Minutes of the meeting

Large Companies Forum

MINUTES OF THE PLENARY SESSION 2/2018

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 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

Deputy Director General of Legal Management and Legal Assistance - Department of Financial and Tax Inspection

Mr. Marcos Alvarez Suso

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 the Tax Department

Mr. Jose Maria Vallejo Chamorro

LA CAIXA

Director of Tax Advisory

Mr. Manuel Alfonso García Rodríguez

CEPSA

Fiscal Director

Mr. Alberto Martin Moreno

COFARES

Advisory Board of Directors

Mr. Luis Valdeolmos Gonzalez

EL CORTE INGLÉS

Director of Taxes

Ms. Pilar Fernandez Medina

ENDESA

Head of Tax Affairs

Mrs. Maria Muñoz Viejo

FCC

Director of the Tax Department

Mr. Daniel Gómez-Olano González

GAS NATURAL

Director of Tax Planning

Mr. Baltasar Gomez Febrel

IBERDROLA

Global Director of Tax

Mrs. Begoña Garcia-Rozado Gonzalez

IBERIA

Spanish Tax Lead

Mrs. Elena Sanchez Llorente

INDITEX

Director of Tax Advisory

Mr. Andres Sanchez Iglesias

MAPFRE

Tax Advice Director

Mr. Antonio Lafuente Gonzalez de Suso

MERCADONA

Tax Manager

Mr. Jose Ibanez Rosello

MICHELIN

Fiscal Manager

Mrs. Rosa María Peña García

NORFIN HOLDER

Director of Tax Advisory

Mr. Jose Antonio Gibello Saiz

RENAULT ESPAÑA

Director of Tax and Customs Affairs

Mr. Felix Ruiz Madarro

REPSOL

Director General of Economic and Fiscal Affairs

Mr. Luis Lopez-Tello and Diaz Aguado

SEAT

Director of Taxes

Mr. Francisco Javier Baulenas Setó

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 20, 2018, the seventeenth plenary session of the Large Companies Forum is held, attended by the people mentioned above, and in accordance with the following

AGENDA

1. Session opening
2. Approval of the minutes of the meeting held on July 11, 2018
3. Results of the different working groups of the Forum
4. Next call
5. Other considerations, requests and questions

1. Session opening

The session was 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 present for their presence, conveyed the apologies of the Secretary of State for the Treasury and President of the Tax Agency for not being able to attend the meeting due to agenda reasons, as well as those of the Director of the Department of Financial and Tax Inspection, who is currently in Uruguay attending the Global Forum on Transparency and Exchange of Information for Tax Purposes, and who will be replaced in this session by the Deputy Director General of Legal Management and Legal Assistance.

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

2. Approval of the minutes of the meeting held on July 11, 2018

Mr. Jesús Gascón gives the floor to Ms. Rosa María Prieto, who, after thanking all those present for their attendance, points out that the minutes of the 16th 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 July 11, 2018 are declared definitively approved.

3. Results of the different working groups of the Forum

At this point, the General Director of the State Tax Administration Agency gives the floor to Mr. Gonzalo García de Castro, Director of the Tax Management Department, in order for him to comment on the results of the working group on Analysis and Rationalization of Indirect Tax Burdens .

Mr. Gonzalo García de Castro indicates that at the meeting of this working group on October 10, the simplification measures and the new features of the Corporate Tax model were presented, first of all, pointing out that the filing of returns for major taxes, which include Corporate Tax, is undergoing a technological transition towards the so-called “Renta WEB” environment, that is, towards a web form system for filing returns that will represent a significant advance in facilitating the filing of returns, in the processing of information and in all procedures that may arise from the processing of said returns.

Regarding the changes in the fractional payments of the Corporate Tax, he highlighted the following:

• A first modification motivated by the need to exempt venture capital entities from the obligation to make the minimum split payment applicable to large companies
• and a second modification, consisting of adapting the models of fractional payments to taxpayers subject to the regional regulations as a consequence, mainly, of the changes in the regional regulations of the Provincial Councils of the Basque Country regarding fractional payments, which has established the obligation to make a single fractional payment in the first 25 calendar days of the month of October.

The Director of the Tax Management Department continues his presentation by pointing out that, as regards the informative declarations, work has been carried out on the new system TGVI on line , in order to improve the transmission of large volumes of information.

