Executive summary

On 6 March 2023, the Spanish Ministry of Finance released a public consultation document regarding the transposition of the EU Directive implementing Pillar Two Global Minimum Tax rules (Council Directive 2022/2523 of 14 December 2022, “Minimum Tax Directive”) into the Spanish tax law. This document is not a draft tax law but rather a description of the structure of the EU Minimum Tax Directive provisions; it is subject to public consultation until 24 March 2023.

Detailed discussion

The EU Directive requires EU Member States to implement the Model Rules on the Pillar Two Global Minimum Tax (GloBE), as agreed by the G20/Organisation for Economic Co-operation and Development Inclusive Framework on Base Erosion and Profit Shifting (BEPS) released on 20 December 2021, in their domestic legislation before fiscal year 2024.

The document published by the Spanish Ministry of Finance simply summarizes the structure of the EU Minimum Tax Directive provisions. The document does not indicate whether Spain will opt to approve a qualified domestic minimum top-up tax or any other tax policy position available to implementing jurisdictions. However, the wording of the document could be read as implying that Spain will opt to establish GloBE rules as a tax unit separate from regular Corporate Income Tax Law and Nonresidents Income Tax Law.

The document acknowledges that the Spanish rules transposing the EU Minimum Tax Directive should be implemented before 31 December 2023 (31 December 2024 in the case of the Undertaxed Payments Rule). In effect, provisions implementing the EU Minimum Tax Directive into the Spanish tax law will be applicable in 2024.

The document states that it seeks to gather input from taxpayers and organizations on the:

Problems that this initiative seeks to solve

Need and opportunity for its approval

Purpose of the rule

Potential alternatives from a regulatory or non-regulatory perspective

Taxpayers and stakeholders may submit observations by 24 March 2023.

Implications

Multinational groups may want to consider submitting comments addressing specific issues that may arise for their structures and should be considered when the Spanish tax law implementing GloBE rules is drafted.

EY has the experience to assist taxpayers on the drafting of comments.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young Abogados, Madrid

Tatiana de Cubas Buenaventura | tatianade.cubasbuenaventura@es.ey.com

Isabel Hidalgo Galache | isabel.hidalgogalache@es.ey.com

Ernst & Young LLP, Spanish Tax Desk, New York

Jose A. (Jano) Bustos | joseantonio.bustos@ey.com

Andrés Carracedo | andres.carracedo.insua1@ey.com