Statistical exploitation of the 2018 'CBC Report'

• All 122 multinationals with an annual turnover of more than 750 million euros and a Spanish parent company report a global effective tax rate of 18.3% and 16.9% for Spain, four points below the rate applied in jurisdictions outside the EU.
• Around half of the declared profit is concentrated in 77 groups which, however, only contribute 26.5% of the tax declared as paid by the group as a whole.
• Spanish multinationals have 53% of their global turnover and two thirds of their tangible assets in Spain, but only 42% of their profits and 39% of the tax they pay in Spain.
• The information includes more than 15,000 subsidiaries, of which almost 10,200 are foreign, with a global turnover of more than 858.5 billion euros, global net profits of more than 91.8 billion euros and Corporation Tax paid worldwide of 16.8 billion euros

October 4, 2021 .- 16% of Spanish multinational companies (MNCs) that in 2018 had an annual turnover of more than 750 million euros declared having paid throughout the year that year world an average of 1.9% of its global profit. These 20 groups paid Corporation Tax of 336 million euros on profits of 17.833 billion euros.

This group with the lowest overall taxation has a rate almost ten times lower than the overall rate of Spanish MNCs, despite having a return on assets and a return on capital only slightly lower than the rest, and even a higher productivity per employee and higher turnover to assets and return on capital ratios than the Spanish groups as a whole.

The total group of companies included in the report's statistics is made up of 122 Spanish multinationals, which paid a total of 16.8 billion euros in Corporation Tax. The amount represents 18.3% of their profits (91.809 billion euros). Measured on an accrual basis, not on a cash basis, the tax reached a total of 17.063 billion euros for these groups – 18.6% of the profit.

The data is included in the third edition of the analysis prepared by the Tax Agency based on the information provided by the companies through form 231 of the 'Country by Country' ('CbC'), a declaration whose purpose is to compile aggregate data on the collective for the exchange of information between tax administrations established in the OECD agreements 'BEPS' (Base Erosion and Profit Shifting).

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.

Further statistical breakdown

The study, which is already published on the Agency's website, sede.agenciatributaria.gob.es , is offered starting this year in statistical format, with a greater breakdown territorial and magnitude.

Last week, the European Council reached an agreement on a new European directive that establishes an obligation for European multinationals to publicly report their profits and tax payments in the different jurisdictions of the European Union and in those considered by the EU as non-cooperative.

In parallel, the study published today by the Agency breaks down the key figures by EU territory, although it groups them by continent for the remaining jurisdictions, given that the current European list of non-cooperative jurisdictions does not match the one in effect in 2018, to which the statistics refer.

General data and distribution by effective tax rate tranches

The analysis carried out by the Tax Agency provides information on the largest Spanish parent groups and their 15,085 subsidiaries, of which 10,197 (67%) are foreign. According to the information reported to the CbC, these multinationals together had a global turnover of 858.483 billion euros in 2018.

This edition of these statistics again shows a wide dispersion of effective tax rates on profits. According to the data provided by the companies themselves in their CbCs, the 77 companies with the lowest effective tax rates only accounted for 26.5% of the positive tax paid by the group as a whole, despite accounting for around half of turnover (49.3%), profit (53.4%), employees (53.2%) and capital (54%).

In the specific case of the 20 groups with the lowest declared effective tax rate (below 5%), this difference between tax payment and operating figures is accentuated, as they represent 2% of the tax paid by the 122 MNCs but have a significantly higher weight in terms of sales (16.6%), profit (19.4%), workers (13.1%) and capital (12.7%).

Comparison of Spain with other territories

According to what companies declared in the CbC, the statistics also show how the effective tax rate paid in Spain was 16.9% in 2018 – four points lower than the rate paid by the same group in non-EU countries (20.9%). This difference widens to almost nine points if the effective accrued tax rate is taken into consideration (14.8% in Spain and 23.7% in non-EU countries).

In turn, Spanish multinationals declare in the CbC to have concentrated 53% of their global turnover in Spain in 2018, compared to 29% in non-EU countries, they have 56% higher productivity per employee in Spain than in non-EU countries and they have 66% of their total assets in Spain. In contrast, Spain's weight falls significantly in terms of profit (42% of the total) and tax paid (39%).

Tax 'accrued' and 'paid'.

The taxation analysis is carried out in terms of 'paid' and 'accrued' tax, which do not match due to the different computation criteria. On an accrual basis, the tax corresponds to the net tax liability for fiscal year 2018, made up of the sum of the payments in instalments and the differential tax liability for the same fiscal year 2018. In contrast, the tax 'paid' is the combination of the 2018 instalments and the 2017 differential amount. This difference means that, for example, the tax credits applied, which are included in one item or another (accrued and paid), are different.

Differences with Spanish statistics

The CbC study complements the information published by the Tax Agency on the data declared in Companies by individual companies and consolidated Spanish groups.

The Tax Agency publishes statistics based on the data declared in Spanish Corporation Tax, where the effective rates at which companies and groups in our country are taxed, calculating these rates both on the taxable bases of the tax and on the accounting results declared, including income obtained abroad and which may have been taxed in other countries in the latter.

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. This CbC analysis completes the information given that the taxes accrued and those considered to be paid by the large Spanish groups throughout the world are published based on information supplied by companies in their 'Country by Country' declaration.

In any case, the information referring to the CbC is not comparable with that existing in the statistics published by the Tax Agency on taxation in Spain, as there are great methodological differences.

The main difference lies in the concept of ‘profit’ included in the CbC and in the Consolidated Annual Accounts of Companies published by the Tax Agency. The CbC makes reference 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 in the CbC, discounting losses, the resulting tax rates are higher than those that would be obtained if the CbC included the gross profit.

In addition, the CbC concept of tax paid includes payments made as a result of audits and court rulings in previous years, whereas the Consolidated Annual Accounts statistic avoids this distortion by taking into account only the net tax liability for each tax year.

What is the 'CbC'?

'Country by Country' (CbC) information is an informative declaration form that must be filed, at their tax addresses, by the parents of multinationals with consolidated net turnover at a global level superior to 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 anonymised data from this collective of large multinationals for the exchange of information set out in actions 11 and 13 of the 'BEPS Agreements' 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 1 January 2018, includes a breakdown 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)