Fight against fiscal fraud – Modification of tax regulations Law 7/2012 of 29th October

Cash payment limitations:

• with regard to transactions with the intervention of at least one entrepreneur or self-employed
• with regard to transactions equal to or greater than 2,500 Euros (or its equivalent in foreign currency)

Being this amount increased to 15,000 Euros (or its equivalent in foreign currency) in case the payer is a natural person who neither acts as entrepreneur nor as self-employed and proves not to be tax-resident in Spain. Consequently, this condition is not to be applied to payments or revenues realized with credit institutes or transactions between particulars.

The determination of the maximum cash amount permitted is based on the total transaction volume, i.e. the sum of all instalment payments which might have been agreed on.

The non-observance of this limitation is classified as serious infringement, with the payer and the payee being jointly liable, totally or partially, before the Spanish Administration with regard to the payments realized above the legally established limitation, so that the Tax Authorities may hold both of them responsible, jointly or separately, by applying the following penalty:

• 25 per cent of the cash amount paid.

The limitation of cash payments is applied to all payments realized since 19th November 2012, regardless of whether the corresponding transactions have been contracted before this date.

Reporting obligation with regard to goods and entitlements located abroad

• accounts in banks and credit institutes located abroad, as well as their proprietors, beneficiaries and designees or otherwise authorized persons
• titles, assets, securities or shares of common stock, own capital or net assets of any enterprise, or cessions to third parties of own capital located or deposited abroad, as well as life and invalidity insurances or lifelong or temporary annuities from monetary or movable or immovable property contributions contracted with enterprises established abroad,
• real estates and real estate entitlements located abroad.

The reporting obligation applies to both the legal and the beneficial owners of the aforementioned goods.

The non-compliance of this provision (failure to submit the information in time or in the required form, reporting of incomplete or wrong data) is classified as very serious tax offence.

Reversal of the VAT taxable person – new circumstances

• regarding the supply of immovable property when renouncing to VAT exemption (IVA-IGIC), i.e. land unsuitable for building, second and subsequent supplies),
• regarding the supply of immovable property in enforcement proceedings, expressly extended to lieu of payment transactions with the acquirer assuming the responsibility of extinguishing the tax liability (IVA and IGIC),
• regarding civil work executions as a consequence of directly concluded contracts between promoters and contractors which comply with certain requisites.

Modification of article 108 of the Stock Market Act

• in force since 31st October 2012
• solely taxing the transmission of unquoted securities realized on secondary markets
• not to be applied to transactions regarding the acquisition or the increase of control of a company by means of the issuance of new shares
• there must exist pretension of avoidance with regard to the payment of the tax liabilities which would have arisen from the transmission of the immovable assets owned by the enterprises which the aforementioned securities represent
• pretension of avoidance is given
  • in case of acquisition or increase of control over a company whose main assets consist of real estates located in Spain where no business activities are realized,
  • in case of obtaining the control over a company whose assets consist in at least 50 per cent of real estates located in Spain where no business or professional activities are realized or, once obtained the control, the quota of participation in this company is increased,
  • in case of obtaining the control over a company whose assets include values which permit the control over another company whose assets consist in at least 50 per cent in real estates located in Spain where no business or professional activities are realized or, once obtained the control, the quota of participation in this company is increased,
  • in case the transmitted values have been received for the contribution of real estates at founding a company or increasing its share capital, without these real estates presenting any business or professional activities and without having passed a three-years period between the dates of contribution and transmission
• when pretension of avoidance is given, the transmission of values is taxed as if it was an onerous transmission of real estates (TPO or VAT),
• a general IVA or ITP/AJD tax exemption is established with regard to the transmission of values, except when the avoidance of those taxes is pretended, which would have arisen for the transmission of real estates owned by the entity represented by these values. In this case the taxation is the same as for onerous transmissions of real estates.