaign:

   • In relation to the regulatory modifications, the draft Ministerial Order modifying models 184, 189, 193, 194, 196, and 198 was explained. 280 and 289, highlighting the most relevant changes:

     • Form 184 - Informative Declaration. Entities under income allocation regime: It will include a greater breakdown of deductible expenses for both economic activities in direct estimation and for real estate capital gains. The Director of the Tax Administration Department clarifies that, although these modifications do not affect the entities represented at this Forum too much, for the Tax Agency their importance lies in the fact that they affect a large group of taxpayers.

     • Form 189 - Information declaration. Securities, insurance and income: The modifications are aimed at adapting the information in order to enable the use of the “Securities Portfolio” tool.

     • Form 198 – Annual declaration of operations with financial assets and other securities: The amendments to this declaration were discussed in great detail, although the postponement of its entry into force to the 2020 financial year was noted. Mr. Gonzalo García de Castro indicates that these modifications are linked to the Administration's interest in providing a greater and better information and assistance service to the taxpayer, in relation to the management of their securities portfolio in the area of IRPF .

     • Form 280 – Annual information declaration of long-term savings plans: In 2019 it will be possible to present it through the TGVI system on line.

     • Form 289 - Annual information declaration of financial accounts in the field of mutual assistance (CRS): Annexes I and II are updated, including in the list the countries with which information will be exchanged from 2020.

   • In relation to technical developments, the following were discussed, among others:

     • Application of the TGVI system on line to models 038, 159, 170, 171, 180, 184, 189, 195, 199, 270, 280, 296, 349, 611, 616, 720, 990, 993 and 995.

     • Elimination of pre-declarations of forms 190, 347 and 390.

     In relation to this point, the Director of the Tax Management Department adds that, from a practical point of view, the modifications are aimed at four areas: to the presentation, to the gradual elimination of the pre-declaration, to the extension of the TGVI on line y los formularios web y a todo el mecanismo de presentación de complementarias y sustitutivas. Prosigue indicando que el TGVI on line es un mecanismo con el que el usuario puede contrastar sus datos con los que tiene la Administración y, desde su implantación en 2018, se puede afirmar que tiene un funcionamiento satisfactorio. Para la Agencia Tributaria ha supuesto un avance en los servicios de información y asistencia al contribuyente, tanto en IRPF como en IVA, y que se espera que en un futuro también se pueda aplicar al Impuesto de Sociedades. Además, señala que, aunque desde un punto de vista normativo se tenga clara la diferencia entre una declaración complementaria y una declaración sustitutiva, desde un punto de vista práctico se ha logrado una mejora en la utilización del TGVI on line and web forms where the taxpayer, once a declaration has been submitted, may add, modify or delete records directly, without having to explicitly indicate the desire to supplement or replace a previous declaration. The treatment of the declaration as complementary or substitute will be as appropriate depending on the records submitted at any given time. In this way, legal security is increased for the taxpayer since the Administration will be the one to qualify the operation and, depending on the dates of supply of the records, will be able to assess the information provided as a whole.

2. Analysis of the regulatory changes affecting form 349 - Recapitulative declaration of intra-community operations:

   • The annual filing is eliminated (last filing in January 2020 for the 2019 financial year).
   • Incorporation into the model of the taxation rules for “consignment sales agreements”: This means that once certain requirements are met, only an exempt EIB is produced in the Member State of origin for the supplier and a AIB is produced in the Member State of destination for the customer.
   • Simplification of chain operations (successive deliveries between different companies when there is a single intra-Community transport).
   • The requirements for EIB to be exempt are highlighted ( NIF - VAT , update of VIES , inclusion of the operation in the recapitulative declaration of intra-community operations).

3. It was commented that the improvements to the SII validations that came into operation on October 1, 2019 had had a fairly good result, increasing the quality of the system's information. In addition, a pilot assistance project was reported for the completion of form 303 (Pre303) that was going to be implemented from February 2020, for a certain group of taxpayers of SII , which will take the data from the information declared in the registration books.

4. As regards corporate tax, some issues were discussed relating to the simplification of the models for payments on account (202 and 222), as well as certain incidents in the presentation of declarations in the regional territories due to the homogeneity of the computer files.

