Circular 4/2012 of the Bank of Spain on reporting standards for residents' economic transactions and financial asset and liability balances with non-residents

CIRCULAR 4/2012, OF APRIL 25, OF THE BANK OF SPAIN, ON STANDARDS FOR COMMUNICATION BY RESIDENTS IN SPAIN OF ECONOMIC TRANSACTIONS AND BALANCES OF FINANCIAL ASSETS AND LIABILITIES WITH NON-RESIDENTS. (BOE of May 4) [1]

[1]

Note that the entry into force of this Circular was January 1, 2013, and that as of January 1, 2014, Circulars 6/2000 of October 31 and 3/2006 of July 28, as well as paragraph 4 of the first provision, paragraph 2 of the second provision, paragraph 2 of the third provision, and Tables 2A and 2B of the Annex to Circular 2/2001 of July 18, will be repealed.

Royal Decree 1816/1991 of December 20 (partially modified by Royal Decree 1360/2011 of October 7) and the Order of December 27, 1991, developing Royal Decree 1816/1991 of December 20 (modified in turn by Order EHA/2670/2011 of October 7), establish a new system for declaring foreign receipt and payment operations to the Bank of Spain by payment service providers (registered entities). The new wording of Article 5 of the Order of December 27, 1991, eliminates the obligation for residents making receipts and payments exceeding 50,000 euros through resident payment service providers to declare the nature of the operations, as well as the obligation for these entities to collect this information from their clients and communicate it along with the rest of the operation data. According to said Article, from January 1, 2014, payment service providers will only provide data on receipts and payments in which they participate when their collection does not impact the automated processing of payments and can be carried out in a fully automatic manner.

For its part, Article 8 of the Order of December 27, 1991, in its new wording, establishes that residents carrying out economic transactions with non-residents or holding assets or liabilities abroad will be subject to the obligation to provide the competent bodies of the State Administration and the Bank of Spain with the data requested from them, in the form, frequency, and amount determined by the Bank, for administrative, tax, and statistical monitoring purposes.

These changes mean that part of the information on foreign receipts and payments, which under the previous declaration procedure was obtained through payment service providers (such as the nature of the transactions and the information necessary to calculate balances of assets and liabilities with non-residents), must now be obtained through direct declaration by the residents holding these operations, for the statistical, tax, and administrative purposes established by the aforementioned regulations. From a statistical point of view, this information is essential to continue producing external statistics with the quality required by European regulations and international organizations, as well as the debt data of Public Administrations in accordance with the Excessive Deficit Protocol (EDP).

Therefore, the promulgation of a new circular is required to establish the standards for making these declarations. At the same time, it is necessary to fully repeal Circulars 6/2000 of October 31, on external loans, credits, and compensations, and 3/2006 of July 28, on residents holding accounts abroad, as well as partially repeal Circular 2/2001 of July 18, on the declaration of operations and balances of external assets and liabilities in negotiable securities, since they established obligations for direct declaration by residents carrying out these transactions, which are now encompassed within the new declarations.

Therefore, in exercise of the powers granted, the Governing Council of the Bank of Spain, upon proposal of the Executive Committee, has approved this Circular, which contains the following provisions:

First Provision. Obligation to Report.

The provisions of this Circular apply to natural and legal persons (public or private) resident in Spain, other than payment service providers registered in the official registers of the Bank of Spain, who carry out transactions with non-residents (acts, business, and operations that imply - or from whose compliance may derive - foreign receipts, payments, and/or transfers, as well as variations in debtor or creditor accounts or financial positions) or hold assets or liabilities with non-residents.

Second Provision. Content of the Information.

The residents mentioned in the previous provision will inform the Bank of Spain, with the frequency and exceptions determined in the following provision, of the situations and movements listed below:

1. Operations on own account with non-residents, regardless of their nature and regardless of how they are settled, i.e., whether settled through foreign transfers, via credits or debits in bank or inter-company accounts, by compensation, or through cash delivery.

2. Balances and variations of assets or liabilities with non-residents, regardless of the form in which they are materialized (accounts in banking or financial entities, inter-company accounts, cash or securities deposits, equity participations, debt instruments, derivative financial instruments, real estate, etc.).

Third Provision. Frequency and Exceptions of the Information.

1. The following frequencies and deadlines for sending information are established, depending on the amounts reached by transactions with non-residents and balances of assets and liabilities with non-residents:

• Monthly frequency, within 20 days following the end of each natural month, if the amounts of transactions during the immediately preceding year, or the balances of assets and liabilities on December 31 of the previous year, are equal to or greater than 300 million euros.

• Quarterly frequency, within 20 days following the end of each natural quarter, if the amounts of transactions during the immediately preceding year, or the balances of assets and liabilities on December 31 of the previous year, are equal to or greater than 100 million and less than 300 million euros.

• Annual frequency, no later than January 20 of the following year, if the amounts of transactions during the immediately preceding year, or the balances of assets and liabilities on December 31 of the previous year, are less than 100 million euros. However, when the amount does not exceed one million euros, the declaration will only be sent to the Bank of Spain upon express request, within a maximum period of two months from the date of the request.

2. The annual declaration referred to in the previous paragraph may be made in summary form, containing exclusively the initial and final balances of external assets and liabilities, the total sum of receipt operations, and the total sum of payment operations for the declared period, provided that neither the amount of the balances nor the amount of the transactions exceeds 50 million euros.

3. The Bank of Spain may request those holders whose declarations significantly affect certain headings of external statistics or the EDP to make them with a higher frequency than that corresponding to them according to the provisions of point 1 above. Similarly, it may request that the annual declaration referred to in paragraph 2 above be made without summary, detailing the nature of the operations and corresponding balances.

4. Residents who, having not reached the declaration limits established in paragraph 1 of this provision, exceed them during the current year will be obliged to submit declarations with the corresponding frequency, from the moment those limits are exceeded.

5. For the purposes of calculating the amounts established in this provision, transactions denominated in currencies other than the euro will be converted to euros at the daily exchange rate on the date these are effected, and balances at the exchange rates of the last business day of the period, applying official exchange rates if they exist and the reference average exchange rate in other cases.

Fourth Provision. Submission of Information.

The information must be sent to the Statistics Department of the Bank of Spain, by telematic means, in accordance with the formats, conditions, and requirements established in the "technical applications" of this Circular. An updated version of these specifications will be maintained on the Bank of Spain's website, freely accessible on the Internet.

Transitional Provision.

Residents who were obliged to provide the required information according to Circulars 6/2000 of October 31, 2/2001 of July 18, and/or 3/2006 of July 28, must continue to provide and declare it until the one corresponding to December 31, 2013, without prejudice to compliance with the obligations established in this Circular.

Final Provision First. Repeal of Regulations.

Circulars 6/2000 of October 31 and 3/2006 of July 28, as well as paragraph 4 of the first provision, paragraph 2 of the second provision, paragraph 2 of the third provision, and Tables 2A and 2B of the Annex to Circular 2/2001 of July 18, will be repealed, effective January 1, 2014.

Final Provision Second. Entry into Force.

This Circular will enter into force on January 1, 2013.

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