The terms and definitions used in Council Directive (EU) 2016/881 of 25 May, and in the 2015 report on action 13 of the project on the erosion of the taxable base and the transfer of the profits of the OCDE and the G-20, carried out by the OECD, are applicable for reporting country-by-country information by resident companies belonging to an obligated group.Specifically, the following will be applicable:

• Constituent entity, designates any of the following:
  1. Any separate business unit of an “group of multinationals” that is included in the “consolidated financial statements” of the “group of multinationals” for financial reporting purposes, or would be so included if equity interests in the business unit of a ‘group of multinationals’ were traded on a public securities exchange
  2. Any business unit that is excluded from the “consolidated financial statements” of the “group of multinationals” solely on the grounds of size or relative importance.
  3. Any permanent establishment of any separate business unit of the “group of multinationals” included in (a) or (b), provided the business unit prepares a separate financial statement for this permanent establishment for financial reporting, regulatory, tax reporting, or internal management control purposes.
• The reporting entity means the “constituent entity” that is required to file a country-by-country report in its jurisdiction of tax residence on behalf of the “group of multinationals”.The “reporting entity” may be the “ultimate parent entity”, the “surrogate parent entity”, or any constituent entity under obligation, in accordance with the provisions of article 13.1 second paragraph of the Corporate Tax Regulation.
• The term “ultimate parent entity” means a “constituent entity” of a “group of multinationals” that meets the following criteria:
  1. It directly or indirectly owns a sufficient interest in one or more of the other “constituent entities” of the “multinational group” such that it is required to prepare “consolidated financial statements” under accounting principles generally applied in its jurisdiction of tax residence, or would be so required if its equity interests were traded on a public securities exchange in its jurisdiction of tax residence.
  2. There is no other “constituent entity” of the “group of multinationals” that directly or indirectly owns an interest described in point (a) in the first-mentioned “constituent entity”.
• The term “surrogate parent entity” means a “constituent entity” of the “group of multinationals” that has been appointed by it as a sole substitute for the “ultimate parent entity”, to file the country-by-country report in the jurisdiction of tax residence of the “constituent entity”, on behalf of the “group of multinationals”.

In compliance with article 13.1 of the Corporate Tax Regulation, any entity resident in Spanish territory that forms part of a group obligated to carry out country by country reporting must notify the tax Administration of the identification and the tax country or residence of the entity obligated to provide this information.However, this does not mean that the communication must be presented individually; it could be the object of a joint communication for all the entities belonging to the same group.

To facilitate this operation, the Tax Agency has drawn up a pre-communication form through which an organization can submit the communication individually or on behalf of the other companies in the group that are resident, which will be understood to be in fulfilment of the obligation of all the organizations that are included in the aforementioned form to give prior notice.

The obligation to provide the “Country by country reporting”, will be required for tax periods beginning after 1 January 2016, when the consolidated net turnover of all the people or entities that form part of the group in the previous twelve months exceeds €750 million at the beginning of the tax year.

The Country by country Reporting Declaration (model 231) can be filed from the day after the end of the tax period corresponding to the information to be supplied until twelve months after the end of this tax period.

If the parent company resides in Spain or in an EU country, this entity must present the information country by country, and no other entity of the group may present it either as a subordinate entity or as a constituent entity.　

In this case, the entity obliged to present the information on a country-by-country basis will do so as a “parent entity” and the identification of the parent entity and the entity obliged to present the information must match.

If the entity obliged to report on a country-by-country basis does so as a designated constituent entity, its country of residence must belong to the EU (including Spain).

If a multinational group, whose parent does not reside in the EU or in a jurisdiction with an Agreement to exchange information on a country-by-country basis, has not designated a constituent entity resident in an EU Member State or appointed an entity as a subrogate for country-by-country reporting, the dependent entity resident in Spain must file Form 231 in order to declare the information on a country-by-country basis.

Already-filed prior communications cannot be modified. They must be resubmitted in order to replace the previously-filed communication.

In order to cancel or modify the records included in the country-by-country report submitted or to cancel the form submitted, there are mechanisms for correction and cancellation (contact us for more info).

The modification or cancellation of the records included in the country-by-country report or the cancellation of the form must be carried out by the submitting entity. It will not be sufficient to comply with the requirement of the Tax Administration for them to modify the invalid or incorrect information.

The declarations of form 231 “Country by Country Information” , regardless of the financial year to which they refer, will follow the new XSD version 2.0 or Form, das from 01/01/2021 inclusive.

A Reporting Entity may choose to use data from its consolidated reporting package, separate statutory financial statements for each of the entities, statutory financial statements for regulatory purposes or internal management accounts.It is not necessary to reconcile the income, profit and tax information in the Annex to the template to the consolidated financial statements.

In the “Additional Information” section included in the Annex to Form 231, the Entity communicating the information must provide a brief description of the data sources used to complete the Form 231.

The Reporting Entity should consistently use the same data sources in all years.

In the event that the Reporting Entity changes the data sources used from one year to the next, it must explain in the “Additional Information” section the reasons for the change and its consequences.

According to the Guidelines for country-by-country reporting:Action 13, chapter VI of which deals with issues relating to mergers, acquisitions and divisions, it may be interpreted as meaning that if the accounting standards applicable to both the group from which the companies are separated and the group in which they form part require both companies to include in their consolidated financial statements for the year in which the sale took place a proportional part of the financial data of the subgroup sold and purchased respectively, both groups must include in their prior notification the NIFs of the entities sold.

The Reporting Entity must report the gross income of the multinational group, distinguishing between income earned from transactions with associates and non-associates.

Revenues should include income from sales of inventories and assets, services, royalties, interest, bonuses and any other amounts.

In no case should payments received from other entities within the multinational group that are treated as dividends in the tax jurisdiction of the payer be included.

The Reporting Entity must report in this column the sum of the profits/(losses) before corporate income tax or tax of the same or a similar nature to corporate income tax, if any, for all the Component Entities resident for tax purposes in the relevant tax jurisdiction.

It should be noted that the profit/(loss) before corporate income tax will include all extraordinary income and expenses.

The Reporting Entity must indicate in this column the total amount of the sum of Corporate Income Tax or Tax of the same or similar nature actually paid by all the Component Entities resident for tax purposes in the relevant tax jurisdiction.

The concept of taxes paid should include those taxes that the member entity has paid in cash to its tax jurisdiction of residence, as well as to any other tax jurisdiction.

Taxes paid should also include withholding taxes paid by other entities (both affiliated and non-affiliated) for payments made to the member entity.

The Reporting Entity should indicate in this column the sum of the reported capital of all the Reporting Entities resident for tax purposes in the relevant tax jurisdiction.

In relation to permanent establishments, the declared capital must be reported by the legal entity to which the permanent establishment belongs, unless there is a capital requirement in the tax jurisdiction of the permanent establishment for regulatory purposes.

The Reporting Entity must report in this column the sum of the total undistributed results of all the Reporting Entities resident for tax purposes in the relevant tax jurisdiction at the end of the year.

In relation to permanent establishments, the amount of undistributed profits shall be declared by the legal entity to which the permanent establishment belongs.

The Reporting Entity must report in this column the sum of the net book values of the tangible assets of all the Reporting Entities resident for tax purposes in the relevant tax jurisdiction.

In relation to permanent establishments, assets should be disclosed with respect to the tax jurisdiction in which the permanent establishment is located.

It should be noted that the concept of intangible assets does not include cash, cash equivalent instruments and financial assets.