5. Improvements related to the Tax on Economic Activities: Mr. Gonzalo García de Castro refers to the request by companies for improvement in the management of municipal headings and in the search engine for economic activities. He points out that the Tax Agency is interested in providing a consistent service in this area. He comments that work has been done on a new virtual assistance tool, “Economic Activity Search Engine”, which has been in operation since 7 November and which indicates the headings of the IAE rates and, where applicable, the equivalent activity code ( CNAE ) that is applicable.

6. The following topics proposed by companies were also discussed:

   • They raised difficulties in locating notifications from the Tax Agency: It was replied that improvements in the order in which they are displayed would be studied.
   • They requested a simplification of form 232 (Informative declaration of related-party transactions and transactions and situations related to countries or territories classified as tax havens): The Department of Financial and Tax Inspection stated that the objective was to obtain quality information and that in the campaigns to be carried out in December, March and April, the most frequent errors in the completion of the form would be analysed. The Director of the Planning and Institutional Relations Service also asked companies to submit all proposed modifications in relation to this model, in order to be taken into account once the appeal against the Ministerial Order approving the model is resolved.

Mr. Jesús Gascón thanks Mr. Gonzalo García de Castro for his intervention and gives the floor to Ms. María Pilar Jurado Borrego, Director of the Customs and Excise Department, so that can comment the activity of the Special Taxes working group.

Ms. Pilar Jurado begins her presentation by pointing out that the Special Taxes working group met on October 31 and addressed the following issues:

1. SILICIE Project (Immediate Supply of Manufacturing Excise Tax Accounting Books): the Director of the Customs Department and II. EE. points out that this project is in its final stages, as it comes into force on January 1, 2020. It goes on to comment that at the meeting of the working group, the regulatory development of the project was reported and, specifically, that, by virtue of the First Transitional Provision of Order 998/2019, establishments required to keep accounts through the Electronic Headquarters of the AEAT could provide the accounting entries corresponding to the first half of 2020 during the period between July 1 and September 30, 2020. Information was also provided on the dissemination work carried out through specific days by sectors, both at the central and territorial level, and the sending of information letters to the required operators. In addition, computer developments relating to the project were discussed.

   In relation to this point, Ms. Pilar Jurado points out that based on the information held by the Tax Agency, most companies will be able to provide the information from the outset. He added that he was grateful for the effort and collaboration made in adapting to the new system. He goes on to say that the project has a query box that will allow the publication of a “frequently asked questions” section, with general criteria in relation to the system.

2. Integrated Supply of Supplies and Delivery Notes (SIANE), which came into force on October 1: The status of implementation of the new system was reported, which has involved the online communication of all transactions with exemption from the hydrocarbon tax. Thus, in relation to the procedure for sales en route (which is the one that affects a greater number of operators and documents), it was noted that no significant incidents had occurred and that, after one month, the number of operators who were submitting documents through SIANE was similar to that previously submitted by the repealed form 511.

3. Reduced rate diesel colourant: It was reported that from a tax point of view there would be no problem in the unification of the colorants established in the OM PRE/1724/2002 for the reduced rates based on their use (agricultural and heating), since these colorants are additional to the use of the same chemical marker, provided that they are clearly and visually differentiated from the rest of the full-rate diesel fuels. It was added that the aforementioned ministerial order would need to be amended.

4. Correction of self-assessments in certain cases of article 108.4 of the Excise Tax Regulations: the Customs Department of II. EE. reported a specific case in which a request for undue income had been received relating to the Tax on Hydrocarbons, requested by a final consumer of natural gas who did not communicate to the gas marketer the professional destination of the gas consumed and requested the retroactive application of the reduced rate. In view of the concurrent circumstances and in application of the jurisprudence of the CJEU and the Supreme Court, it had been determined that the application of a reduced rate could not be denied, due to mere failure to comply with a formality, if the actual end-use of the natural gas was a use for which the rule provides for the application of said reduced rate.

Mr. Jesús Gascón thanks Ms. Pilar Jurado for her intervention and gives the floor to Mr. Manuel Trillo Álvarez, Central Delegate for Large Taxpayers, so that he can comment on the activity of the Cooperative Relations working group.

The Central Delegate reports that the Cooperative Relations working group met on November 12 and that, first of all, he wanted to thank the tone in which it was conducted, since it has allowed significant progress in different aspects, including trust between the parties, which results in greater transparency, even in disagreement.

