Spain: Financial Transaction Tax (FTT) approved and published
Clearstream Banking1 would like to inform customers that the Spanish Financial Transaction Tax (FTT) Law 5/2020 of 15 October 2020 has been published in the official Spanish Gazette.
16 January 2021
a 0,2% FTT rate will be applied on the acquisition of certain Spanish shares.
Important note: certain changes proposed by the Spanish Banking Association (AEB) to the Spanish General Directorate of Tax are under discussion and may be included in the final Regulation.
Among those changes, a postponement of the reporting and payment of the FTT related to January and February 2021 declarations is being considered. The new reporting date for both declarations is expected to be between the 10th and the 20th of April. These changes are subject to final approval by the Spanish Parliament so they cannot be taken as definitive.
Shares of Spanish companies admitted to trading on a regulated market in Spain or any other country of the European Union , or on a third country market considered equivalent, and that have a market capitalisation of more than EUR 1 billion on 1 December of the year prior to the acquisition.
- Marketable securities consisting of certificates of deposit representing the shares mentioned above, regardless of the place of establishment of the issuing entity of the such certificates.
- Securities arising from the execution or settlement of:
- Convertible or exchangeable debentures or bonds;
- Derivative financial instruments;
- Financial instruments or financial contracts.
The list of Spanish companies with a market capitalisation of more than EUR 1 billion on 1 December of each year will be published before 31 December of the same year by the State Tax Administration Agency (AEAT). During the period between the date of entry into force of the Law and the following 31 December, the value considered for the requirement of market capitalisation will be that as of one month before the date of entry into force of the Law, as published by the AEAT.
The tax applies to the following transactions:
- Onerous acquisitions of taxable shares, regardless of whether the acquisition is carried out in a trading venue or in any other market or procurement system, by a systematic internaliser, or by direct agreements between the parties;
- Onerous acquisitions of marketable securities consisting of certificates of deposit representing the shares mentioned above, regardless of the place of establishment of the issuing entity;
- Acquisitions resulting from the execution or settlement of convertible or exchangeable debentures or bonds, of derivative financial instruments, as well as of any financial instrument, or of the financial contracts of the securities subject to the tax. The tax will be applied regardless of the place where the acquisition is made and regardless of the residence or place of establishment of the persons or entities involved in the transaction.
Please note that certain transactions will be exempt.
Tax due date
The tax will be due at the time when the registration of the securities is made in favour of the acquirer in a securities account or register, either with an entity providing custody services or in the system of a Central Securities Depository, resulting from the settlement of the transaction or the financial instrument giving rise to the acquisition of the securities.
The tax base will be constituted by the amount of the consideration of the transactions subject to the tax, not including:
- Transaction costs derived from the prices of market infrastructures;
- Trading fees;
- Other expenses associated with the transaction.
If the amount of the consideration is not expressed, the tax base will be the value corresponding to the closing of the most relevant regulated market for the liquidity of the security, on the last trading day prior to that of the transaction.
Customer should note that special rules may apply to determine the tax base of certain transactions.
Taxpayers and taxable persons
The taxpayer is the acquirer of the securities. The taxable person is the entity obliged to file the relevant tax return and pay the FTT due vis-à-vis the AEAT.
The taxable person is the Investment Service Firm (ISF) or credit institution making the acquisition on its own account, regardless of where the ISF or acquiring credit institution is established.
Where the acquisition is not carried out by an ISF or credit institution acting on its own account, taxable persons, as substitutes for the taxpayer, will be the following entities:
- In the case of acquisitions in a trading venue, the taxable person will be the market member that executes the acquisition. However, where one or more financial intermediaries are involved in the transmission of the order to the market member on behalf of the acquirer, the taxable person will be the financial intermediary receiving the order directly from the acquirer;
- If the acquisition is carried out outside a trading venue within the scope of the activity of a systematic internaliser, the taxable person will be the systematic internaliser itself. However, where one or more financial intermediaries are involved in the acquisition on behalf of the acquirer, the taxable person will be the financial intermediary who receives the order directly from the acquirer;
- If the acquisition is made outside a trading venue and outside the activity of a systematic internaliser, the taxable person will be the financial intermediary who receives the order from or delivers the securities to the acquirer by virtue of the execution or settlement of a financial instrument or contract;
- If the acquisition is carried out outside a trading venue and none of the previous persons or entities is involved, the taxable person will be the entity providing the securities deposit service on behalf of the acquirer. The acquirer shall inform the institution providing the deposit service of the circumstances which determine the obligation to pay the tax and its quantification.
The purchaser of the securities who has communicated to the taxpayer erroneous or inaccurate information determining the improper application of the exemptions provided for, or a lower tax base resulting from the incorrect application of the special rules for determining the tax base, shall be jointly and severally liable for the tax debt. The liability will extend to the tax debt arising from the lack of wrong or inaccurate communication or disclosure.
If the taxable person is the entity that provides the service of depositing securities on behalf of the purchaser, the purchaser of the securities who has not made the communication of the circumstances that determine the obligation to pay the tax, as well as its quantification, or has made it in an erroneous or inaccurate manner, shall be jointly and severally liable. The liability will extend to the tax debt arising from the lack of wrong or inaccurate communication or disclosure.
Role of Clearstream Banking
The payment and reporting of the FTT will be done via Iberclear, as a central securities depository and through its participants. To this extent, the taxable person should provide the participants with the information required to file the relevant tax return and with the amount of the FTT due. In turn, this information and the amount of the tax will be subsequently provided to Iberclear, which will file the tax return on behalf of the taxable person and pay the FTT due.
Where Clearstream Banking Frankfurt (CBF), in its role as participant of Iberclear, is not the taxable person of a transaction, taxable persons might in certain conditions appoint CBF for the payment and the reporting upon providing the relevant information and tax due. CBF, in turn, will provide the information to Iberclear, which will file the relevant FTT returns and pay the tax due on behalf of the taxable person. This will not trigger any specific tax liability for CBF.
Where Clearstream Banking is the taxable person to a transaction, the law makes explicit reference to the obligation of the acquirer of the shares to communicate to Clearstream Banking the circumstances that determine the obligation to pay the tax and its quantification. Clearstream Banking will provide Iberclear with the information and the tax amount required for the latter to fulfil the tax obligations on its behalf. The acquirer will be jointly and severally liable of the tax obligations in the terms exposed above.
Customers should note that the operational details of the FTT application are still being analysed by market participants. Clearstream Banking continues to closely monitor the market and will inform customers as soon as further details are defined and officially communicated by the market.
Note: This Announcement does not aim to provide any legal or tax advice and should not be considered as such. Moreover, the information provided is purely indicative and subject to change. Customers are advised to consult with their tax advisor on this topic.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
1. Cearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.