Thus, Mr. Gonzalo García de Castro indicates that for the Tax Agency, data relating to a third party has three components: The first refers to identification, the second to location, that is, attribution of a domicile, and the third refers to the analysis of the tax consequences of the information provided. Therefore, in order to efficiently manage the tax system and provide an adequate service to citizens, it is essential that the information derived from the different information declarations submitted is as reliable as possible and with minimal validation errors. He added that the collaboration of large data providers is essential in this task, and he would therefore like to take this opportunity to thank those present for their cooperation in this area.

He goes on to point out that the TGVI system on line It will enable online validation of information and, when there are incorrect records and other correct ones, the system will allow the presentation of the latter, with the incorrect ones having to be corrected. Finally, the agency announced that a tax identification assistance service and a testing portal will be available on the Tax Agency's website.

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 Customs Department II.EE. , in order to comment on the activity of the Special Taxes working group .

Ms. Pilar Jurado begins her presentation by pointing out that the Special Taxes working group met once during this second semester, specifically on October 25, and the following issues were addressed:

1. Regarding the new features introduced by Royal Decree-Law 15/2018, of October 5, on urgent measures for the energy transition and consumer protection, the following were highlighted:

   1. Modification of the tax base and the amount of the fractional payments of IVPEE : The taxable base of the tax, as a result of the reduction introduced for the last quarter of 2018 and the first quarter of 2019, will be zero, which also affects the respective fractional payments.
   2. Exemption from manufacturing and import operations of products included in the objective scope of the Tax on Hydrocarbons used in the production of electricity in thermal power plants or in the cogeneration of electricity and heat in combined power plants. Furthermore, information was provided on the registration procedure, derived from the entry into force of Royal Decree-Law "October 7", granting the requested registrations effects from that day, even if they had been managed later, and for all product headings included in the objective scope of the Tax on Hydrocarbons. It was also clarified that if any managing office had issued registration cards limiting the exemption to one or more sections of the Hydrocarbon Tax, these would be rectified.

2. It was reported that Law 6/2018, on the General State Budget for 2018, introduced into Law 38/1992, on Special Taxes, a 100% reduction in the taxable base of the Special Tax on Electricity for electrical energy supplied to vessels docked in port that do not have the status of private recreational vessels.

3. Regarding the procedure for sales en route and provisioning of vessels and aircraft, the Ministerial Order that develops the provisions of articles 27, 101, 102 and 110 of the Regulation on Excise Taxes was published on October 31, the date after the day of the meeting. However, during the session it was reported that a document with the Annexes contemplated in the Draft Order had been published on the Electronic Headquarters of the Tax Agency and was available on the portal of EMCS , in which a new section had been included, called SIANE . It was also reported that a test environment was planned to be opened.

4. Regarding the draft reform of the Regulation on Special Taxes, the planned changes affecting, among others, the following matters were discussed:

   1. Technical adjustments resulting from the elimination of the regional section of the tax rate on hydrocarbons.
   2. Technical adjustment to the conditions applicable to bonded warehouses that transport bulk liquids to clarify that they must have a minimum storage capacity.
   3. Amendment to Article 26 to regulate the requirement for tax stamps on rolling tobacco.
   4. Adjustments to Article 27 of the Regulation to expressly include sales en route and aircraft supplies.
   5. Modification of article 37 of the RIE , to include the specificities in the issuance of the e-DA corresponding to fuel supplies to aircraft.
   6. Amendment to Article 108 Ter to authorize mixtures on board ships in both factories and bonded warehouses.

5. Finally, with regard to the maintenance of the accounting records of II. EE. in the Electronic Office, information was provided on the progress made by the Tax Agency in the design of the accounting books. Thus, it was mentioned that information meetings were being held with the main associations of the affected sectors, from which suggestions and observations had been requested. It was also reported that the method of keeping the books would be regulated by Ministerial Order.