Mr. Manuel Trillo then comments that the following issues, among others, were discussed at the working group meeting:

1. Firstly, the Tax Agency proposed opening a debate on the internal control systems required by companies adhering to the Code of Good Tax Practices, introducing a commitment to transparency regarding decision-making, the bodies involved, the system of reporting to the board of directors on decisions with tax repercussions, etc. It was stated that the objective was to continue advancing the development of the Code, introducing this new practice and, if deemed appropriate, establishing it in the future as a prerequisite for adherence to the Code. For their part, companies, in general, indicated that it seemed to them a logical measure that the entities that adhered to the Code should have auditable internal control mechanisms, adding that the reform of the Capital Companies Act had already brought about a change in the same direction. However, they indicated that the definition of the terms and scope of the measure would have to be defined and that one of the keys would be to decide whether the Code was to be an instrument for promoting voluntary compliance or, if prerequisites for accession were established, a control tool.

   To conclude this point, Mr. Manuel Trillo points out that there are currently more than 140 member entities, representing more than 1,300 companies, since many of the memberships are made as a group. He adds that the Code is not “something” of the Administration, but rather it is “something” of all those present and of those entities that have decided to adhere to it and that, given the time that has passed since it was launched, this could be a good time to strengthen it, given the growing interest in adhering to it. In other words, it would be a matter of establishing transparency in internal control mechanisms as a good practice and, in due course, it could become a necessary requirement for membership and permanence. Thus, given that the current requirements for membership are purely formal, the objective pursued by this proposal is none other than to reinforce the value and security provided by adherence to the Code of Good Tax Practices. Furthermore, Mr. Manuel Trillo adds that we must not forget that, based on this Code, other Codes are emerging, although adapted to the groups for which they are intended.

2. Secondly, regarding the transparency reports for 2017, it was reported that 23 reports had been received from the Central Delegation and one from the territorial delegation. It was recalled that the Tax Agency had decided to carry out an exhaustive analysis of each of the reports, in addition to a discussion with the presenters, so that any questions raised by the report could be clarified directly. These meetings had taken place between the months of April and July. It was noted that not only had more reports been submitted than the previous year, but that overall the quality of the reports was better, and in some cases significantly so. It was reported that a larger submission was expected for 2018 reports, as the same number of reports had been received at that time as in the previous year. It was noted that work had begun on the reports as they were received, without waiting for them all to be submitted. It was also reported that the start of the meetings had been brought forward, in order to be able to space them out over time, and that this phase of the work was expected to be completed in the first quarter of 2020. Furthermore, the efforts made by the companies were highlighted and it was pointed out that the relations had been strengthened in mutual trust, with the whole process being highly valued by the Team Leaders. It was added that, as a result of these meetings and the analysis of risk lines, the Tax Agency was taking decisions related to the control model. On the other hand, it was noted that, given that the current regulatory framework did not allow for giving legal value to the reports and the conclusions derived from them, the Tax Agency was willing to continue moving forward in the establishment of a document of conclusions, previously discussed and agreed with the Administration, which could be presented to the boards of directors. In relation to the latter, the Central Delegate indicates that last year only a formal letter was sent to the companies thanking them for submitting the report and little else. He adds that this year the communication will contain a kind of procedural iteration , detailing the phases through which the analysis of the report and the requests and contributions of documentation have been passed, as well as their dates.

   Mr. Manuel Trillo concludes this point by highlighting that transparency reports are providing the tax authorities with earlier knowledge on many issues and that some of the decisions taken, especially regarding control, are based on them. On the other hand, he points out that, in relation to transparency reports, a greater commitment is still needed, since, although there are more than 140 entities adhering to the Code of Good Tax Practices, the transparency reports presented have been, as he has already stated, 24.

3. Thirdly, the Director of the Planning and Institutional Relations Service gave a presentation on the Strategic Plan of the Tax Agency 2020 - 2023. The Central Delegate said that he would not refer to this issue, as it would be presented by the General Director.

4. The fourth topic discussed was proposed by companies, who requested early knowledge of the Tax Agency's criteria in inspection actions. Examples were given of the deductibility of directors' remuneration or the taxation of vehicles, with companies pointing out that knowing the position of the Administration in advance would reduce conflict. They were told that the Tax Agency's criteria on both issues were clear and were included in the minutes with which the inspection procedures ended. Furthermore, it was pointed out that, with regard to the remuneration of directors, at a meeting of the working group on the Analysis of Tax Legislation and Reduction of Conflicts it had been agreed that, upon request from the companies, the General Directorate of Taxes would prepare an explanatory note.

