Spain: Financial Transaction Tax (FTT)
The Spanish FTT is an indirect tax on acquisitions of the shares of large listed Spanish companies, which applies independent of the residence of the purchaser participating in the transaction or the place where the acquisition takes place.
Impacted transactions and securities
The Spanish FTT is applicable on the acquisitions of shares traded on a regulated market (Spanish or foreign) issued by a Spanish entity with a market capitalisation of more than EUR 1 billion at 1 December of the previous year (acquisitions may also result from corporate actions). Only acquisitions are taxed, while sales are not in the scope. The list of Spanish companies with a market capitalisation on 1 December of each year greater than EUR 1 billion will be published before 31 December of the same year on the website of the State Tax Administration Agency (AEAT).
The SFTT concerns shares as defined in Article 92 of the Capital Corporation Law:
- In-scope examples: shares, depositary certificates representing shares, for example ADRs of Spanish shares.
- Out-of-scope examples: debt instruments, units of Collective Investment Vehicles, units in Exchange-Traded Funds, derivatives, voting rights.
Derivatives are not themselves in the scope of the Spanish FTT. However, the physical settlement of a derivative over in-scope shares is regarded as a taxable acquisition. Similarly, bonds exchangeable or convertible into shares are not themselves in the scope either, but only at conversion.
In summary, only acquisitions of shares or depositary certificates representing such shares are in the scope of the tax. For other financial instruments (derivatives, bonds, etc.), they will only be subject to the tax when the execution or settlement of said financial instruments entails a delivery of shares (or depositary certificates).
The numerous exemptions provided by the law can be summarised as follows:
Primary market and issues
- Issuance of shares: Acquisition during the primary issuance;
- Initial Public Offerings: Acquisitions from initial public offerings (IPOs);
- Instrumental acquisitions: Instrumental acquisitions related to IPOs and primary issuance of shares. These acquisitions are finalised before the above, with the aim of distribution of the shares to final investors or to fulfil their obligations as underwriters;
- Stabilisation agreements: Acquisitions by financial intermediaries responsible for price stabilisation aiming to stabilise the prices, as part of an agreement, in the context of admission of shares to the stock market.
Appropriate functioning of secondary market
- Purchase or loan by CCP or CSD: Acquisitions deriving from purchase or loan transactions by a central counterparties (CCP) or a central securities depository (CSD) in the exercise of their respective duties;
- Liquidity agreements: Purchase by financial intermediaries as liquidity suppliers;
- Market Making: Acquisitions performed during market-making activities
- Intragroup transaction:
i. Purchase of shares between entities of the same group on the terms of article 42 of the Commercial Code.
ii. Acquisition of own shares or shares of the parent company of the group, made in the context of a repurchase program with the sole purpose of: decreasing the share capital of the issuer, complying with obligations inherent to convertible financial instruments or complying of obligations derived from stock options or share plans of employees or directors of the group.
- Some business restructuring transactions: Purchase qualified for the special tax regime mentioned in Corporate Income Tax Law 27/2014 for mergers, spinoffs, contributions of assets, exchanges of securities and change of registered office; Purchase as a result of merger or spin-off transactions involving CIVs, or compartments or sub-funds;
- Securities financing: Repurchase, lending & borrowing, buy-sell back & sell-buy back, margin lending;
- Collateral transactions: Collateral transactions involving change of title;
- Resolution measures: Purchase as a result of the application of resolution measures adopted by the Single Resolution Board.
Tax base and Tax due date
The tax base comprises the amount of the consideration of the transactions subject to the tax, not including:
- Transaction costs derived from the prices of market infrastructures;
- Intermediation trading fees;
- Other expenses linked to the transaction.
If the amount of the transaction price is not mentioned, the tax base will be the value corresponding to the closing value on the most relevant regulated market, on the last trading day prior to that of the transaction.