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

The Central Delegate said that the working group meeting on 17 October was the first he had attended and that he was very satisfied with the atmosphere in which it had taken place. As regards the content of the session, the document “Reflections on the form, content and conclusions of risk analysis and assessment actions” was discussed, prepared by the Central Delegation of Large Taxpayers and distributed among the attendees prior to the meeting. Next, and in relation to the Transparency Reports, it was reported that more than twenty had been submitted in these two years and that, given that it was not possible to analyse them all with the desired level of detail, it had been decided to select six reports and begin to work in depth on this sample. As regards the methodology used, given that there is no regulated procedure, it was noted that these reports had been analysed by a specialised management team, which subsequently held a series of meetings with the affected companies and requested additional documentation considered relevant. It was also reported that the Tax Agency had made a commitment to send companies the recommendations and suggestions arising from the analysis of the Transparency Report submitted, but that, at the moment, there were certain difficulties due to the lack of regulation through a procedure, which was being worked on. For their part, the companies stressed the convenience of receiving feedback from the Report submitted and that the Tax Agency should send a message of reassurance to the entities that, for various reasons, have not submitted the Transparency Report, in the sense that this does not imply a lesser involvement in terms of cooperative relations.

Mr. Manuel Trillo then points out that, given the limited resources available to the Tax Agency, it will be necessary to continue working on a sample of the Transparency Reports submitted, but, nevertheless, from there, it will be necessary to try to draw some conclusions, in the form of soft law , so that the benefits of the cooperative relationship become evident and everyone's commitment in this matter does not wane.

Finally, with regard to companies that have not submitted the Transparency Report, the Central Delegate stresses that such submission is voluntary and that it is a good practice, but that there are many others and, therefore, non-submission does not presuppose a lower level of commitment to the cooperative relationship.

Next, Mr. Jesús Gascón thanks Mr. Manuel Trillo for his intervention and gives way to Mr. Marcos Álvarez Suso, Deputy Director General of Legal Management and Legal Assistance of the Department of Financial and Tax Inspection, who will comment on the activity of the working group on Analysis of Tax Regulations and Reduction of Conflict .

Mr. Marcos Álvarez Suso begins his presentation by pointing out that the last meeting of the working group was held on October 30, and the following issues were discussed:

1. Regarding Council Directive (EU) 2018/822, of May 25, 2018 (Directive on Fiscal Intermediaries or DAC 6), the General Directorate of Taxes made a summary of its content and clarified that, regarding the transposition , there was still no draft of the text. For their part, the company representatives raised their concerns and commented on the need to clarify certain concepts and issues, to which the General Directorate of Taxes responded with a message of reassurance and offered the possibility for the business sector to send their concerns or suggestions, so that they could be assessed and taken into account, without forgetting the limitations at the national level, in terms of content, that the transposition of a Directive has.

2. Regarding requests for rectification of self-assessments, the Tax Agency expressed its concern about the considerable increase that has occurred in the number of such requests submitted by companies. An attempt was also made to transfer the value given in the legislation to the treatment of these rectifications; Thus, the limited preclusive effect regarding subsequent decisions by the Tax Authority was clarified, that is, the fact that a request for rectification is granted in whole or in part does not constitute a definitive pronouncement by the Tax Authority on the entire obligation affected by that request.

3. Regarding the situation of the procedures for recovery of State aid, the fundamental impact was on the situation of the recovery of the tax lease , due to the resolution of July 25, Court of Justice of the EU , which must be carried out. In this area, work is being done jointly with the business sector on a study that will enable an agreement to be reached with the European Commission on the amount of aid compatible with the internal market. Furthermore, Mr. Marcos Álvarez adds that, in relation to this issue, two resolutions of the General Court of Justice of the EU have been issued after the meeting of the working group. , confirming the Decisions of the European Commission in which the Spanish tax regime for the amortization of financial goodwill was classified as State aid incompatible with the internal market.

4. Finally, at the meeting held on the 30th, the criteria of the Tax Agency to be applied in relation to:

   1. Tax period to which the income derived from the refund of taxes declared contrary to the legal system by the Supreme Court is to be attributed in the Corporate Tax: It was clarified that such income is attributed to the tax period in which the judgment is issued.
   2. Regarding the deduction of VAT by the entities holding , it was clarified that, in line with what is established by the resolutions of CJEU , deductibility is only possible to the extent that it intervenes in the economic management of subsidiary companies.

Mr. Marcos Álvarez continued his presentation by saying that one of the missions of this working group is to reduce conflict, which is why controversial issues are always included in the agenda, so that different points of view can be shared and discussed transparently. In this regard, he points out that agreements will not necessarily be reached, but that it is very positive to know the different positions regarding an issue. He added that he would appreciate it if companies could submit specific topics of interest to them for the next meeting of the group and commented that proposals are being received regarding ongoing regulatory projects.