   Mr. Manuel Trillo adds that there have been companies that, through the mechanisms derived from the analysis of transparency reports, have requested to know the criteria of the Tax Agency on certain issues and, of course, there have been no problems in providing them with the information, making it clear that they are not interpretative criteria of the regulations, but administrative criteria for their application. To conclude this point, the Central Delegate invites those present, through the Technical Secretariat Collaborator representing the companies, to raise any issues they consider would be of interest to analyze in this Forum.

5. The fifth topic to be discussed was the European Centralized Office. The Central Delegate indicated that the Director of the Customs Department and II. EE. will present it later.

6. In the last point of the meeting, the companies raised the possibility of incorporating new entities to the Forum, to which the Tax Agency replied that the limitations that existed were not only of space, but that it would be necessary to try to maintain a balance between the composition and number of participants and the effectiveness of the results of the meetings. However, it was made clear that this was an issue that would have to be studied by everyone and alternatives would have to be sought, such as the establishment of rotating shifts both in plenary sessions and in working groups.

   Finally, the companies reiterated an issue raised on previous occasions regarding the methodology followed in the publication of certain statistics which, in their opinion, gave rise to interpretations that were not entirely correct. They were told that the Administration's position was well known and that, in an effort to be transparent, it was limited to reflecting what had been declared by the taxpayers, without any ideological burden and without entering into the assessments that each person might subsequently make.

Next, Mr. Jesús Gascón thanks Mr. Manuel Trillo and the other Directors for their intervention and offers the floor to those present, in case they wish to make any comments.

Ms. Carmen Alonso Peña, representative of Banco de Santander and Collaborator of the Technical Secretariat of the Forum representing the companies, took the floor. After thanking the group for sharing the issues discussed at the work group meetings, she pointed out that many of the issues proposed by the companies are the result of prior grouping work and that it would be desirable to have a more direct channel to consult on the issues that arise in their internal meetings. He added that summaries and documentation of the working group meetings will be available shortly. On the other hand, he points out that the issue of directors' remuneration and the use of vehicles are topics that were proposed at the meeting as an example, but that what companies want is to have early certainty about what may occur in the verification actions. He adds that the Tax Agency's commitment to publish the administrative criteria that govern its actions is a good instrument, but that what is being demanded is that, before their publication, they be shared and explained and debated in the meetings of the working groups, thus being a good opportunity that would also allow the point of view of the business sector to be taken into account, which would result in less litigation. On the other hand, he points out that, as far as inspections are concerned, they would also like to have as much advance notice as possible of what the main focuses of the action will be, and not leave the most important issues for the final stages.

Mr. Manuel Trillo answers that, in verification procedures, it is sometimes difficult from the beginning to determine the most relevant sources, since new data emerge as the procedure progresses. However, he points out that section 3 of the Code of Good Tax Practices contains a series of principles to which all parties involved must conform their actions. The Tax Agency must therefore provide taxpayers with information as soon as possible about the facts that may be regularised, seeking the greatest possible exchange of opinions, and companies, for their part, must provide the requested information and documentation as quickly and completely as possible. In inspection procedures, both parties have their strategies and what must be sought is a bilateral balance, with everyone working along the same lines, even in the face of disagreement. In this regard, the Central Delegate adds that the instructions given to the inspection teams are those included in the Code of Good Tax Practices and urges companies to inform the Tax Agency of cases in which they consider that this is not the case.

Ms. Carmen Alonso agrees and points out that what is being requested is precisely this balance, especially in the years in which transparency reports have already begun to be presented.

Mr Javier Hurtado then took the floor to add that the Tax Agency is working on developing some administrative criteria, although not all of them affect large companies. However, he emphasises the general nature of these, which implies that they must be adapted when applied to each specific case, with their own documentation and evidence.

The Director General of the Tax Agency then moves on to the next point on the agenda.

4. Next call

Regarding the next meeting, Mr. Jesús Gascón expressed the intention to maintain the semi-annual frequency of the meetings, indicating in this regard that the next meeting would be held, foreseeably, in the month of June.

