Royal Decree-Law 3/2016, of December 2, adopting tax measures for public finance consolidation and other urgent social measures

OFFICIAL BULLETIN OF THE STATE
No. 292 Saturday, December 3, 2016 Sec. I. Page 84746
I. GENERAL PROVISIONS
THE HEAD OF STATE
11475 Royal Decree-Law 3/2016, of December 2, adopting measures in the tax field aimed at the consolidation of public finances and other urgent measures in social matters.
I
Since the fourth quarter of 2013, the Spanish economy has recovered a path of economic growth that, according to various economic forecasts, including those of the main international organizations and institutions, will continue, with a slight deceleration, in the coming years.
To consolidate this achievement, it is essential to continue adopting economic policy measures that contribute to correcting certain imbalances that still negatively affect the Spanish economy.
In this context, the reduction of the public deficit constitutes a priority goal, not only to meet the objectives set by the European Union, compliance with which takes on greater relevance following the adoption of a legally binding instrument for the Kingdom of Spain, such as Council Decision (EU) 2016/1222 of July 12, establishing that Spain has not taken effective measures to follow the Recommendation of June 21, 2013, but also to mitigate the negative consequences that a high public deficit has on the Spanish economy. In this regard, Royal Decree-Law 2/2016, of September 30, introducing tax measures aimed at reducing the public deficit, modified the legal regime of installment payments in the Corporate Tax, incorporating the desirable volume of revenue into public coffers, to favor compliance with the objectives set at the European Union level. Now, with this royal decree-law, various measures aimed at the consolidation of public finances are adopted, which complement those contained in the aforementioned decree and will guide the Spanish economy along a path of growth and job creation, compatible with compliance with our fiscal consolidation commitments achieved within the European Union. The reforms incorporated in this royal decree-law, from the point of view of compliance with the fiscal consolidation path, are intimately linked to the formulation of the non-financial expenditure limit for the General State Budgets for 2017, which is approved by the Council of Ministers. According to the latest available data, the settlement of the 2016 Budget could close at an amount five billion euros lower than the initial Budget. This saving has been achieved as a result of the positive evolution of the State Debt's financial expenses and the effectiveness of the mechanisms approved for Budget management, such as non-availability agreements or the advance of the closure order of the Budget itself. In this sense, the planned execution for the 2016 Budget has been taken as the starting point for calculating the non-financial expenditure limit of the State Budget for 2017. The necessary revenue scenario, which guarantees a similar level of expenditure to that described, requires tax reforms that increase collection, even taking into account the positive effect of the economic cycle. It is for this reason that, in this regard, this royal decree-law contributes with a tax reform that boosts collection and allows financing a prudent level of expenditure, similar to that executed in 2016. cve: BOE-A-2016-11475 Verifiable at http://www.boe.es

OFFICIAL BULLETIN OF THE STATE
No. 292 Saturday, December 3, 2016 Sec. I. Page 84747 II The tax reforms of this royal decree-law are framed within the good practices of taxation in countries in our vicinity, and in the recommendations of international organizations, including the European Union. The normative text includes a moderate increase in the indirect taxation of certain products to approximate collection, in terms relative to GDP, to countries in our vicinity. Reforms in the field of Corporate Tax are also included, which will increase collection with new limits on the deductibility of certain figures in the taxable bases, approximating the effective taxation to the nominal rates of the Tax. The nominal rates are not modified in relation to Corporate Tax. A reform of certain tax figures is addressed, in this sense, which is not expected to substantially harm the growth and job creation pattern of the Spanish economy. As a result, an increase in the structure of collection is expected, which maintains stable fiscal pressure, and allows placing the revenue forecast for determining the spending ceiling of the State Budget for 2017 at a level similar to the collection forecast that existed when the 2016 Budget was formulated. Specifically, in the field of Corporate Tax, three measures of relevance are adopted, the first two representing a widening of the taxable bases of Spanish entities, while the third ensures the adequate level of collection of this tax figure. The first relevant measure refers to the non-deductibility of losses realized in the transfer of participations in entities whenever these are participations entitled to exemption on positive income obtained, both in dividends and in capital gains generated in the transfer of participations. Likewise, any type of loss generated by participation in entities located in tax havens or in territories that do not reach an adequate level of taxation is excluded from integration into the taxable base. In these cases, taking into account comparative law and the evolution of normative proposals made by the European Union, it is advisable to adapt to regulations similar to those provided in countries in our vicinity, discarding the incorporation of any income, positive or negative, that may be generated by holding participations in other entities, through an authentic exemption regime. In addition to the objectives indicated regarding the non-deductibility of negative income generated in the transfer of participations, it is worth recalling the existing fiscal treatment regarding impairments of participations. These impairments register in the accounting scope the expected loss in the investor in the event of a decrease in the recoverable amount of the held participation compared to its acquisition value, without that loss having been realized. The incorporation of income into the taxable base of Corporate Tax is currently built on the realization principle, so that impairments of participations in entities are not fiscally
