The double tax treaty between Spain and the United Arab Emirates has recently been published in the Official Gazette. The entry into force of the treaty, together with the removal of the United Arab Emirates from the Spanish list of tax havens, should benefit both jurisdictions and increase commercial transactions and cross-border investments between the two countries.
Parliament has recently approved Law 35/2006, which implements a major reform of personal income tax and amends the corporate, non-resident and wealth tax legislation. Parliament also approved Law 36/2006, which introduces significant anti-avoidance measures, including a set of new transfer-pricing rules.
The European Court of Justice has recently ruled that the withholding tax triggered by a dividend distribution by a French subsidiary to its EU parent company violates the freedom of establishment under the EC Treaty. This judgment gives Spanish taxpayers enough grounds to claim Spanish withholding tax paid by EU parent companies on dividends distributed by their Spanish subsidiaries.
The government is actively working on extending Spain's tax treaty network. For example, a treaty on exchange of information has been agreed with the Netherlands Antilles and has opened the door for negotiations on a treaty for the avoidance of double taxation. Moreover, pursuant to a recent amendment, double taxation relief is now more effective.
The European Commission has recently found that the anti-abuse clause of the Spanish law implementing the EU Parent-Subsidiary Directive was contrary to EU law and sent a formal request to Spain to amend the clause. Among other things, the commission also referred Spain to the European Court of Justice with regard to the implementation of the EU Capital Duty Directive.
In 2002 the tax legislation introduced the possibility to amortize the financial goodwill embedded in qualifying foreign shares for tax purposes, at a 5% yearly rate of amortization. The inadequate wording of the provision that introduced this tax incentive has given rise to a number of controversies. On March 16 2006 the General Directorate of Taxes issued a report stating its position on the matter.
On March 10 2006 the Council of Ministers presented to Parliament a draft Law on the Avoidance of Tax Fraud. The proposed amendments aim to adapt the legislation on transfer pricing to the Organization for Economic Cooperation and Development directives and to the guidelines of the European Forum on Transfer Pricing, as well as to harmonize the performance of the tax authorities with that of other countries.
On December 27 2001 the Spanish Parliament approved a new budget and accompanying laws for 2002. This update describes the effect that these changes will have on corporate tax in Spain.
Some of the measures and modifications usually included in the budget have instead been implemented in Law 6/2000. This law approved urgent tax measures to encourage family saving and promote small and medium-sized businesses.
In an attempt to woo foreign investors, new legislation has been passed that makes the Canary Islands a very attractive prospect for companies thinking of setting up there.
The Spanish government has recently enacted changes to tax legislation that improve tax relief on overseas earnings and modify the foreign-securities holding company regime. It is hoped that the new legislation will enhance Spain's appeal as a platform for international investment.
Including: Corporate Income Tax; Personal Income Tax; Non-Residents Income Tax; Value Added Tax; Net-Worth Tax; Inheritance and Gift Tax; Transfer Tax; Other Taxes; Special Holding Regime; Canary Islands' Special Tax Regime
The government submitted its budget and accompanying laws for 2000 in December last year. The new laws will alter corporate taxation rules and update tax scales. They also correct minor aspects of the current legislation. Major changes have also been made to the regulation of research and development tax incentives.
The draft of the budget and accompanying laws for 2000 has been submitted for debate to parliament. Major changes are proposed on the regulation of research and development tax incentives.
Including: Corporate Income Tax; Personal Income Tax; Other Taxes; Special Regimes