Tax Annual Report 2014 | Page 2

Tax Annual Report Taxing times Under a rain of reforms, Iberia’s tax frameworks are an ongoing ‘work-inprogress’. Their respective governments have been on a drive to attract foreign investment and increase each country’s competitiveness. While some measures have been very welcomed, others are creating even more legal uncertainty. And 2014 looks set to be another challenging year, say lawyers. our industries, and a capacity for IP and exports.” Reforming the system 2013’s measures, while good news for Spain’s tax collectors, have been disadvantageous for domestic companies, say lawyers, especially those with an international presence. One of the most significant examples being the abolition of article 12.3 of the Corporate Income Tax (CIT) Law, by which the depreciation of participation in other companies has become non-deductible. This has a negative effect, as it slows down the internationalisation of Spanish companies in return for short-term tax gains, according to Miguel Angel Albaladejo Torres, Tax Partner at Lener. But there have been some positive measures. The ‘patent box’ rules have been enhanced increasing CIT relief from 50 to It has been all change across Iberia’s tax 60 percent on profits earned from the lease scene. 2013 was not shy of reforms, and or assignment of intangible assets, the lawyers foresee many more in 2014. limit on the amount on which it could be Over the past two years, the Spanish Government continued its drive to increase applied has been removed, and it will also apply to net income. This enhancement gross domestic product and reduce should be a good incentive for this type of public deficit. And tax collection was their investment, agree lawyers. weapon of choice. The tax credit for research and But while many of the measures they development (R&D) activities has also been introduce were designed to be shortimproved by eliminating the limit on the term and one-off, they have recently amount of gross tax payable against which been extended to 2014 and 2015. “If we it can be applied, explains Daniel Riopérez, are honest, these are likely to become an increasingly hot topic as the election dates Head of Tax at Osborne Clarke, Madrid, on the condition that a 20 percent discount is draw closer,” says Isidro del Saz, Tax deducted from the amount. Partner at Roca Junyent. But as advisers In VAT, the new ‘special cash regime’ it is becoming increasingly difficult to has been approved, but it will probably provide advice in such an unstable legal have a reduced impact if it is not modified, environment, explains Luis Rodríguezexplains Ramón-María Parcerisa Bundó, Ramos, Tax Partner at Ramón y Cajal Head of Tax at Pintó Ruiz & Del Valle. Abogados, and almost impossible to The new regime allows taxpayers with a provide advice on a long-term basis. turnover of less than €2m to pay output Enhancing the country’s competitiveness was top of the Portuguese VAT when they collect the money from the Government’s agenda this past year. “And client. At the same time, the client will be only able to deduct the input VAT when the the country’s tax system is very appealing payment to the supplier is made. Lawyers, nowadays,” says Tiago Caiado Guerreiro, however, are waiting to see whether this Head of Tax at Caiado Guerreiro. “Recent changes have brought about a stability that actually works in practice. “The initiative that we believe could have has replaced the past uncertainty.” more impact in the coming months has been What is important is the added to simplify the system of SOCIMIs (Spanish value this gives to the economy, says REIT),” says Carlos Diéguez, Head of Tax Diogo Ortigão Ramos, Head of Tax at at Broseta. “Listing would be possible on a Cuatrecasas, Gonçalves Pereira, Portugal. MAB (multilateral trading system) and the “We have created the conditions to boost 24 • IBERIAN LAWYER • January / February 2014