However, the following special rules are established to settle the tax base when the acquisition derives from:
- Convertible or exchangeable bonds or other marketable securities, the tax base will be the amount mentioned in the document of their issue;
- The execution or settlement of options or other derivative financial instruments that give a right to acquire or transfer the taxable securities, the tax base will be the strike price mentioned in the contract;
- Forward transactions, the tax base will be the agreed price, however, if the derivative is traded on a regulated market it will be the delivery price at which such acquisition must be made on maturity;
- The settlement of financial contracts the tax base will be the value corresponding to the closing price of the most relevant regulated market on the last trading day of the transaction.
If acquisitions and transfers of the same taxable value are made in the same day, ordered and executed by the same taxable person, for the same purchaser and which are also settled on the same date, the tax base for such acquisitions shall be calculated by multiplying the positive difference resulting from subtracting from the number of securities acquired those transferred on the same day, by the quotient resulting from dividing the sum of the consideration for the said acquisitions by the number of securities acquired.
The tax occurs when the registration of the securities is made for the purchaser in their account or register, either with an entity providing custody service or in the system of a CSD.
However, taxable persons may opt to consider as the settlement date the theoretical settlement date, which will be, for transactions performed through trading venues, the second business day following the execution of the transaction, subject to any adjustments that may be required if, as a result of a failure to settle the securities, the transactions are not settled.
The option to use the theoretical settlement date must be made in the first self-assessment to be submitted by the taxable person in each calendar year and will be in effect at least during that year, and during subsequent years, provided that it is not waived.
In cases where it is appropriate to file and pay the self-assessment through a Spanish CSD, the option must be communicated by the taxable person through, where appropriate, the participating entities, before the start of the period for the filing and payment of the self-assessment in which said option or waiver must be stated.
Taxpayers and taxable persons
According to article 36 of the Spanish General Tax Law 58/2013, a taxable person (in general, “sujeto pasivo”) is the person liable to pay tax who, according to the law, must fulfil the main tax obligation, as well as the formal obligations inherent to it, either as a taxpayer or as a substitute for the taxpayer. Therefore, it differentiates between:
i. The taxpayer (“Contribuyente”), who is the one who carries out the taxable event (in the case of the FTT, the investor acquiring the shares).
ii. A substitute is the taxable person who, by operation of law and in the place of the taxpayer, is obliged to fulfil the main tax obligation, as well as the formal obligations inherent therein. The substitute may demand from the taxpayer the amount of the tax obligations fulfilled unless the law stipulates otherwise.
Therefore, the taxpayer is the acquirer of the securities and the taxable person is the entity obliged to file the relevant tax return and pay the FTT due.
The potential scenarios to determine whom is the taxable person are the following:
1. The taxable person is the Investment Service Firm (ISF) or credit institution making the acquisition on its own account, regardless of the establishment country.
2. Where the acquisition is not made by an ISF or credit institution acting on its own account, the taxable persons, as substitutes for the taxpayer, will be the following entities:
- Acquisitions in a trading venue, the taxable person will be the market member which executes the purchase order. However, if one or more financial intermediaries are involved in transmitting the order to the market member on behalf of the purchaser, the taxable person will be the entity which receives the order directly from the purchaser;
- If the acquisition is executed outside a trading venue within the scope of the activity of a systematic internaliser, the taxable person will be the systematic internaliser itself. However, if one or more financial intermediaries are involved acting on behalf of the purchaser, the taxable person will be the entity which receives the order directly from the purchaser;
- If the acquisition is executed outside a trading venue and outside the activity of a systematic internaliser, the taxable person will be the financial intermediary which receives the order from the purchaser of the securities or delivers them to the latter by virtue of the execution or settlement of a financial instrument or contract;
- If the acquisition is executed outside a trading venue and none of the previous persons or entities are involved, the taxable person will be the entity providing the securities custody service on behalf of the acquirer. For these purposes, the acquirer shall inform the entity providing the custody service of the circumstances which determine the obligation to pay the tax and its quantification.
