Law 5/2020, of October 15, on the Financial Transactions Tax

Law 5/2020, of October 15, on the Financial Transactions Tax.
Head of State
"BOE" No. 274, of October 16, 2020
Reference: BOE-A-2020-12356

INDEX

Preamble ................................................................ 3
Articles ................................................................. 4
Article 1. Nature and scope of application. ...................................... 4
Article 2. Taxable event. ................................................. 4
Article 3. Exemptions. .................................................... 5
Article 4. Tax accrual. ...................................................... 7
Article 5. Tax base. ...................................................... 7
Article 6. Taxpayers, liable parties, and responsible parties. ............................. 8
Article 7. Tax rate. ...................................................... 9
Article 8. Declaration and payment obligation and documentation obligations................ 9
Article 9. Offences and sanctions. ............................................ 10
Transitional Provisions ...................................................... 10
Single Transitional Provision. Companies whose shares are subject to tax in the first year of application of the tax. .................................................. 10
Final Provisions ......................................................... 10
First Final Provision. Competence title. ..................................... 10
Second Final Provision. Regulatory development and execution. ............................ 10
Third Final Provision. Modification by the General State Budgets Law. .......... 10
CONSOLIDATED LEGISLATION

Fourth Final Provision. Adaptation of the Economic Agreement with the Autonomous Community of the Basque Country and of the Economic Agreement between the State and the Chartered Community of Navarre. ........... 10
Fifth Final Provision. Entry into force. ........................................ 11
OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

CONSOLIDATED TEXT
Last modification: July 1, 2022

FELIPE VI
KING OF SPAIN
To all who see and understand this.
Know ye: That the General Courts have approved and I come to sanction the following law:

PREAMBLE
Since 2013, Spain has been part of the group of countries in the European Union participating in the enhanced cooperation procedure for the adoption of a Directive on the implementation of a harmonized Financial Transactions Tax, together with Germany, France, Austria, Belgium, Slovakia, Slovenia, Greece, Italy, and Portugal.

During these years, despite progress in the configuration of the tax, it has not been possible to reach an agreement leading to the approval of the Directive. Taking into account the time elapsed since then, and without abandoning the enhanced cooperation procedure aimed at establishing a harmonized tax, it is considered appropriate to establish at the national level the Financial Transactions Tax, with the aim of contributing to the objective of consolidating public finances, and reinforcing the principle of equity of the tax system, given that the operations now subject to taxation generally are not effectively subject to any tax within the scope of indirect taxation.

The configuration of the tax follows the line adopted by countries in our environment, among which France and Italy can be cited, thereby contributing to greater coordination of these levies within the European scope.

Thus, the taxable event of the tax consists of the onerous acquisition of shares of Spanish companies, regardless of the residence of the persons or entities involved in the operation.

Therefore, the so-called "issuance principle" is established as the principle of taxation, as it is considered that in this way the risk of decentralization of financial intermediaries is minimized compared to the residence principle, given that shares of Spanish companies are subject to taxation, regardless of the residence or place of establishment of the financial intermediary or the place where they are traded.

Likewise, deposit certificates representing the aforementioned shares are subject to the tax.

However, the tax does not apply to all acquisitions of shares of Spanish companies, but is limited to the shares of those companies that have shares admitted to trading on a regulated market, regardless of whether the transaction is executed in a trading venue, and that also have a market capitalization value greater than 1,000 million euros. With this threshold, it is intended that the tax affect the liquidity of the market as little as possible, while guaranteeing a very high percentage of the potential tax revenue.

Certain operations typical of the primary market, those necessary for the proper functioning of the markets, those arising from corporate restructuring operations or resolution measures, those carried out between companies of the same group, and temporary transfers are declared exempt.

The tax accrual is established at the moment when the annotation in favor of the taxpayer of the securities subject to the onerous acquisition constituting the taxable event is carried out, whether such annotation is made in a securities account or in the books of a financial entity providing deposit or custody services, or in the registers of a central securities depository or in those kept by participating entities.

OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

The tax base is the amount of the consideration, excluding expenses associated with the transaction. However, certain special rules are established in those cases where the acquisition of securities results from the execution or settlement of obligations or convertible or exchangeable bonds, financial derivative instruments, or any financial instrument or contract, as well as in the case of acquisitions and transfers made on the same day.

The taxpayer of the tax is the acquirer of the securities. The liable party, as a general rule, is the financial intermediary that transmits or executes the acquisition order, whether acting on its own account, in which case it will be the liable party as a taxpayer, or on behalf of third parties, in which case it will have the status of substitute for the taxpayer.

Finally, regarding the declaration and payment of the tax, the Law provides for the regulatory development of the procedure and the cases in which a central securities depository established in Spanish territory is the one who, in the name and on behalf of the liable party, makes the declaration and payment of the tax debt. In this way, a high degree of automation in its management is allowed.

For cases where the previous procedure is not applicable, the self-assessment system by the liable party is established as a general rule.

For these purposes, and with the aim of guaranteeing the effectiveness of the tax regardless of where the taxed operations are carried out, the Spanish tax administration will use all legal instruments for obtaining information provided for by the regulations. In particular, those provided for in international treaties and conventions as well as in the community acquis, such as those regulated in Council Directive 2011/16/EU of February 15, 2011, on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC.

Finally, it must be emphasized that, in accordance with what has been stated so far, this normative text adapts to the principles of necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency provided for in Article 129 of Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations.

Article 1. Nature and scope of application.

1. The Financial Transactions Tax is an indirect tax that taxes the acquisition of shares under the terms provided for in Article 2 of this Law.
2. The tax will apply regardless of where the acquisition is made and regardless of the residence or place of establishment of the persons or entities involved in the operation, without prejudice to the special territorial tax regimes of concert and economic agreement in force, respectively, in the Historical Territories of the Basque Country and in the Chartered Community of Navarre.

Article 2. Taxable event.

1. The following shall be subject to the tax: the onerous acquisitions of shares defined in the terms of Article 92 of the consolidated text of the Capital Companies Law, approved by Royal Legislative Decree 1/2010, of July 2, representing the share capital of companies of Spanish nationality, when the following conditions are met:
   a) That the company has its shares admitted to trading on a Spanish market, or of another State of the European Union, which has the status of regulated in accordance with the provisions of Directive 2014/65/EU of the European Parliament and of the Council of May 15, 2014, on markets in financial instruments, or on a market considered equivalent in a third country as provided for in Article 25.4 of said Directive. b) That the market capitalization value of the company is, on December 1 of the year prior to the acquisition, greater than 1,000 million euros.

The acquisitions referred to in this paragraph shall be subject to the tax regardless of whether they are executed in a trading venue, as defined in number 24 of paragraph 1 of Article 4 of the aforementioned Directive; in any other market or system of contracting; by a systematic internalizer, as defined in Article 331 of the consolidated text of the Securities Market Law, approved by Royal Legislative Decree 4/2015, of October 23; or through direct agreements between the contracting parties.

2. The following are also subject to the tax:
   a) The onerous acquisitions of negotiable securities constituted by deposit certificates representing the shares referred to in paragraph 1 of this article, regardless of the place of establishment of the issuing entity of said securities.

However, the acquisition of shares carried out with the exclusive purpose of issuing the securities referred to in the previous paragraph shall not be subject to the tax. Nor shall the acquisition of the deposit certificates referred to in this letter a) carried out in exchange for the delivery by the acquirer of the shares they represent, nor the operations carried out to cancel said deposit certificates by delivering to their holders the shares they represent, be subject to the tax.

b) The acquisitions of the securities referred to in paragraph 1 of this article and letter a) of this paragraph that result from the execution or settlement of obligations or convertible or exchangeable bonds, financial derivative instruments, as well as any financial instrument, or of the financial contracts defined in the fourth paragraph of paragraph 1 of Article 2 of Order EHA/3537/2005, of November 10, which develops Article 27.4 of Law 24/1988, of July 28, on the Securities Market.

