Law 16/2013, of October 29, establishing certain measures in environmental taxation and adopting other tax and financial measures

OFFICIAL STATE GAZETTE No. 260 Wednesday, October 30, 2013 Sec. I. Page 87528 I. GENERAL PROVISIONS HEAD OF STATE 11331 Law 16/2013, of October 29, establishing certain measures in the field of environmental taxation and adopting other tax and financial measures. JUAN CARLOS I KING OF SPAIN To all who shall see and understand this. Know ye: That the General Courts have approved and I hereby sanction the following law. PRELIMINARY STATEMENT I Economic reality shows that, despite the efforts made during 2012 to lay the foundations for achieving the consolidation of public finances, the achievement of this objective still requires the adoption of additional measures that, complementing those already incorporated into the legal system, contribute to advancing along the path initiated. To this end, this Law introduces various modifications to the tax legislation, fundamentally in the regulation of the Corporation Tax, which affect, in addition to the aforementioned tax, the field of the Personal Income Tax, the Non-Resident Income Tax, the Wealth Tax, and certain local taxes. With the same purpose of contributing to the consolidation of public finances, to which is added in this case the objective of cooperating in the achievement of environmental goals, in line with the basic principles governing the fiscal, energy, and environmental policy of the European Union, and as a continuation of the measures adopted in this area at the end of 2012, this Law regulates the Tax on Fluorinated Greenhouse Gases, as an instrument that acts on the emissions of halogenated hydrocarbons. II Regarding the Corporation Tax, as a substantial novelty, the non-deductibility of the impairment of value of participations in the capital or equity of entities is established, as well as of the negative income generated during the period of maintenance of permanent establishments located abroad. Both measures seek to avoid the double deductibility of losses, first at the level of the entity or permanent establishment that generates them, and second at the level of the investor or head office. With this measure, the tax legislation of the Corporation Tax approaches that of countries in our environment, allowing for greater comparative and fiscal competitiveness with respect to them. This modification is accompanied by a transitional regime that establishes the recovery in the taxable base of the Corporation Tax of the impairment of value of participations and of the negative income of permanent establishments that have been tax-deductible, through an increase in equity or distribution of results, in the first case, and through the obtaining of positive income similar to the previous regime, in the second case.

OFFICIAL STATE GAZETTE No. 260 Wednesday, October 30, 2013 Sec. I. Page 87529 Additionally, the Stability commitments agreed upon require an extension, for the fiscal years 2014 and 2015, of part of the measures of a temporary nature already incorporated through Royal Decree-Law 12/2012, of March 30, introducing various tax and administrative measures aimed at reducing the public deficit, and Royal Decree-Law 20/2012, of July 13, on measures to guarantee budgetary stability and promote competitiveness. This includes the limitation on the compensation of negative taxable bases, the limitation on the tax deductibility of goodwill in its different versions and of intangible assets with indefinite useful life, and the limit established in the application of deductions to incentivize certain activities, in each tax period. For identical reasons, the inclusion, in the base of the installment payments to be made in the aforementioned exercises, of 25 percent of dividends and income derived from the transfer of participations that have the right to the exemption regime, and the establishment of a minimum installment payment determined based on the accounting result of the year, albeit exclusively for large companies, are extended for the same years. Also extended for 2014 are the increased rates corresponding to the installment payments. On the other hand, the indefinite validity of the deduction for investments in cinematographic productions and audiovisual series is established, and the base of this deduction is expanded, including copies and advertising expenses borne by the producer. Likewise, the current regulation of the bonus for income obtained in Ceuta and Melilla is modified, with the aim of equating it to that existing in the field of natural persons and establishing minimum rules that facilitate the practical application of the bonus. Apart from the above, an extension is established, for financial leasing contracts whose annual duration periods begin in the years 2012 to 2015, of the exception provided for in the Corporation Tax legislation regarding the constant or increasing nature of the part corresponding to the recovery of the cost of the asset in the financial leasing installments, given that the current situation continues to oblige the lessees of these contracts to modify their conditions. Finally, a specific fiscal regime is established for the Bank Asset Management Society, with the object of equating it, in the application of certain fiscal measures, with credit institutions, which allows eliminating the distortions generated in the operation of said entity, as a consequence of not having this configuration from the point of view of its substantive regulation. III In the Personal Income Tax, various modifications are introduced in line with others collected in this Law in the field of the Corporation Tax, as well as those derived from the regulation established for the so-called "omnibus accounts," which is the reason for the modifications incorporated in the Non-Resident Income Tax. IV In order to promote local autonomy to stimulate activities of special interest or utility for the municipality, the optional bonus applicable in the Real Estate Tax, the Economic Activities Tax, and the Tax on Construction, Installations and Works is extended to the Tax on the Increase in Value of Urban Land, when economic activities are developed that are declared of special interest or municipal utility due to social, cultural, historical-artistic, or employment promotion circumstances that justify such declaration.