Finally, the Deputy Director of Legal Management and Legal Assistance reminded those present that within the framework of the Code of Good Tax Practices, a channel has been established for consulting questions on the practical application of tax regulations. He adds that the number of queries received to date has not been very large, but that, nevertheless, the Tax Agency considers it a very positive experience since it allows issues that may not have been as detailed as they should have been to be detected and clarified in a friendly manner.

The Director General thanks Mr. Marcos Álvarez Suso for his intervention and points out that, in line with what has been said, the intention of the Tax Agency to act with the greatest possible transparency and to be more proactive in terms of the publication of the criteria used, in order to make the application of the tax system more predictable, was already mentioned in the previous plenary session. However, he says that this attitude can be interpreted as a greater level of conflict, since every time a criterion is disseminated on a complex issue, a debate will be opened which, logically, will be full of controversy. Mr Jesús Gascón adds that, however, he wants to make clear the Tax Agency's commitment to disseminating the interpretative criteria it applies.

The General Director then opens the floor for companies to present their observations and comments.

Mr. Daniel Gómez-Olano, representative of FCC, took the floor to state that, in relation to what was said about the fact that the presentation of the Transparency Report is voluntary and will not imply any differentiation between companies that present it and those that do not, he considers that the entities that present the report would deserve greater trust and legal security since, in some way, they are acquiring a greater commitment to transparency. He adds that, in fact, the cooperative relationship model is often criticised for being seen as a way of privileging certain groups of companies and believes that this cannot be the case, but that, on the other hand, it is necessary to treat equals equally and unequals unequally, that is, in order to ensure that the model is not distorted, the cooperative relationship should imply greater legal security for the entities that practice greater transparency.

Mr. Jesús Gascón then intervened to clarify that an entity that presents the Annual Transparency Report can improve the two-way relationship it maintains with the Tax Administration, that is, it can improve the assessment of tax risk for the Administration. However, this assessment cannot be detrimental to other companies.

Next, Mr. Francisco Javier Baulenas, representative of Seat, intervenes. Addressing Ms. Pilar Jurado, he asks whether, in relation to Brexit , the Customs and II. EE. Department is going to issue any circular that could help companies that export to the United Kingdom to focus on customs procedures.

Ms. Pilar Jurado takes the floor and points out that in these days it will be published on the website of the AEAT (Tax Agency) a banner with information about the Brexit. At the moment, very basic information is available, since, as it is a political agreement, it needs ratification by the European Council and Parliament and by the British Parliament. Thus, the Director of the Customs Department and II. Excise Duties He comments that the entities represented at this Forum have a great deal of experience in customs procedures and invites companies to meet with the Tax Agency and to report specific and concrete problems. It also reports that the Customs Department and  Excise Department On November 7th, he participated in a seminar on the implications for Spanish companies of the United Kingdom's exit from the European Union, Organized by the Secretary of State for Trade and ICEX Spain Export and Investment, together with the Spanish Chamber of Commerce and the Spanish Confederation of Business Organizations. He adds that information activities on the subject will be developed in all the CC.AA.

Mr. Francisco Javier Baulenas states that this is not the first time that this type of meeting has been held, but that, since the status that the United Kingdom will ultimately be given is unknown, even though his entity has a lot of experience in customs procedures, at this time they do not know what resources they will need to dedicate to the adaptation.

Ms. Pilar Jurado responds that, if the agreement is ratified, there will be a transitional period until December 31, 2020, after which it has been agreed that a single customs territory will apply EU -United Kingdom, where there will be customs facilities.

Ms. Pilar Jurado comments that, broadly speaking, in principle, the model would be similar to that adopted with Turkey, but that, nevertheless, it is premature to make a statement since at this time the Administration is analyzing and studying the agreement and certain modifications that are being included.

Finally, the Director of the Customs Department and II.EE. reiterates its request to companies to send any problems or queries they may have to the Tax Agency.

Mr. Jesús Gascón then intervened to state that the Tax Agency also has uncertainties regarding investments and resources and that we will have to wait and see how this matter develops. However, he points out that we must be prepared to deal with the different scenarios that may arise and that, therefore, it is very important to organize meetings with all the sectors involved in order to understand the problems that may arise.