deductible since 2013, although those impairments that were registered prior to that date and reduced the taxable base maintain a transitional reversal regime. All this leads us to the second measure of widening the taxable base, which consists of a new mechanism for reversing those impairments of participations that were fiscally deductible in tax periods prior to 2013. This reversal is carried out by a minimum annual amount, linearly over five years. This royal decree-law establishes the automatic incorporation of the aforementioned impairments, as a minimum amount, without prejudice to higher reversals resulting from general application rules, taking into account that these are estimated and unrealized losses that reduced the taxable base of Spanish entities. As a third measure, the limit on the compensation of negative taxable bases for large companies with a net turnover of at least 20 million euros is regulated again, accompanied by a new limit on the application of deductions for international or internal double taxation, generated or pending compensation, with the object of achieving that, in those tax periods where positive taxable base is generated, the application of tax credits, by reducing the taxable base or the gross amount, does not reduce the amount to be paid in its entirety. In the Wealth Tax, the requirement to levy it is extended during 2017, in order to contribute to maintaining the consolidation of public finances, fundamentally those of the Autonomous Communities. In the field of Special Taxes, specifically in the Tax on Intermediate Products and the Tax on Alcohol and Derived Beverages, the taxation levied on the consumption of intermediate products and alcohol and derived beverages is increased by 5 percent both on the Peninsula and in the Canary Islands. With the new modification of tax rates, although these remain among the lowest in the European Union, it contributes to reducing the difference in taxation existing with that of the rest of Member States. In the Tax on Tobacco Products, the weight of the specific component is increased relative to the ad valorem component while the corresponding adjustment is made in the minimum level of taxation, both for cigarettes and for rolling tobacco. With this measure, the process of reforming the tax structure of this product initiated with Royal Decree-Law 12/2012, of March 30, introducing various tax and administrative measures aimed at reducing the public deficit, continues. This adjustment aims to progressively achieve a greater balance between the percentage element of the tax linked to the price in relation to the specific element determined by unit of product, all in consonance with the current taxation of other Member States. On the other hand, the possibility of deferral or installment of certain tax obligations is eliminated. In this sense, the normative exception that opened the possibility of deferral or installment of withholdings and payments on account is
suppressed. On the other hand, the possibility of deferral or installment of tax obligations to be fulfilled by the person liable for making installment payments of Corporate Tax is eliminated. Likewise, tax settlements confirmed totally or partially by a final resolution when previously suspended during the processing of the corresponding appeal or claim in the administrative or judicial sphere cannot be subject to deferral or installment either. Furthermore, the possibility of deferral or installment of passed-on taxes is eliminated, since the effective payment of said taxes by the person liable to bear them implies the entry of liquidity into the subject who passes them on. As in the case of the aforementioned Royal Decree-Law 2/2016, the adoption with immediate effect of new measures of an economic and tax nature, which help to sustainably meet the public deficit objectives for the periods 2017 and following, justifies the use of the normative figure of royal decree-law, as the circumstance of extraordinary and urgent necessity required by Article 86 of the Spanish Constitution exists, an essential requirement as constitutional jurisprudence has recalled. This royal decree-law also includes the approval of the coefficients for updating cadastral values for 2017, in compliance with what is provided in Article 32.2 of the Real Estate Cadastre Law, which provides for their update through the General State Budget Law for each year. As a consequence of the delay in the formation of a new government, it is impossible to process the draft Budget Law for 2017 before the end of the year. Given that the measure has an immediate impact on the Real Estate Tax and that said Tax accrues on January 1 of each calendar year, it is mandatory to use the royal decree-law mechanism so that it enters into force before that date. The measure is necessary given that it contributes to strengthening municipal financing, fiscal consolidation, and the budgetary stability of local entities, and to this effect it has been requested by 2,452 municipalities that meet the application requirements of the Law, which could not cve: BOE-A-2016-11475 Verifiable at http://www.boe.es

OFFICIAL BULLETIN OF THE STATE
No. 292 Saturday, December 3, 2016 Sec. I. Page 84749 approve new fiscal ordinances in time to adapt the tax rates in the IBI, so they would not see their budgetary forecasts fulfilled had they counted on said update.