OFFICIAL STATE GAZETTE No. 260 Wednesday, October 30, 2013 Sec. I. Page 87530 Likewise, in the consolidated text of the Law Regulating Local Treasuries, the necessary technical adjustments are made for the case where the application of the update coefficients provided for in article 32.2 of the consolidated text of the Real Estate Cadastre Law results in a decrease in the taxable base of the properties. To this end, articles 68 and 69, relating to the reduction of the taxable base of the Real Estate Tax, are modified. As a consequence of the Stability commitments maintained by the Kingdom of Spain, it is necessary to provide continuity to the increase in the tax rate of the Real Estate Tax for urban properties, established in December 2011, avoiding the initially planned negative impact for 2014. On the other hand, the consolidated text of the Real Estate Cadastre Law is modified to, on the one hand, extend the deadline for Municipalities to request the application of the update coefficients provided for in article 32.2, and, on the other, to enable the electronic edict to be regulated in the cadastre field by Ministerial Order in application of what is provided for in article 112.1 of Law 58/2003, of December 17, General Tax. V In the framework of Western economies, and particularly the European Union, for several years now, increasing importance has been given to the role of environmental taxation as an instrument to favor the construction of a sustainable economy, which in turn contributes to fulfilling the principle of sufficiency. Add to this that, in the case of Spain, measures in the field of environmental taxation are justified by what is provided for in article 45 of the Spanish Constitution, a provision that enshrines the protection of the environment. Environmental taxation thus constitutes a complementary means to cooperate in the protection and defense of the environment, and is articulated around tax figures whose purpose is to stimulate and incentivize behaviors more respectful of the natural environment. In this context, it is appropriate to introduce mechanisms for correcting certain environmental externalities, such as those caused by the emission of greenhouse gases: due to their global reach and the magnitude of the environmental impact. To these ends, this Law introduces into our legal system the Tax on Fluorinated Greenhouse Gases. Halogenated hydrocarbons have been used habitually in numerous sectors, such as refrigerants, solvents, foaming agents, or fire extinguishing agents, due to their special properties. However, among the characteristics of these substances, their negative contribution to the warming of the atmosphere must be highlighted, with a global warming potential much higher than CO2, which has obliged a large part of these substances to be regulated by the Kyoto Protocol on greenhouse gases, where mandatory emission objectives are established for developed countries that have ratified it, such as the Member States of the European Union. The Tax on Fluorinated Greenhouse Gases is an indirect tax that falls on the consumption of these gases and taxes, in a single phase, the putting into consumption of the same, taking into account the atmospheric warming potential. On the other hand, a deduction from the Tax is established in cases where the destruction of the products subject to the Tax is accredited, since regulating these options stimulates the development of ecological technologies. VI Additionally, the Special Tax on Certain Means of Transport is modified to regulate the exemption from the Tax in the first registration or, if applicable, in the circulation or use of recreational or nautical sports vessels destined exclusively by companies to rental activities regardless of the length of their hull. With this, it is intended to bring our taxation closer to that of other Member States of the European Union, boosting the recreational boating sector and producing a dynamic effect on other productive sectors, with the consequent increase in wealth and employment generation capacity. VII A national franchise is also regulated for certain ship and aircraft supply operations, in coordination with other indirect taxation figures, which will allow Spanish legislation to be equated with that of other Member States of the European Union. VIII Law 35/2003, of November 4, on Collective Investment Institutions, is modified regarding the marketing in the internal market through global accounts of investment funds constituted in Spain, with the aim of implementing a system similar to that of other countries in our environment that strengthens the competitiveness of the sector. The modification implies the replacement of the system of keeping the unique register of participants of an investment fund by the management entity, with