5. Other considerations, requests and questions

Mr. Jesús Gascón then moves on to point 5 of the agenda, “Other considerations, requests and questions” and before giving the floor to those present, he indicates that, as he mentioned at the beginning of the meeting, he is going to present the Strategic Plan of the Tax Agency 2020 – 2023. Thus, it indicates that it has not yet been presented and that some data will have to be updated since, initially, it was intended for the period 2019 - 2022. He added that, however, information on the main lines of action had been provided in advance at previous meetings. He goes on to point out that the Plan is a strategic planning document of the Tax Agency, of a multi-annual nature and that it does not include regulatory issues, that is, it does not have a proposal for legislative changes of any kind (neither tax, nor procedural, nor even organizational). It does not affect the territorial financing system or the participation model of the Autonomous Communities in the Tax Agency. That is to say, the Plan is based on the regulations in force. He adds that it will be an open document, because, as happens in companies, the strategy can become outdated due to the occurrence of certain events, whether favorable or unfavorable. Therefore, it indicates that observations and suggestions will be well received and will serve to permanently adapt the Plan to reality. He points out that the document has more than 130 pages, but that it is not an exhaustive and detailed account of the work of the Tax Agency. Thus, it reports that, basically, its main aspects are the following: Firstly, it establishes the actions of the Tax Agency taking into account the context; Secondly, the Plan defines a series of multi-annual strategic indicators that can be used to measure the quantity and quality of the work carried out by the Tax Agency, going beyond the annual system of objectives that currently governs the organisation's planning; It also introduces changes in the governance of the institution, in terms of ethical infrastructure, transparency, accountability, etc.; And finally, it sets out some priority strategic lines that will be strengthened in the coming years. Mr. Jesús Gascón goes on to point out that, with regard to the context, a brief and succinct analysis of the national and international macroeconomic situation and the budgetary situation is presented. What it shows is that, regardless of whether an economic slowdown may occur, the current scenario is very different from that of the last ten years, when the impact of the economic crisis prioritised short-term actions in order to achieve a consolidation of public accounts and a reduction in the deficit. The Director General goes on to point out that, although the objective of reducing the deficit remains in place, the current situation allows the Tax Agency to combine activities aimed at obtaining short-term results with others that have a medium- and long-term time horizon. On the other hand, he comments that the Strategic Plan has also involved a sociological analysis, delving into the perception that citizens have about the work of the Tax Agency and about the existence of fraud, as well as the positioning of each segment of taxpayers in relation to it, which has come to determine an approach not exclusively in repressive terms, since it has been detected that the majority of taxpayers wish to comply voluntarily, with the least possible problems. This means strengthening information and assistance services, as well as fraud prevention services, since there may be a segment of taxpayers who may be inclined to engage in fraudulent behaviour if the Tax Agency is unable to convey the perception of a real risk in this. He added that there is also a profile of taxpayers who are resistant to voluntary compliance, and the Administration's actions will aim to identify non-compliance and try to regularise it. Existing studies on the Tax Gap and the black economy have also been taken into account, although they are not a fundamental part of the Plan, which does not mean that they are ignored and not compared with data from countries around us. It should therefore be noted that not all of the black economy can be regulated, since, for example, illegal activities are obviously not likely to generate any tax revenue, which is why the figures presented in the studies sometimes convey the idea that more could be collected, which is not true. However, the existence of the shadow economy is a reality and discovering it is also an objective of the Administration. On the other hand, and taking into account that the Tax Agency in recent years has been valued externally, above all, for the results obtained in the short term, the Plan includes a change in terms of strategy, clearly focusing on voluntary compliance and prevention, and on designing multi-annual strategic indicators that better illustrate the work carried out by the Tax Agency and that even open a debate on what society expects from the actions of the Spanish tax administration. Thus, in line with this prioritisation of voluntary compliance, the first strategic indicator proposed focuses its efforts on measuring the evolution of said compliance. The way to do this is to compare the main macroeconomic indicators with the evolution of the main fiscal indicators. It is well known that the GDP growth rate this year is around 3.6, 3.7% and domestic demand has been growing slightly above that figure. The question is whether fiscal indicators are evolving better or worse than the main related economic magnitudes, since, if they evolve better, one of the components will be the increase in voluntary compliance, which implies a collective success as a society. It is also noted that the evolution of tax revenues in terms of cash is not a reliable indicator of the Agency's work, since they are conditioned by advances on refunds or extraordinary situations such as, for example, the refunds that have had to be made this year following the Supreme Court ruling on the exemption from maternity benefits. This means that, in homogeneous terms, comparing one year with another is not the best indicator. However, he stresses that what has been observed is that the aggregate tax bases of the main taxes and the collection in terms of taxes accrued are growing more than the macroeconomic indicators, which, in principle, is a positive fact. He reiterated that the aim is to avoid an exclusively annual analysis, where temporary circumstances may have arisen, and that what must be considered is the historical series and that the trend should be consolidated over the years. He also adds that, in order to illustrate the impact that the Tax Agency's actions have on improving voluntary compliance, changes in taxpayer behaviour must be studied, since if, for example, a taxpayer inspected in the future declares worse than before, the action cannot be considered successful, since although a regularisation may have been achieved in the short term, the final objective has not been fully achieved, since an increase in voluntary compliance has not been achieved. A great effort is also being made in prevention, making information transparent so that taxpayers are aware of the data held by the Administration, which necessarily has to translate into better and greater voluntary compliance. Of course, this affects the Tax Agency's ability to carry out subsequent regularisation, since the taxpayer has directly complied with his obligations. Thus, over the next few years, in addition to measuring the impact of preventive actions, the impact of inspections will also be measured. Thus, with the exception of companies and groups affiliated with the Central Delegation for Large Taxpayers (where there is a great variability in results between years due to internationalisation and business restructuring which makes it difficult to make comparisons between years homogeneous), the Director General cites, as an example, that it had been observed that taxpayers inspected in 2015 had increased their income in the three years following the year in which the regularisation was carried out by 25.6%, compared to what they had been declaring