Gipuzkoa, part of the Basque Country in Spain, operates its own independent tax system while adhering to international tax transparency standards, including those outlined by the OECD in BEPS (Base Erosion and Profit Shifting) Action 13. Country-by-Country Reporting (CbCR) is one of the key tools used to ensure that multinational enterprises (MNEs) report their income, taxes, and business activities across all jurisdictions where they operate. This guide offers an overview of the CbCR requirements for companies in Gipuzkoa, explaining who is affected, how to comply, deadlines, penalties for non-compliance, and where to find further resources.

Applicability of CbCR in Gipuzkoa

Criteria for Reporting:

• CbCR obligations apply to multinational enterprise (MNE) groups with operations in Gipuzkoa that meet the following criteria:
  • The MNE group’s consolidated revenue exceeds €750 million in the preceding fiscal year.
  • The ultimate parent entity (UPE) is a tax resident in Gipuzkoa.
  • A constituent entity based in Gipuzkoa may be required to submit the CbC report if:
    • The UPE’s jurisdiction does not require CbCR,
    • The UPE’s jurisdiction does not have an agreement for the automatic exchange of CbC reports with Spain or Gipuzkoa,
    • There has been a failure in the exchange of the CbC report between the UPE’s jurisdiction and Spain.

Relevant Legislation:

• The CbCR framework in Gipuzkoa is governed by Foral Regulation 2/2016, which aligns with the OECD’s BEPS Action 13. The local tax authority responsible for enforcing this regulation is the Gipuzkoako Foru Ogasuna (Gipuzkoa Tax Authority).

Reporting Requirements

Information to be Reported:

• MNE groups must submit a CbC report that provides detailed financial information on each entity within the group, broken down by tax jurisdiction. The report must include:
  • Total revenue (distinguished between related and unrelated parties),
  • Profit or loss before income tax,
  • Income tax paid and accrued,
  • Capital and accumulated earnings,
  • Number of employees,
  • Tangible assets other than cash and equivalents.
• Additionally, the report must list all constituent entities, the jurisdictions in which they are tax residents, and their main business activities.

Form and Submission:

• The CbC report must be filed electronically using the OECD XML schema format to ensure international compliance.
• In Gipuzkoa, the CbC report is submitted through the Gipuzkoako Foru Ogasuna’s electronic tax filing platform, which ensures secure and compliant data transmission. For more details, visit: Gipuzkoa Tax Authority – CbCR.

Filing Deadlines

• The CbC report must be submitted within 12 months after the end of the MNE group’s fiscal year. For example, if the fiscal year ends on 31 December 2023, the CbC report must be submitted by 31 December 2024.
• Constituent entities based in Gipuzkoa must also notify the tax authority of the identity of the reporting entity (whether it is the UPE or a surrogate parent entity) before the end of the fiscal year.

Penalties for Non-Compliance

Penalties:

• Gipuzkoa enforces significant penalties for non-compliance with CbCR obligations, which include:
  • A fine of up to €250,000 for failure to file the CbC report within the required deadline.
  • Fines for failure to notify the tax authority of the reporting entity or for submitting incomplete or inaccurate information.
  • Additional penalties may apply in cases of repeated non-compliance or deliberate provision of false information.

Defences:

• Multinational groups may appeal penalties if they can show a valid reason for the delay or errors, such as technical difficulties or unforeseen circumstances. However, companies are expected to ensure that appropriate processes and systems are in place to avoid non-compliance.

Confidentiality and Use of Information

Data Protection:

• The CbC reports submitted to the Gipuzkoa Tax Authority are treated as confidential and are used solely for tax risk assessment and audit purposes.
• As part of Spain, Gipuzkoa participates in the automatic exchange of information under the OECD’s BEPS Action 13 framework. CbC reports are only shared with jurisdictions that have established exchange agreements and meet OECD standards for confidentiality and data protection.