The purchaser (taxpayer) of the securities who has communicated to the taxable person wrong or inaccurate information determining the improper application of the exemptions provided for, or a lower tax base resulting from the incorrect application of the special rules for determining the tax base, shall be jointly and severally liable for the tax debt. The liability will extend to the tax debt arising from the lack of wrong or inaccurate communication or disclosure.
The FTT will have to be assessed and paid by taxable persons on a monthly basis.
The tax rate is set at 0.2%.
Submission and payment obligation
The taxable persons must submit and pay taxes through a CSD based in Spain under several scenarios. The main scenarios are the following (please refer to the FTT regulations for covering all scenarios):
- Where the purchase of securities is recorded in the accounts linked to a registration system operated by a CSD based in Spanish territory:
- Where taxable persons, whether acting on their own account or on behalf of third parties, have an account in the CSD registry established in Spanish territory or have an account in the second-tier registers of any of the participants in that CSD (scenario A);
- If a taxable person is not covered by the above, it shall choose a participant in the CSD for the purpose of filing information and paying the tax debt. Such participant shall be the institution whose accounts in the CSD are part of the chain of custody of the securities subject to acquisition (scenario B).
- If the securities are recorded in the accounts of different participants, the taxable person can choose all or one of those participants;
- If the securities are in the accounts of a CSD established outside Spain, the taxable persons may choose to submit and enter self-assessment of the tax through a CSD established in Spanish territory in the following cases:
- Partnership agreement between a CSD established in Spanish territory and a CSD established outside Spanish territory is applicable (scenario C);
- Where there is no partnership agreement as referred above, when the CSD established outside Spanish territory is included in the third party account of a participating institution in a CSD established in Spanish territory designated by the issuing institution to keep the book-entry register of the securities, and there is a prior agreement for the submission and payment of self-assessments of the tax through the CSD established in Spanish territory concluded between the CSD established outside Spanish territory and the aforementioned participant. The designated participant must be the one in which the CSD established outside Spanish territory holds the account (scenario D);
- When the taxable person has concluded an agreement with a participant in a CSD established in Spanish territory to file and pay the self-assessments on their behalf (scenario E).
- Taxable persons who are not participants in the CSD shall pay the amount of the tax debt to the participant in whose second-tier register they have an account or to which they have designated, prior to the start of the deadline for the submission of the self-settlement and tax revenue. The tax debt may not be deferred or paid in instalments and the period for payment shall coincide with the calendar month;
- The CSD must submit a self-assessment of the tax within the period between the 10th and 12th day of the month following the corresponding monthly settlement period, on behalf of each taxable person who made the notification and payment;
- If the taxable person does not have a tax identification number (TIN), the self-assessment will include the individual identification code (IIC) assigned to him by the tax authorities for the sole purpose of filing the self-assessment, and the date on which the taxable person has communicated the information to the CSD and on which the amount of the tax debt has been paid to the participant. For this purpose, the participant shall inform the CSD of the dates mentioned above at the time that it reports the information;
- In cases where a CSD established in Spain is not responsible for submitting and paying the self- assessment in the name and on behalf of the taxable person, the taxable person must submit a self-assessment of the tax and pay the tax debt in the manner determined by the Minister of Finance within the 10th and 12th day of the month following the corresponding monthly settlement period.
Information to be provided by the taxable person
In cases where a CSD established in Spain is responsible for submitting and paying the self-assessment, the taxable person will provide the CSD, either directly, if it is a participant, or through the participant in whose second-tier register they have an account or have designated, with the information regarding the acquisitions subject to the tax that they have made, before the start of the period for filing the self-assessment and paying the tax.
The taxable persons must submit the following information for each transaction regardless if it is exempt or not exempt:
- Name and surname or company name or full name, Spanish tax ID number (NIF), if available, and LEI code or, failing that, BIC, and tax residence of the taxable person. If the taxable person does not have a Spanish tax identification number, where the taxpayer is an entity, the date of incorporation, it will have to obtain its IIC.