in the three previous years, with the average growth in tax income between these periods for all taxpayers being clearly lower, at 12.6%. That is to say, in general and always in statistical terms, the inspected taxpayer complies better in the future than he did in the past, which is also a positive fact in promoting behaviors oriented towards voluntary compliance. Mr. Jesús Gascón adds that all these actions will have an impact on the annual figures for control activities, which will of course continue to be public, but which, however, should not be assessed in an aggregated and uncritical manner, since the overall figure, as already mentioned, is not a reliable indicator of the work of the Tax Agency. Furthermore, it points out that the data on control and collection activities must continue to be presented due to their relationship with the organisation's financing system. On the other hand, if voluntary compliance is significantly improved, the annual control results via regularisation would decrease, so an alternative way of illustrating that decreasing control results do not mean that the Tax Agency is working worse, but rather that it is a consequence of the effort made in prevention actions would have to be found. The aim is to establish a broader and more plural vision of the control results, so that it is not just a figure compared to the previous year that measures the quality of the work carried out, but rather that this figure is put in relation to the evolution of voluntary compliance. On the other hand, Mr. Jesús Gascón points out that up to now he has been speaking in quantitative terms, but that a series of qualitative indicators must also be established when measuring the performance of the actions of the Tax Agency. Firstly, it points out that the Administration must act with transparency and be able to measure the litigation generated by its actions, in order to adopt measures to improve the situation. He clarifies that this matter has been analyzed both from the point of view of absolute conflict (number of appeals and claims), and in terms of relative conflict (percentage that represents what is appealed or claimed with respect to the totality of administrative acts issued by the Tax Agency with the basis of appeal or claim). Thus, it indicates that, although the relative conflict is very low, 1.8%, this means that the Economic-Administrative Courts receive between 150,000 and 160,000 claims per year, which places them in a very complex operational situation, which makes evident the need for reinforcement in material and personnel resources, as has been done this last year, so that the resolutions are issued within a reasonable time. On the other hand, he adds that it is also necessary to learn from the litigation generated, looking for formulas to avoid it, either by improving the quality of the actions both in their content and in their form or by attending to the cases that are fully or partially upheld by the courts. For this reason, the Plan also includes an indicator of the percentages of estimates, both in economic-administrative proceedings and in contentious-administrative proceedings. He adds that, analysing the administrative acts that are the subject of an economic-administrative claim and, where appropriate, of a subsequent administrative appeal, it can be observed that the relative conflict is at 0.9% and that applying the percentage of total and partial estimates in this way (30%), it can be estimated that 0.27% of the acts susceptible to claim are finally annulled totally or partially by the Economic-Administrative Courts. Of the remaining 0.63%, only 15% are subject to administrative appeal. Furthermore, 31% of the appeals filed end with the appeal being fully or partially upheld. That is to say, of the total number of actions issued by the Tax Agency and which are subject to appeal, 0.3% are ultimately annulled by the courts, either through economic-administrative proceedings (0.27%) or through contentious-administrative proceedings (0.03%). Likewise, Mr. Jesús Gascón points out that given the diversity of functions performed by the Tax Agency, the studies of the percentages of cancellation of the acts issued present variations according to the nature of the different acts, since there are procedures with a very low rate of conflict, such as in the census or collection area, compared to others that have a higher rate. For this reason, the aim is to make public the percentage of the most controversial administrative acts that are subject to total or partial annulment at some point during the claim procedure. Specifically, the cases of non-compliance reports and sanctions in the area of inspection have been analysed, bearing in mind that more than 80% of the reports are in compliance or with agreement, which shows a very clear strategic line and that is that, within the current regulatory framework, if it is possible to reach agreements, this route will be used as an instrument to reduce conflict. Mr. Jesús Gascón continues his presentation by pointing out that, on the other hand, the studies carried out also show that the higher the amount of the adjustment, the greater the propensity to appeal and make a claim. Thus, it mentions the existence of 41.627 billion euros of total outstanding debt, of which 12.763 correspond to debt suspended by appeal or claim and 5.664 to bankruptcy proceedings, with the Tax Agency's margin of action in terms of manageable debt being considerably lower than the 41.627 billion euros mentioned. It has therefore been considered important to include an indicator focused on what could be called manageable debt, that is, that part of the total debt over which the Tax Agency has full capacity. This is an index that relates, for each financial year, the amount of managed debt with respect to manageable debt, in the executive period. In addition, it would indirectly measure the state of litigation in terms of suspended amounts pending court decisions, as well as the debt managed by the collection department. Mr. Jesús Gascón goes on to point out that another quality indicator that has been considered important to include is the payment of late payment interest by the Administration. Thus, it indicates that the payment of interest to taxpayers is imposed by the regulations, but that, nevertheless, it is an area of action that can be improved by the Tax Agency, since, fundamentally, late payment interest originates from delays in the processing of refunds and unfavorable resolutions or sentences from which a refund to the taxpayer is derived. There are also cases where the margin of action is smaller, as is the case with refunds resulting from corrections to self-assessments. The indicator will measure the trend over the years and, barring extraordinary situations, it is expected that the interest paid will decrease, since the reduction in interest is a clear indicator of a higher quality in the provision of services by the Tax Agency by streamlining the management of refunds, as well as by increasing the quality of the administrative acts produced, allowing for an increase in the percentages of estimated resources and claims in favor of the Administration. Finally, the Director General reports that an efficiency indicator has been introduced, which compares the organisation's budget with the income it manages. He added that this year the executed budget will be around 1.4 billion euros and the managed income around 213 billion euros, which gives a ratio below 0.7, meaning that for every 100 euros managed, the cost to the Public Treasury is 0.7 euros. The aim is to keep this rate stable since it places us ahead of the average of the OECD and the European Union, and of neighboring countries, such as France, Germany and Italy. . The Tax Agency adds that maintaining this ratio would allow the number of employees to recover, which was reduced by the impact of the economic crisis. The report also states that the Tax Agency is facing a truly worrying retirement scenario, as the average age of its staff is 53 years old. This means that if we want to have a prepared and trained staff, it is necessary to start holding the appropriate selection processes.

