The country-by-country (CbC) report is a tax report that multinational companies must submit in Spain in compliance with the rules established by the Organisation for Economic Co-operation and Development (OECD) under Action 13 of the BEPS Plan (Base Erosion and Profit Shifting).

In Spain, the obligation to submit a CbC report was established through Law 27/2014 on Corporate Tax and is implemented via Form 231 of the Spanish Tax Agency. Form 231 is submitted annually and must include information on the revenues, taxes paid, and profits earned by each entity in the corporate group in each jurisdiction where they operate.

Companies required to submit Form 231 must meet the following criteria:

• Be a multinational enterprise (MNE) with consolidated revenue exceeding €750 million in the previous fiscal year.
• Be domiciled in Spain or have a permanent establishment in Spanish territory.
• Be part of a corporate group with presence in at least two different jurisdictions.

The deadline for submitting Form 231 is 12 months from the end of the relevant fiscal year.

It is important to note that submitting Form 231 does not imply the payment of any additional taxes. Its purpose is to provide the Tax Agency with information to identify potential tax avoidance practices by MNEs. Failure to submit Form 231 can result in financial penalties and other coercive measures, such as temporary suspension of business activity or exclusion from public tenders.

In summary, submitting Form 231 in Spain is a tax obligation for multinational companies operating in the country that meet certain criteria. The report’s purpose is to provide information to the Tax Agency to prevent tax avoidance and ensure tax fairness.

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Submission of the Country-by-Country Report in Spain

Form 231, also known as the country-by-country report, includes detailed information on revenues, taxes paid, and profits earned by each entity in the corporate group in each jurisdiction where they operate. Additionally, the report includes information on total assets, employees, and the economic activities of each entity in each jurisdiction.

Specifically, Form 231 must include the following information:

• Identification of the multinational company submitting the CbC report.
• Identification of all entities in the corporate group, including their name, tax residence, jurisdiction of residence, and tax identification number.
• A table breaking down total revenues, pre-tax profits, taxes paid, and withholding taxes for each entity in each jurisdiction where they operate.
• Information on total assets, employees, and economic activities of each entity in each jurisdiction.
• Any other relevant information necessary to understand the CbC report and its relation to the corporate group.

This information must be presented clearly and accurately and supported by proper documentation and accounting records. Its purpose is to provide tax authorities with the information needed to identify potential tax avoidance by multinational companies.

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Submission in Foral Territories

In the Foral Territories, as in the rest of Spain, submission of Form 231 is required for multinational companies with presence in the region that meet the criteria set by Spanish tax law.

However, there are some specific differences in Bizkaia, Gipuzkoa, and Araba. Companies in these Basque provinces must submit a special version of Form 231 that includes additional information about the economic activity and structure of the corporate group in the province. Additionally, they must submit an explanatory report detailing the group’s structure and transactions with related entities during the fiscal year. This report must include information on transfer pricing agreements, business risks and opportunities, and any other relevant data for understanding the group’s operations in Bizkaia, Gipuzkoa, or Araba. Another particularity is that the CbC report and explanatory report may be submitted in Basque or Spanish, depending on the company’s choice.

For Navarra, the general guidelines are similar to the rest of Spain, but local tax regulations may impose additional requirements. For example, specific criteria may apply for valuing transactions with related entities, which could affect the information in the explanatory report. Companies required to prepare consolidated accounts must also submit an annex with the financial information of group companies in Navarra.

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Submission in the Canary Islands

In the Canary Islands, multinational companies with presence in the territory must also submit Form 231. The differences with the rest of Spain include specific information about transactions with companies located in free zones or the Canary Special Zone. The explanatory report must include details on applying the special tax regime of these zones.

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Submission in Ceuta and Melilla

There are no significant differences from the rest of Spain for Form 231 submission in the autonomous cities of Ceuta and Melilla. The same guidelines apply, though the explanatory report should include details on the application of the autonomous city’s tax regime and information about transactions with companies in the city’s free zone.

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How to Submit the Country-by-Country Report

Entities required to submit Form 231 must identify themselves with an electronic certificate and submit the report electronically via web services. At CBC.report, we have implemented a system to simplify this process, adjusting the content to the legal requirements, which only requires filling in the data in the designated fields.

The system sends the submission and receives an electronic response containing a list of accepted and rejected records, along with reasons for any rejections. If errors are detected, the system allows corrections, resubmission, or cancellation of a previous submission. It also includes a simulation environment for testing before real submission. Contact us for more information.