- The bill transposes Directive (EU) 2022/2523 and creates a top-up tax so that large groups pay at least 15% in each jurisdiction.
- It affects groups with consolidated turnover of 750 million euros or more in at least two of the previous four years.
- The tax will have three strands, domestic, primary and secondary, and coexists with the 15% minimum rate that already exists in corporate income tax.
The bill that transposes Directive (EU) 2022/2523 and creates in Spain the top-up tax, which ensures a global minimum level of taxation of 15% for large multinational groups and large domestic groups, enters Parliament. The Council of Ministers approved it at second reading on 4 June and it was published in the Official Gazette of the Cortes Generales on 14 June, which opens its passage. The text derives from a draft bill put to public consultation from the end of December 2023.
The rule will apply to groups whose consolidated net turnover is 750 million euros or more in at least two of the four immediately preceding years, and excludes public bodies, non-profit organisations and pension funds, among other entities. It is the European Union’s transposition of the OECD’s so-called Pillar Two, which seeks to curb the race to the bottom in tax competition between countries.
How the tax works
When a group is taxed, jurisdiction by jurisdiction, at an effective rate below 15%, it will have to pay an additional levy, the top-up tax, for the difference up to that minimum. The calculation is based on the accounting result adjusted according to the Directive’s parameters, the same in every country, and not on the corporate income tax base. That is why it is conceived as an additional levy on top of the corporate income tax already paid.
There are three complementary parts. The domestic top-up tax ensures that entities located in Spain are taxed at least 15%. The primary one applies when a Spanish parent earns income from foreign subsidiaries in low-tax jurisdictions without a qualifying domestic top-up tax. And the secondary one acts as a backstop: it is triggered when group income earned abroad has not been taxed at 15% and falls not on the parent but on subsidiaries located in Spain.
What changes for companies
For the groups covered, it means new calculation, reporting and documentation obligations, with a major effort to collect data by jurisdiction. Spanish groups with subsidiaries in low-tax countries and foreign groups with a presence in Spain may be affected. The burden is not only tax: it is also accounting and systems. It will also require coordinating finance, tax and accounting within the group, something many companies will have to reinforce with specific tools.
For companies below the threshold, there is no direct obligation. But the tax changes the environment: the tax incentives of some territories lose appeal for the groups covered, and decisions on where to locate investments and on group structure will be revisited. Mid-sized companies aiming to grow should bear in mind that the threshold exists.
What to review
Groups close to the 750 million threshold can check, with their adviser, whether they meet the condition in at least two of the previous four years and which group entities would be included, and analyse the effective tax rate by jurisdiction. If there are subsidiaries in low-tax territories, now is the time to assess the impact.
The text still has to pass through Parliament and could change. The prudent course is to follow its progress and to consult your tax adviser on preparing the necessary information systems.
Paying at least 15% moves from an international aspiration to a Spanish rule in the making.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