III
Likewise, a clarification of the agreement to suspend compensation for the suppression of the IGTE of the Canary Islands adopted in the Mixed Commission for Transfers State Administration-Autonomous Community of Canary Islands on November 16, 2015, is incorporated; with this, it is clarified that said suspension must be understood in terms of accrual, thus providing greater legal certainty to the financial relations between the parties signatories to the aforementioned Agreement. On November 16, 2015, an Agreement was adopted within the Mixed Commission for Transfers State Administration-Autonomous Community of Canary Islands regarding the suspension of compensation from the Canary Islands to the State for the suppression of the IGTE that would have application in the fiscal years starting from January 1, 2016. However, with the purpose of clarifying and providing both parties with the necessary legal certainty regarding the impact of said agreement on the 2016 and subsequent budgetary years, it is necessary to specify by legal provision that the cited suspension of compensation is in terms of accrual and not merely a suspension in terms of cash flow derived from it. Given the relevance that this clarification may pose for the closing of the 2016 budgetary year in which the Mixed Commission Agreement already deploys its effects, it is urgent to incorporate the provision into the legal order before the end of the current 2016 fiscal year. IV Regarding measures in social matters, Articles 9 and 10 are included in the royal decree-law, referring respectively to the update of the maximum cap and maximum contribution bases in the Social Security system and to the future increases in the maximum cap and maximum contribution bases and the maximum limit of pensions in the Social Security system. The failure to approve a Budget Law for the year 2017 will determine the automatic extension of the current year's Budgets until the approval of those for the following year, in application of the provision contained in Article 134.4 of the Spanish Constitution. In order to ensure the viability of the Social Security system given its deficit situation and in application of the principle of solidarity on which said system is based, under Article 2.1 of the consolidated text of the General Social Security Law, approved by Royal Legislative Decree 8/2015, of October 30, it is necessary to update for the year 2017 the amounts of the maximum cap of the contribution base to Social Security, in the regimes that have it established, as well as the maximum contribution bases in each of them, increasing them by 3 percent with respect to those in force in the current year. All these circumstances are what justify the extraordinary and urgent necessity required by Article 86 of the Constitution to approve this measure by royal decree-law. Attending to the proportionality of the contribution to the Social Security system, this measure is also justified based on the evolution
of present and predicted salaries. On the other hand, it is deemed appropriate to introduce a legal provision whereby future increases in the maximum cap and maximum contribution bases in the Social Security system, as well as the maximum limit for pensions accrued in the same, shall in all cases be adjusted to the recommendations made in that sense by the Permanent Parliamentary Commission for Evaluation and Monitoring of the Agreements of the Toledo Pact and to agreements within the framework of social dialogue. cve: BOE-A-2016-11475 Verifiable at http://www.boe.es

OFFICIAL BULLETIN OF THE STATE
No. 292 Saturday, December 3, 2016 Sec. I. Page 84750 On the other hand, the sole additional provision entrusts the Government with setting, in accordance with what is established in Article 27.1 of the consolidated text of the Workers' Statute, approved by Royal Legislative Decree 2/2015, of October 23, the minimum interprofessional salary for 2017 with an increase of 8 percent with respect to that established by Royal Decree 1171/2015, of December 29, which sets the minimum interprofessional salary for 2016. Likewise, the Government will determine the allocation of said increase to the references to the minimum interprofessional salary contained in the collective agreements in force on the date of entry into force of the royal decree approving the minimum interprofessional salary for 2017, with the purpose of avoiding that it could produce distortions in their economic content, as well as in non-state norms and in contracts and pacts of a private nature. The Government considers it convenient to increase the minimum interprofessional salary taking into account the improvement in the general conditions of the economy, while continuing to favor, in a balanced way, its competitiveness, thus pacing the evolution of salaries in the process of employment recovery. The extraordinary and urgent necessity that Article 86 of the Constitution requires to approve the measures relating to the minimum interprofessional salary is justified by the short time remaining until the end of the year 2016, combined with the certainty it provides to the negotiating subjects of collective agreements with knowledge of it in advance, given that it is precisely in the last month of the year when the most wage revision agreements are concluded. By virtue thereof, making use of the authorization contained in Article 86 of the Spanish Constitution, at the proposal of the Minister of Finance and Public Function and the Minister of Employment and Social Security and prior deliberation of the Council of Ministers in its meeting on December 2, 2016, I HEREBY ORDER:
CHAPTER I
Measures in the tax field
Article 1. Modifications in Law 20/1990, of December 19, on the Fiscal Regime of Cooperatives.