a system in which, when the marketing of the fund is agreed with a financial intermediary established in Spain through a global account, said intermediary may be responsible for keeping the register of participants who are its clients. Consistently with the fact that the management entity will no longer have all the information on the participants of the fund, but that some of them or their participations will appear in the registers of the marketing entities, these, with respect to the participants included in their registers, must assume obligations in the financial and fiscal field that make necessary the modification, in addition, of the laws regulating the Personal Income Tax, the Corporation Tax, and the Non-Resident Income Tax. IX Law 15/2012, of December 27, on tax measures for energy sustainability, created in its Chapter II of Title II the Tax on the production of spent nuclear fuel and radioactive waste resulting from the generation of nuclear energy. With the objective of clarifying the regulation and practical application of this tax, it is necessary to proceed to a restructuring of its articles and to make certain modifications. Thus, regarding spent nuclear fuel, the taxable event is modified both to incorporate the definition of spent nuclear fuel and to specify that the production of spent nuclear fuel resulting from each reactor is taxed. Additionally, the method of determining the taxable base in cases of definitive cessation of exploitation is regulated, and the tax period is modified, which becomes the operation cycle of each reactor, that is, the time that elapses between two refueling shutdowns of the spent nuclear fuel in the reactor core. On the other hand, with the aim of establishing homogeneous collection, a new regulation of the advance payments is carried out. Thus, two installment payments of each current tax period are established, to be made in the months of June and December. The base for calculating the installment payment consists of the kilograms of heavy metal estimated to be contained in the spent nuclear fuel to be permanently extracted from the reactor at the end of the corresponding current tax period, corrected by a coefficient. Similarly, the final self-assessment must be made within the first twenty days of the month following the end of the tax period. Regarding radioactive waste resulting from the generation of nuclear energy, the deadlines for installment payments are modified to coincide with those established for spent nuclear fuel and thus minimize management and administrative costs for both the taxpayer and the State Tax Administration Agency. Finally, three transitional provisions, third, fourth, and fifth, are introduced in the aforementioned Law 15/2012. Through the first, for tax periods whose fuel permanently extracted from the reactor contains fuel elements introduced into the reactor core prior to January 1, 2013, a specific method for calculating the taxable base and the base for installment payments is established. The second regulates as the start date of the operation cycle of each reactor January 1, 2013. Finally, the third determines the declaration period of the tax for those taxpayers whose tax period, according to the regulation established in the aforementioned Law 15/2012, ended in the year 2013. Article 1. Modification of the consolidated text of the Law on Corporation Tax, approved by Royal Legislative Decree 4/2004, of March 5. First. With effect for tax periods beginning from January 1, 2012, paragraph 1 of the thirtieth transitional provision of the consolidated text of the Law on Corporation Tax, approved by Royal Legislative Decree 4/2004, of March 5, is modified, which shall read as follows: "1. In financial leasing contracts in force whose annual duration periods begin within the years 2009, 2010, 2011, 2012, 2013, 2014, and 2015, the requirement established in paragraph 4 of article 115 of this Law shall not be required for the amount of the part of the installments corresponding to the recovery of the cost of the asset." Second. With effect for tax periods beginning from January 1, 2013, the following modifications are introduced in the consolidated text of the Law on Corporation Tax, approved by Royal Legislative Decree 4/2004, of March 5: One. Paragraph 3 of article 12 is repealed. Two. Letters j), k), and l) are added to paragraph 1 of article 14, which shall read as follows: "j) Losses due to impairment of securities representing participation in the capital or equity of entities. k) Negative income obtained abroad through a permanent establishment, except in the case of transfer thereof or cessation of its activity. l) Negative income obtained by companies that are members of a temporary business union operating abroad, except in the case of transfer of the participation