Global Tax Alert | 30 May 2014
Spanish Government approves draft bill extending responsibility for tax significant transactions to Board of Directors
On 23 May 2014, the Spanish Government approved a draft bill which modifies the Spanish Company Law with the stated aim of improving corporate governance practices of listed companies. Among many other measures, the draft bill expands the scope of the duties of the Board of Directors to include the approval of any transaction significantly relevant for tax purposes.
A more detailed Alert will follow once the bill is enacted. This Alert only covers the tax-related key provisions included in the draft bill.
The draft bill proposes the following amendments to the Spanish Company Law:
- • To include among the non-transferable duties of the Board of Directors (i) the determination and management of the company's tax risk policy; (ii) the approval of investments or transactions with a high tax risk; (iii) the approval of the incorporation or acquisition of special purpose vehicles or entities located in a tax haven; and (iv) the determination of the company's tax strategy.
- • To include among the duties of the company's audit committee the supervision of the efficiency of the tax risk management control systems, as well as the obligation to inform the Board of Directors of the incorporation or acquisition of special purpose vehicles or entities located in a tax haven.
- • To include a description of the tax risk management control systems the company has in place in the annual corporate governance report.
The draft bill aims to increase the responsibility of the Board of Directors of listed companies, and the involvement of these companies' audit committee as a supervising body in relation to investments or transactions with high tax risk, as well as to include a mention in the annual corporate governance report of the tax risk management control systems.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Abogados, Madrid
- • Laura Ezquerra
+34 915 727 570
Ernst & Young LLP (United Kingdom), London
- • José Antonio Bustos
+44 20 7951 2488
Ernst & Young LLP, Spanish Tax Desk, New York
- • Cristina de la Haba
+1 212 773 8692
EYG no. CM4456