Spanish tax legislation includes several specific “tax haven” anti-avoidance tax rules for, amongst other cases, payments made to entities based in jurisdictions included in the Spanish list of “tax haven” jurisdictions and for foreign investors investing in Spain through jurisdictions included in this list (e.g., in the ETVE holding regime and in the special tax regime for venture capital entities).
Law 11/2021, of 9 July, on measures to prevent and fight against tax fraud (“Law 11/2021”) which implemented several aspects of Council Directive (EU) 2016/1164 of 12 July 2016 (so-called “ATAD”) and also included other relevant amendments to Spanish tax legislation to prevent tax fraud and strengthen tax control, switched from the concept of “tax haven” jurisdictions to the concept of “non-cooperative" jurisdictions (i.e. all references to “tax haven” jurisdictions in anti-avoidance rules would be deemed to be made to “non-cooperative” jurisdictions) and established that the Ministry of Finance shall approve the list of “non-cooperative jurisdictions”, which shall include jurisdictions, territories and preferential tax regimes based on the following criteria: (i) tax transparency and effective exchange of information, (ii) existence of beneficial tax regimes for off-shore entities or instruments to facilitate the allocation of profits which do not reflect actual economic activity in such jurisdictions, and (iii) the existence of low or nil taxation.
In addition, Law 11/2021 stated that the list of non-cooperative jurisdictions shall be updated attending to the criteria of the EU Code of Conduct on Business Taxation or the OECD Forum on Harmful Tax Practices, which in practice implies a transition to the concept used by the OECD and the EU aligning the criteria used to classify these jurisdictions.
The draft list of non-cooperative jurisdictions
On 12 January 2023 the Ministry of Finance published a draft of its long-awaited list of non-cooperative jurisdictions. Although the draft list has been released for public consultation purposes before it enters into force, we do not expect significant amendments to the list before its final approval.
The draft list includes the following jurisdictions: Anguilla, Bahrain, Barbados, Bermuda, Dominica, Fiji, Gibraltar, Guam, Guernsey, Isle of Man, Cayman Islands, Falkland Islands (also called Malvinas Islands), Mariana Islands, Solomon Islands, Turks and Caicos Islands, British Virgin Islands, United States Virgin Islands, Jersey, Palau, Samoa (only with respect to its harmful tax regime for offshore business), American Samoa, Seychelles, Trinidad and Tobago, and Vanuatu.
Our main remark is that Spain has followed the EU approach only with some jurisdictions. The existing Spanish list is reduced from 33 “tax haven” jurisdictions to 24 “non-cooperative” jurisdictions, but the EU list has only 12. In particular, it is worth noting that:
- Panama and Bahamas are not included in the Spanish list of non-cooperative jurisdictions, even though they are in the EU list.
- British Virgin Islands and Cayman Islands maintain their status as black-listed jurisdictions, even though they are not in the EU list.
- Gibraltar remains in the Spanish list, even though it signed an international agreement on taxation and protection of financial interests with Spain after Brexit with a clause aimed at enhancing administrative cooperation with a view to exchanging information.
- Barbados and Trinidad and Tobago ceased to be considered tax haven jurisdictions when they signed a tax treaty with Spain with an exchange of information clause, but they are included in the new list even though the said tax treaties remain in force.
- Guam, Palau, Samoa and American Samoa are considered non-cooperative jurisdictions for the first time.
In addition, we note that Law 11/2021 clarified that, if a jurisdiction with a tax treaty with Spain is included in the list of non-cooperative jurisdictions (i.e., this is the case of Barbados and Trinidad and Tobago), the tax rules related to non-cooperative jurisdictions will also apply to such jurisdiction to the extent they are not contrary to the tax treaty provisions.
Entry into force
In general terms, the Order shall come into force on the day following its publication in the Spanish Official Gazette and shall apply from its entry into force to taxes without an accrual tax period and to the tax periods starting after the entry into force with respect to the remaining taxes. However, the relevant effects of the list are postponed for a 6-month period after the publication in the Spanish Official Gazette for the new non-cooperative jurisdictions.
Spanish taxpayers investing in, or through, jurisdictions included in the draft Spanish list of non-cooperative jurisdictions, and foreign investors investing in Spain through such jurisdictions, need to assess the impact of such inclusion.
Hogan Lovells can provide practical guidance and assistance on this matter. Please contact us for more information on how we can help.
Authored by Alejandro Moscoso del Prado, Priscila Méndez.