With effect for tax periods starting from January 1, 2016, the following modifications are introduced in Law 20/1990, of December 19, on the Fiscal Regime of Cooperatives:
First. An additional eighth provision is added, which is drafted as follows:
"Additional Eighth Provision. Limits applicable to the compensation of negative tax quotas.
In the case of cooperatives whose net turnover is at least 20 million euros during the 12 months prior to the date on which the tax period begins, the limit established in paragraph 1 of Article 24 of this Law shall be replaced by the following:
– 50 percent, when in the aforementioned 12 months the net turnover is at least 20 million euros but less than 60 million euros.
– 25 percent, when in the aforementioned 12 months the net turnover is at least 60 million euros.
The limitation on the compensation of negative quotas shall not apply to the amount of income corresponding to debt restructuring agreements resulting from an agreement with creditors not linked to the taxpayer."
Second. Paragraph 2 of the eighth transitional provision is modified, which is drafted as follows:
"2. In the case of cooperatives to which the additional eighth provision of this Law does not apply, the limit referred to in paragraph 1 of Article 24 of this Law shall be 60 percent for tax periods starting in the year 2016."
Article 2. Modification of Law 11/2009, of October 26, regulating Listed Real Estate Investment Trusts.
With effect for tax periods starting from January 1, 2017, letter a) of paragraph 2 of Article 10 of Law 11/2009, of October 26, regulating Listed Real Estate Investment Trusts, is modified, which is drafted as follows:
"a) When the transferor or recipient is a taxpayer of Corporate Tax or Non-Resident Income Tax with a permanent establishment, the exemption established in Article 21 of Law 27/2014, of November 27, on Corporate Tax shall not apply in relation to positive income obtained."
Article 3. Modifications of Law 27/2014, of November 27, on Corporate Tax.
First. With effect for tax periods starting from January 1, 2016, the following modifications are introduced in Law 27/2014, of November 27, on Corporate Tax:
One. An additional fifteenth provision is added, which is drafted as follows:
"Additional Fifteenth Provision. Limits applicable to large companies in tax periods starting from January 1, 2016.
Taxpayers whose net turnover is at least 20 million euros during the 12 months prior to the date on which the tax period begins, shall apply the following special provisions:

1. The limits established in paragraph 12 of Article 11, in the first paragraph of paragraph 1 of Article 26, in letter e) of paragraph 1 of Article 62 and in letters d) and e) of Article 67, of this Law shall be replaced by the following:
   – 50 percent, when in the aforementioned 12 months the net turnover is at least 20 million euros but less than 60 million euros.
   – 25 percent, when in the aforementioned 12 months the net turnover is at least 60 million euros.
2. The amount of deductions to avoid international double taxation provided for in Articles 31, 32 and paragraph 11 of Article 100, as well as that of those deductions to avoid double taxation referred to in the twenty-third transitional provision, of this Law, may not exceed jointly 50 percent
   cve: BOE-A-2016-11475
   Verifiable at http://www.boe.es