This measure is part of the international tax reform promoted by the OECD to address the tax challenges arising from the digitalisation of the economy, within the framework of the initiatives against Base Erosion and Profit Shifting (BEPS).
It is part of “Pillar 2” of the reform, having been approved by 147 countries, but not yet implemented in all of them.
In Spain, the Council of Ministers has approved the bill to transpose the European directive (Council Directive (EU) 2022/2523 of 14 December 2022) that guarantees the overall minimum level of taxation for multinationals, and now it will be sent to the Spanish Parliament for its processing.
In practice, this measure will mean that multinationals (with a group turnover of more than 750 million euros per year) will have to face a minimum global taxation level of 15% (by means of a supplementary tax) in all the countries in which they have presence.
Three scenarios in which supplementary tax will apply
- National supplementary tax: it affects to all resident companies in a country, to be precise, to large companies with activities in Spain taxed at less than 15% of its accounting profit.
- Primary supplementary tax: It affects to parent companies of a multinational group that is located in Spain and obtains income from subsidiaries abroad that do not reach 15% taxation. In these cases, the parent companies will have to pay the tax on behalf of the subsidiaries that have not been taxed at least 15% in the countries in which they have a presence.
- Secondary supplementary tax: it affects subsidiaries in Spain of a group whose parent company is from a country that has not adhered to the global minimum tax initiative.
Methodology to calculate
The methodology starts by calculating the effective taxation level by jurisdiction. To calculate this, the aggregate taxes in the jurisdiction must by divided by the aggregate profits or losses of the corresponding group entities (the latter are calculated based on the profit and loss account of the consolidated financial statements).
Both on the aggregate taxes and the aggregate profits or losses amounts, adjustments will be made (for example, to take into account the corporate income tax expense).
If the result is below 15%, the supplementary tax will be due at a rate amounting to the difference between 15% and the effective rate. This tax is applied to allowable profits and losses, adjusted for incomes linked to economic substance, calculated based on payroll costs and tangible assets (where higher costs and assets in Spain, lower supplementary tax).
When will it come into effect?
The tax will come into force retroactively from January 1, 2024, and will accrue the last day of the tax period, coinciding with the fiscal year of the group’s ultimate parent company.
Exemptions
- Public entities, international organizations, non-profit organizations or pension funds.
- Companies will be exempted from paying this tax when the parent company is in the first five years of its international activity and also until 2027 in those groups that meet certain criteria under a system of traditional safe harbours.
Revenue impact
- If all the countries that have approved the minimum rate had already implemented it, they would have obtained extra annual revenue gains of around USD 220 billion, or 9% of global corporate income tax revenues.
- In Spain, around 830 groups of companies could be affected. These are 113 groups with Spanish parent companies (41 of them paying a tax rate of 6.21% in Spain and others for paying less than 15% in other countries), 10 national groups that tax consolidate and pay an average tax rate of 9.2% in Spain and 707 groups with foreign parent companies and subsidiaries in Spain (which pay an average tax rate of 2.56%).
- In Spain, the revenue would amount to around 10 billion euros per year.
