Statistical exploitation of the "CBC Report"

• 18% of Spanish multinationals declare that they pay an average of 2.6% of their profits in corporate tax worldwide
• Spanish multinationals have 55% of their global turnover and almost two thirds of their tangible assets in Spain, but they only place 43% of their profits and 33% of the taxes they pay in Spain.
• The group of 124 multinationals with annual turnover of more than 750 million and a Spanish parent company declare a global effective rate of 16.7% and 13% for Spain, 8.5 points below that applied in jurisdictions outside the EU.
• 54% of the declared profit is concentrated in 74 groups, which, however, only contribute 30% of the tax declared as paid by the entire group.
• The information includes just over 14,700 subsidiaries, of which 9,800 are foreign, with a global turnover of 933.8 billion, global net profits of 89.7 billion and a corporate tax paid worldwide of 15 billion.

April 20, 2022 .- Today the Tax Agency publishes the fourth edition, referring to the year 2019, of the analysis it prepares from the information provided by companies through model 231 of 'Country by country report' -'CBC'– information declaration, a declaration that aims to collect aggregate data from the group for the exchange of information between tax administrations established in the 'BEPS' agreements ( 'Base Erosion and Profit Shifting') of the OECD.

The total group of companies included in the 2019 CBC statistics is made up of 124 Spanish multinationals (MNCs), which paid a total of 14.965 billion euros in corporate tax. The amount represents 16.7% of its profit (89.7 billion euros). Measured in terms of accruals, not cash, the tax totalled 16.525 billion for these groups, 18.4% of profits.

The study, published on the Agency's website ( Country-by-Country Statistics 2019 ), provides information on the largest Spanish parent groups and their 14,753 subsidiaries, of which 9,810 (66.5%) are foreign. According to the information they have reported to the CBC, these multinationals together had a global turnover of 933.842 billion euros in 2019.

Dispersion of effective rates

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 CBC, the 74 companies with the lowest effective tax rates only accounted for 30% of the positive tax paid by the group as a whole, despite concentrating 54% of the turnover and profits, and 51% of the employees.

In the specific case of the 23 groups with a lower declared effective rate (below 5%), this difference between tax payment and operating figures is accentuated, since they represent 2.6% of the tax paid by the 124 MNCs but have a significantly greater weight in terms of sales (20.8%), profit (17.2%), workers (22.2%) and capital (14.7%).

These 23 groups, 18.5% of Spanish multinationals with an annual turnover of more than 750 million euros in 2019, declared that they paid an average of 2.6% of their global profits worldwide that year.

The 23 MNCs paid 386 million euros in corporate tax on a profit of 15.411 billion euros, according to their declarations in the 2019 CBC. This group with the lowest overall tax rate has an effective rate 6.7 times lower than that of Spanish MNCs overall, despite having a return on assets and capital, and turnover ratios on assets and capital, higher than those of the large Spanish multinationals as a whole.

Comparison of Spain with other territories

In the statistics you can also see how, according to what was declared by the companies in the CBC, the effective rate paid in Spain by the 124 MNCs stood at 13% in 2019, which is almost 8.5 points less than what was paid by the same group in non-EU member countries (21.4%).

In turn, Spanish multinationals declare in the CBC to have concentrated 55% of their global turnover in Spain in 2019, compared to the 29% concentrated in countries outside the Union, they have a productivity per employee of 63 in national territory, 5% higher than in non-EU countries and they place 64.5% of their total assets in Spain. In contrast, Spain's weight falls significantly in terms of profit (42.9% of the total) and positive taxes paid (33.3%).

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. In accrual, the tax must correspond to the net quota of the fiscal year 2019, formed by the sum of the fractional payments and the differential quota of the same fiscal year 2019. Instead, the tax 'paid' is the combination of the 2019 split payments and the 2018 differential rate. 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 regarding the 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 ‘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)