The Director General continued his intervention by pointing out that, in addition to publishing the Strategic Plan and its indicators, the annual objectives will also be published. Also, at the end of the financial year, a report prepared by the Internal Audit Service will be published, which will show the degree of compliance with the annual objectives and the evolution of the multi-annual indicators. He added that the organisation's ethical infrastructure will also be improved, adapting it to new international demands. Mr Jesús Gascón also reiterated that the Plan also identifies some lines of work considered priorities for the coming years. Some have had a lot of media coverage, such as the pilot test of the draft VAT , which is technically a pre-declaration of model 303, or the communication of tax data to companies in the campaign of the Corporate Tax, just like what has been done with Personal Income Tax . The Tax Agency believes that these initiatives are very well received and that progress must be made in implementing virtual assistants, so that taxpayers can use a self-service information and consultation service, which would also free up work for the General Directorate of Taxes. In addition, digital administrations will be created, so that attention to taxpayers can be concentrated on them by telephone and telematic means, without face-to-face assistance. On the other hand, he indicates that in terms of control actions, emphasis will be placed on the black economy, use software, increasing on-site presence and the number of visits; In the area of collection, more specialized work will be promoted, such as personalization and precautionary measures, referrals of liability, etc., since collection management is more automatable; In the Customs area, the same procedure will be followed, since once the Customs Code implementation process has been completed, it is also necessary to focus on the implementation of the SILICIE project. In short, there are activities that will be strengthened in all areas of action.