3. The list of Spanish companies with a market capitalization value on December 1 of each year greater than 1,000 million euros shall be published before December 31 of the same year on the Electronic Headquarters of the State Tax Administration Agency.

Article 3. Exemptions.

1. The following acquisitions of shares shall be exempt from the tax:
   a) Acquisitions derived from the issuance of shares.

Likewise, acquisitions derived from the issuance of the deposit certificates referred to in letter a) of paragraph 2 of Article 2 of this Law, representing shares issued exclusively to create said securities, shall be exempt.

b) Acquisitions derived from a public offer for the sale of shares as defined in Article 35.1 of the consolidated text of the Securities Market Law, approved by Royal Legislative Decree 4/2015, of October 23, in its initial placement among investors.

c) Acquisitions prior to those cited in letters a) and b), carried out instrumentally by the placers and underwriters contracted by the issuers or offerors with the purpose of carrying out the ultimate distribution of those shares among final investors, as well as acquisitions in compliance with their obligations as placers and, in particular, as underwriters, if applicable, of those operations.

d) Acquisitions that, in the context of the admission of shares to the stock exchange, are carried out by financial intermediaries responsible for price stabilization within the framework of a stabilization mandate in accordance with the provisions contained in Regulation (EU) 596/2014 of the European Parliament and of the Council of April 16, 2014, on market abuse and repealing Directive 2003/6/EC of the European Parliament and of the Council, and Directives 2003/124/EC, 2003/125/EC and 2004/72/EC of the Commission.

e) Acquisitions derived from purchase or loan operations and other operations carried out by a central counterparty or a central securities depository on the financial instruments subject to this tax, in the exercise of their respective functions in the scope of clearing or in the scope of settlement and registration of securities.

Operations of novation typical of the central counterparty as well as operations carried out within the framework of a repurchase operation due to a settlement failure, in accordance with Regulation (EU) 909/2014 of the European Parliament and of the Council of July 23, 2014, on improving securities settlement in the European Union and central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) 236/2012, are understood to be included in this letter.

f) Acquisitions carried out by financial intermediaries on behalf of the issuer of the shares in the exercise of their functions as liquidity providers, pursuant to a liquidity contract that meets the requirements required by Circular 1/2017, of April 26, of the National Securities Market Commission, which has as its sole objective to favor the liquidity of operations and the regularity of the quotation of their shares, within the scope of market practices accepted by the National Securities Market Commission pursuant to what is provided in Regulation 596/2014 (EU) of the European Parliament and of the Council of April 16, 2014, on market abuse.

g) Acquisitions carried out within the framework of market-making activities.

For these purposes, such activities are considered those of an investment firm, a credit institution, or an equivalent entity of a third country, which are members of a trading venue or a market of a third country whose legal and supervisory framework the European Commission has declared equivalent, if any of the aforementioned entities acts as an intermediary on its own account in relation to a financial instrument, traded inside or outside a trading venue, in any of the following forms:

1. Simultaneously announcing firm buy and sell quotes of comparable magnitude and on competitive conditions, thereby providing regular and permanent liquidity to the market.

2. Within the framework of its usual activity, executing orders initiated by clients or in response to buy-sell requests from clients.

3. Covering the positions resulting from the execution of the activities referred to in numbers 1 and 2 above.

This exemption shall also apply under the same terms provided for in this letter when the acquisitions have as their object the securities referred to in the first paragraph of letter a) of paragraph 2 of Article 2 of this Law.

h) Acquisitions of shares between entities that form part of the same group under the terms of Article 42 of the Commercial Code.

i) Acquisitions to which the Special Regime of mergers, demergers, asset contributions, share exchanges, and change of registered office of a European Company or a European Cooperative Society from one Member State of the European Union to another, regulated in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax, is susceptible to application.

