Analysis of the information reported in the 'Country by Country Report – CBC Ç

• Spain, a pioneer country in publishing a statistical analysis of the ' Country by Country report ' referring to 2016

• Measured in terms of accruals, not cash, the tax reached 15.5% of profit. The statistics reflect a large dispersion of effective rates

• The analysis aggregates information provided by 134 multinationals with annual turnover exceeding 750 million and which have a Spanish parent company.

• The information affects more than 16,000 subsidiaries, of which almost 11,000 are foreign, with a global turnover of more than 934 billion euros, global net profits of more than 91.8 billion and a corporate tax paid worldwide of 11.6 billion.

November 26, 2019 .- The 134 Spanish multinationals that in 2016 had an annual turnover of more than 750 million euros paid that year 11,594 million euros in corporate tax worldwide, 12.6% of their global profit, which reached 91,849 million euros. Measured in terms of accruals, not cash, the tax totalled 14.26 billion for these groups, 15.5% of profits.

These data appear in the analysis prepared by the Tax Agency based on the information provided by companies through the 'Country by Country' information declaration form 231 ('Country by country report’,  CBC  por sus siglas en inglés) referido a 2016, primer año en el que estaba vigente esta obligación de información que tiene por objeto recopilar datos agregados del colectivo para el intercambio de información entre administraciones tributarias establecido en los acuerdos ‘BEPS' ('Base Erosion and Profit Shifting') of the OECD . The study is published on the Agency's website, sede.agenciatributaria.gob.es .

The analysis carried out by the Tax Agency, a pioneer worldwide, offers aggregated information on the 134 groups and their 16,160 subsidiaries, 10,967 of which are foreign, in order to maintain the confidentiality requirement established in the agreements BEPS .

With a view to transparency, the aim is thus to provide useful information for the studies and analyses of the general public, and of researchers in particular, contributing to the international debate on the taxation of large corporate groups, on how to distribute it among the countries in which they operate and on the establishment of tax land.

Effective global taxation and distribution by tax rates

The analysis carried out affects groups with a Spanish parent company that globally added 934,408 million euros of worldwide turnover in 2016, with global net profits incorporated by the companies to the  CBC  which totalled 91.849 billion euros.

The tax paid by these 134 groups amounted to 11,594 million in cash terms. The results show a large dispersion of effective rates on benefits. Statistics show that only 43 multinationals accounted for 49.1% of the profits of the entire group, and yet they only represented 10.5% of the total quota paid by all multinationals.

The analysis of CBC is also carried out in terms of accrued tax. Accrued and paid taxes do not match because the computation criteria is different.

In accrual, the tax will be the net rate for the fiscal year 2016, formed by the sum of the fractional payments and the differential rate for the same fiscal year 2016. Instead, the tax "paid" is the combination of the 2016 split payments and the 2015 differential rate. This difference means that, for example, the applied tax credits that are included in one or the other concept (accrued and paid) are different.

Differences between Spanish statistics and the CBC

This study complements the information that the Agency has been publishing on the data declared to Companies by individual companies and consolidated Spanish groups.

Until now, the Tax Agency has been publishing statistics based on the data declared in the Corporate Tax in Spain, which present the effective rates at which companies and groups pay taxes in our country, calculating said rates both on the taxable bases of the tax and on the declared accounting results, the latter also including income obtained abroad and likely to have been taxed in other countries.

Therefore, in the case of globalised companies, the information submitted was not complete as information on their taxation was not yet available in the rest of the countries. With this analysis of the  CBC The information is now complete, as for the first time the taxes accrued and those considered to have been paid by the large Spanish groups throughout the world are published thanks to the 'Country by Country' declaration.

In any case, the information regarding CBC is not comparable with that contained in the statistics published by the AEAT on taxation in Spain, as there are major methodological differences.

The main difference lies in the concept of 'benefit' that is included in the   CBC and the one that appears in the Consolidated Annual Accounts of Companies published by the Agency. In CBC reference is made to a net profit; i.e. after deducting the losses of all the subsidiaries of a group in the same tax jurisdiction.

On the other hand, the Annual Accounts take as a reference the gross profit (they do not consider losses), which is understood as a more precise measure and closer to the philosophy of a tax that only aims to tax positive results.

When net profits are taken, minus losses, the resulting tax rates are higher than those that would be obtained if the CBC included gross profit.

What is ' CBC '?

He ' Country by country ' ( CBC ), or 'Country by Country' information, is a model of information declaration that must be submitted, at their tax domicile of residence, by the parent companies of multinationals with a consolidated net turnover worldwide exceeding 750 million euros. The information, which must affect all the entities forming part of the tax group, is presented in Spain using form 231 of the tax return and corresponds to filings for Spanish parent multinationals.

The objective of the CBC is to collect aggregated and anonymized data from this group of large multinationals for the exchange of information established in actions 11 and 13 of the 'Agreements BEPS ' (acronym in English for Base Erosion and Profit Shifting, so as to provide States with a global perspective of the intra-group activity of their largest multinationals.

The information submitted by the parent companies of all their subsidiaries abroad for the fiscal year beginning on or after January 1, 2016 includes the details of the following variables for each of the jurisdictions (countries) in which they operate:

• Number of entities (subsidiaries) forming part of the group

• Turnover

• Profit (loss) before tax

• Corporation tax (paid and accrued)

• Capital and reserves

• Number of employees

• Tangible assets (property, plant and equipment)