Finally, Mr. Jesús Gascón points out that, in relation to the codes of good practice, on July 2, at the Forum of Associations and Colleges of Tax Professionals, two texts were approved, one for associations and colleges and another for tax professionals, considered individually. The Director General reports that in the first months of 2020 the Tax Agency will launch the procedure to manage the adhesions and the governing bodies of the different entities will decide whether to adhere or not. Likewise, he points out that he has already commented in previous meetings that there is also a demand for a specific code of good practices by SMEs and the group of self-employed workers, for whom, due to the characteristics of their organization, the Code of Good Tax Practices approved in this Forum, is not ideal, since it is more oriented towards large companies. He believes that, in reality, there will be a single code, but adapted to different groups. It also indicates that it is clear that the cooperative model is moving forward, extending to other groups, which is leading to a model of reinforced control, based on prevention rather than on a posteriori control, and expressly mentions projects such as ICAP (International Compliance Assurance Programme) or transparency reports. Finally, he said that the cooperative relationship is key in the Strategic Plan and that, as he has already mentioned, it is an open document, subject to modification, so observations and suggestions will be very well received.

Next, Mr. Jesús Gascón offers the floor to anyone who wishes to speak.

Next, Mr. Ángel Martín Gómez, representative of Telefónica, took the floor. After commenting that he found the Plan's approach very interesting and that it would be well received, he asked whether, in reference to the cooperative relationship, there was any provision for streamlining tax review instruments, as a facilitation tool.

The Director General answers that the cooperative relationship is among the most emblematic projects of the Plan and that its international dimension is even addressed and formulas will be promoted to strengthen a bilateral or multilateral preventive control model with other countries, since that it will always be better for two states to act in a coordinated and joint manner, rather than having to resort to mutual agreement procedures and other resources. He added that at the end of the Plan there is a section of an informative nature on the impact of the same from the procedural point of view according to the taxpayer profile. In the case of large companies, it is noted that it is necessary to move towards a model of reinforced and real-time control, which makes it necessary to address the international scope, with transparency reports being a key instrument. Likewise, at the end of the Plan it is also indicated that the development of collaborative bidirectional channels, such as this Forum, for the unification of criteria, as well as its publication, the reinforcement of legal certainty, prevention and, where appropriate, the completion of procedures with an agreement and the early resolution of tax conflicts, constitute tools that will allow the cooperative model to be reinforced. On the other hand, Mr. Jesús Gascón points out that the impact of the digitalization of the economy and its tax consequences are also included, as well as the changes it introduces in the actions of the Administration.

Next, since there were no further interventions, Mr. Jesús Gascón gave the floor to Ms. Pilar Jurado, who was going to give a presentation on the most relevant issues of the “European centralized office”.

The Director of the Customs and Excise Department, supporting her speech with a presentation, begins by pointing out that the Customs Code of the Union (CAU), a directly applicable regulation, regulates the free movement of goods. The centralised European clearance will therefore lead to a significant simplification, reducing customs formalities and standardising processes, and will allow companies authorised as authorised economic operators (AEO) to deal with a single customs authority.

The implementation will be carried out in two phases: The first must be completed by December 2023 and involves the application of European centralised clearance to all goods, except those covered by the CAP and those subject to excise duties, and to all regimes, with the exception of transit and temporary import. By December 2025, electronic transfer of documentation between different Customs offices must be operational, which will require the development of a new electronic system for the exchange of information between member states.

Finally, the Director of the Customs and Excise Department states that the message she wants to convey is that the Spanish Customs Administration has committed to the European Commission to be at the forefront of this project, so that in 2023, which is when the first phase must be completed, taking advantage of the functionalities of the electronic system of the Spanish Customs, the Tax Agency will already have very advanced the computer developments required in the second phase, thus ensuring, from the beginning, its influence on the development of the process. She added that information sessions have already been held and will continue to be held, and that if any of the entities present wish to hold a meeting on the matter, they can contact either the Central Delegate or herself. This offer will also be extended to companies that are not represented at this Forum.

Then, as there were no further interventions, the Director General concluded the session by thanking all those present for their presence.