Likewise, acquisitions originating from merger or demerger operations of collective investment institutions or compartments or sub-funds of collective investment institutions carried out under the provisions of their corresponding regulatory framework.

j) Securities financing operations, mentioned in paragraph 11 of Article 3 of Regulation (EU) 2015/2365 of the European Parliament and of the Council of November 25, 2015, on transparency of securities financing transactions and of reuse and amending Regulation (EU) 648/2012, as well as collateral operations with change of ownership as a consequence of a financial collateral agreement with change of ownership, as defined in paragraph 13 of Article 3 of said Regulation.

k) Acquisitions derived from the application of resolution measures adopted by the Single Resolution Board, or the competent national resolution authorities, under the terms provided for in Regulation (EU) 806/2014 of the European Parliament and of the Council of July 15, 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) 1093/2010, and in Law 11/2015, of June 18, on the recovery and resolution of credit institutions and investment firms.

l) Acquisitions of own shares, or of shares of the parent company carried out by any other entity that forms part of its group under the terms of Article 42 of the Commercial Code, carried out within the framework of a buyback program that has as its sole purpose any of the following objectives:

1. The reduction of the issuer's capital.

2. The fulfillment of obligations inherent to financial debt instruments convertible into shares.

3. The fulfillment of obligations derived from share option programs or other share allocations for employees or members of the management or supervisory bodies of the issuer or an entity of the group.

m) Acquisitions carried out by Employment Pension Funds and by Social Welfare Mutualities or Non-profit Voluntary Social Welfare Entities.

2. For the liable party acting on behalf of third parties to apply the exemptions established in paragraph 1 of this article, the acquirer must communicate to them that the factual circumstances giving rise to such application exist and the following information:

a) Regarding the exemptions collected in letters a), b) and c) of paragraph 1, they must identify the corresponding issuances or the public offer for the sale of shares to which it refers.

b) Regarding the exemption collected in letter e) of paragraph 1, the identification of the entity carrying out the clearing, settlement, and registration operations of securities.

c) Regarding the exemption collected in letter f) of paragraph 1, the identification of the entity carrying out the liquidity provider operations. The market announcement of the liquidity contract must also be provided.

d) Regarding the exemption collected in letter h) of paragraph 1, the identification of the group of companies.

e) Regarding the exemption collected in letter i) of paragraph 1, the identification of the entities affected by the corporate restructuring process, or of the collective investment institutions involved in the merger or demerger, along with the authorization of the operation by the corresponding competent authority.

f) Regarding the exemption collected in letter j) of paragraph 1, the identification of the entities intervening in the financing operation or in the collateral operations with change of ownership.

g) Regarding the exemption collected in letter k) of paragraph 1, the identification of the agreement by which the resolution measures are adopted.

h) Regarding the exemption collected in letter l) of paragraph 1, the identification of the buyback program in which the operations are integrated.

i) Regarding the exemption collected in letter m) of paragraph 1, the identification of the Employment Pension Fund, the Social Welfare Mutualty, or the Voluntary Social Welfare Entity.

For the identification of the entities referred to in this paragraph, it will be required, if applicable, to communicate the Legal Entity Identifier (LEI).

The liable party and the acquirer must keep available to the tax administration the proofs that accredit the carrying out and the content of the communication.

Article 4. Tax accrual.
The tax shall accrue at the moment when the registry annotation of the securities in favor of the acquirer is made in an account or securities register, whether in an entity providing custody services or in the system of a central securities depository, resulting from the settlement of the operation or the financial instrument that originates the acquisition of the securities.

Article 5. Tax base.

1. The tax base shall be constituted by the amount of the consideration of the operations subject to the tax, excluding the transaction costs derived from the prices of market infrastructures, nor the commissions for intermediation, nor any other expense associated with the operation.

In the case where the amount of the consideration is not expressed, the tax base shall be the value corresponding to the closing of the most relevant regulated market by liquidity of the value in question on the last trading day prior to the day of the operation. For these purposes, the most important market in terms of liquidity shall be determined in accordance with Article 4 of Commission Delegated Regulation (EU) 2017/587 of July 14, 2016, supplementing Regulation (EU) 600/2014 of the European Parliament and of the Council, on markets in financial instruments.