Next, Ms. Carmen Alonso Peña, representative of Banco de Santander and collaborator of the Technical Secretariat of the Forum, took the floor. She would like to convey to the representatives of the Tax Agency the gratitude of the companies for the continuous nature with which the activities of this Forum have continued. He adds that, however, it would be desirable to make the meetings of the working groups more fluid, understanding this as greater participation by companies in proposing the topics to be discussed. He points out that legal certainty is a matter of concern, as there are constant rumours about regulatory changes at the tax level and it is a reality that there are projects in the pipeline that sometimes do not know what implications they will have, as is the case, on the other hand, with regulations in force. The Commission therefore welcomes the publication of the interpretative criteria by the Tax Agency, but believes that it would be more productive to discuss them in a meeting before publishing them, so that the companies' point of view could also be taken into account. Ms. Carmen Alonso goes on to state that it would also be desirable to have a more agile and direct means of communication with the Administration and to have, for example, the General Directorate of Taxes responding to queries raised in relation to the interpretation of a regulation, before the operations are carried out. He adds that this is one of the reasons why the number of corrective declarations has increased, since when the criteria are not clear, the self-assessment is submitted and then the correction is made. On the other hand, regarding the cooperative relationship, he comments that he agrees with the Central Delegate that there is good will on both sides and a common interest in continuing to advance in the matter.

Next, Mr. Jesús Gascón intervened, stating that, given the current political and parliamentary scenario, there are numerous uncertainties. He points out that there are currently draft regulations affecting matters entrusted to the Tax Agency, whose comment period has ended and which are still being processed. He added that, as far as possible, efforts will be made to keep companies informed about the progress of this process. On the other hand, he states that the working group on Analysis of Tax Regulations and Reduction of Conflict is an ideal framework for contrasting interpretative criteria, since on many occasions it is the companies themselves that detect interpretative gaps or the lack of uniformity in the application of a criterion by the different departments of the Tax Agency.

The Director General continued his presentation by pointing out that, as is known to all those present, the Tax Agency has another cooperative space, the Forum of Associations and Colleges of Tax Professionals, in which the text of a code of good tax practices is currently being discussed. He adds that, like large companies, tax professionals are concerned about the issue of legal certainty. In this regard, issues related to this matter will begin to be analyzed and discussed, such as those related to the issuance of interpretative resolutions by the General Directorate of Taxes, particularly when regulatory changes occur, other possible ways to reach agreements, beyond the minutes with agreement regulated in article 155 of the General Tax Law, the problem of DAC 6, etc. The Tax Agency therefore believes that, without intending for these two forums to be diluted into one, since they have different objectives and the concerns of their members are also different, synergies could be taken advantage of since there are common points. For this reason, the Tax Agency is interested in having representatives of the Large Business Forum also attend when the working groups of the Forum of Associations and Colleges of Tax Professionals deal with issues that may be considered of common interest, so that they are informed about the debates and conclusions can be drawn that are useful for this Forum. Mr. Jesús Gascón also reports that a series of conferences and seminars are being considered in collaboration with the Institute of Fiscal Studies, with the participation of the private sector, tax intermediaries, as well as representatives of the academic world, so that the debates can be enriched by being able to compare opinions from various fields.

Finally, Mr. Jesús Gascón reiterated the Administration's commitment to the cooperative relationship.

Mr Jacinto Escaplés, representative of Amadeus IT Group, then took the floor and pointed out that a limited number of companies attended the meetings of the working groups and that what is presented in the Plenary Sessions is only a summary of what was discussed. The Committee therefore requests that all members be informed in detail of what was discussed at the meetings, so that entities that are not represented in one or other working group can participate in them in some way, clarifying or making observations on the matters discussed, and thus the Plenary Sessions could go into more depth on the issues.

Mr. Jesús Gascón replied that he thought it was a very reasonable request and that, from now on, after the meetings of the working groups, its content would be communicated to all members of the Forum.

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

The Director General of the Tax Agency then moves on to point 5 of the agenda, “Other considerations, requests and questions” and offers the floor to those in attendance. Since there were no further interventions, Mr. Jesús Gascón concluded the session by thanking all those present for their presence.