therein, or extinction." Three. Paragraphs 11 and 12 are added to article 19, which shall read as follows: "11. Negative income generated in the transfer of securities representing participation in the capital or equity of entities, when the acquirer is an entity of the same group of companies according to the criteria established in article 42 of the Commercial Code, regardless of residence and the obligation to prepare consolidated annual accounts, shall be imputed in the tax period in which said securities are transferred to third parties outside the aforementioned group of companies, or when the transferring entity or the acquirer cease to be part of the same. The provisions of this paragraph shall not apply in the case of extinction of the transferring entity. 12. Negative income generated in the transfer of a permanent establishment, when the acquirer is an entity of the same group of companies according to the criteria established in article 42 of the Commercial Code, regardless of residence and the obligation to prepare consolidated annual accounts, shall be imputed in the tax period in which the permanent establishment is transferred to third parties outside the aforementioned group of companies, or when the transferring entity or the acquirer cease to be part of the same. The provisions of this paragraph shall not apply in the case of cessation of the activity of the permanent establishment." Four. Paragraph 4 is modified and paragraph 5 is added to article 21, which shall read as follows: "4. If a negative income were obtained in the transfer of participation in a non-resident entity that had been previously transferred by another entity that meets the circumstances referred to in article 42 of the Commercial Code to form part of the same group of companies as the taxpayer, said negative income shall be reduced by the amount of the positive income obtained in the previous transfer to which the exemption had been applied. 5. The amount of negative income derived from the transfer of participation in a non-resident entity shall be reduced by the amount of dividends or profit participations received from the participating entity from the tax period that began in the year 2009, provided that said dividends or profit participations have not reduced the acquisition value thereof and have had the right to the application of the exemption provided for in paragraph 1 of this article." Five. Paragraph 2 of article 22 is modified, which shall read as follows: "2. The amount of negative income derived from the transfer of a permanent establishment shall be reduced by the amount of net positive income obtained previously, derived from the same." Six. Letter e) of paragraph 4 is modified, and paragraphs 6 and 7 are added to article 30, with the previous 6 being renumbered as 8, which shall read as follows: "e) When the distribution of the dividend or participation in profits does not determine the integration of income in the taxable base for not having the status of income. The provisions of the previous paragraph shall not apply when: 1.º The taxpayer proves that an amount equivalent to the dividend or participation in profits has been integrated into the taxable base of the Corporation Tax, paying any of the tax rates provided for in paragraphs 1, 2, and 7 of article 28 or in article 114 of this Law, as income obtained by the successive entities owning the participation upon its transfer, and that said income did not have the right to the deduction for internal double taxation of capital gains. In this case, when the aforementioned entities owning the participation had applied to the income obtained by them upon their transfer the deduction for reinvestment of extraordinary profits, the deduction shall be 18 percent of the amount of the dividend or participation in profits. The deduction shall be made partially when the proof referred to in this letter e) is partial. 2.º The taxpayer proves that an amount equivalent to the dividend or participation in profits has been integrated into the taxable base of the Personal Income Tax, as income obtained by the successive natural persons owning the participation, upon its transfer. The deduction shall be made partially when the proof referred to in this letter e) is partial. In this case, the deduction may not exceed the amount resulting from applying to the dividend or participation in profits the tax rate that corresponds in the Personal Income Tax to capital gains integrated into the special part of the taxable base or in the savings, for transfers carried out from January 1, 2007." "6. In the case that the entity proves the taxation of an amount equal to the dividend or participation in profits, in the terms indicated in paragraphs 1.º or 2.º of the

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