- For the purposes of obtaining the IIC, the following information must be sent to the Spanish authorities:
- If the taxable person is an entity, the date of registration or date of the agreement of wills, as applicable, the country or territory of incorporation, the place of residence in Spain or abroad and the type of entity; and
- If the taxable person is an individual, the date and country of birth, gender and residence in Spain or abroad;
- Settlement period and year referred to;
- Declaration reference in the format /xxxxx/yyyyyy, where xxxxx is the CBL or CBF account number (in this case, clients can use only the 6-serioes account, not the KUSTA 7-digit accounts) where the client will be debited for the Tax amount declared and the yyyyy is the client reference which must be unique (no 2 tax declarations can share the same reference);
- Case where the taxable person presents the self-assessment through CSD;
- Indication whether the taxable person acts on their own account or on behalf of others in the acquisition;
- Determination of whether the transaction is subject and not exempt or subject and exempt;
- Number of securities purchased, their ISIN code and the tax identification number or, failing that, the LEI code of the issuer of the securities. If acquisitions and transfers of the same taxable value, ordered or executed by the same taxable person, are made on the same day in respect of the same purchaser and are also settled on the same date; These data shall refer to securities acquired net and shall also indicate the date of execution of the transactions;
- Settlement date or for transactions outside a trading venue, the date of the registration entry;
- For subject and non-exempt transactions, the rule for determining the applicable tax base;
- Tax base of the subject and non-exempt acquisition, and for cases in which the tax base of the acquisition is calculated in accordance with Article 5(3) of the Tax Law, indication of the number of securities acquired and sold and the total consideration for the corresponding acquisitions;
- For each exempt acquisition, the amount of the acquisition and the applicable exemption case(s);
- Tax due for the transaction.
How to obtain the IIC
Prior to submitting the declaration file, the taxable person that does not have a tax identification code will have to obtain an Individual Identification Code (IIC, hereafter). To obtain the IIC, clients are invited to visit the following link where the page for obtaining the IIC has been published by the Spanish Tax Authorities. Clearstream will provide best-efforts assistance to clients with questions about obtaining the IIC. However, clients must understand and accept that Clearstream makes no guarantee that the request will be fulfilled, and that Clearstream will not be held liable for any repercussions – direct or indirect – resulting from any failure to receive the code, or if the code is obtained beyond the expected timing.
As an annex to this announcement, clients can find the latest version of the MS Excel template to be filled in and to be converted to DAT to submit transactions subject to the Spanish FTT file declarations to Clearstream Banking.
Power of Attorney (PoA)
Clients that outsource their reporting activities may have their declaration file(s) rejected since the existing FTT PoA agreement with a third party does not include the permission to upload Spanish FTT declarations.
Clients who want to enable the upload of Spanish FTT declarations via a FTT dedicated PoA should contact their Relationship Officer to obtain the relevant documents. The FTT dedicated PoA must be signed and returned to Clearstream Banking.
How to submit the declaration
Clients will have the possibility to send a monthly declaration before the Clearstream deadline and technical validation checks will be performed by Clearstream Banking.
In order to submit FTT declarations in format required by Iberclear, clients will have the choice to upload their declaration through Xact Web Portal or Xact File Transfer as from the 1 June 2021.
Clearstream Banking will only perform a technical validation check of the declaration header format. Neither the content nor the accuracy will be assessed.
From the reporting month of July onwards, declarations submitted to Clearstream will not be directly forwarded to Iberclear.
Upon receipt of clients declaration file(s), Clearstream will perform technical validation checks of the declaration header format:
- If the declaration fails the validation check, it will be rejected by Clearstream and clients will have to send another declaration file (s) before the deadline mentioned in the following section.
- If the declaration passes the validation check, Clearstream will debit the account indicated in the declaration file(s) with the declared amount.
In the last case, when the declaration passes Clearstream validation checks:
- If the debit is successful, Clearstream will forward the declaration file(s) to Iberclear. Iberclear will perform some validation checks and will forward the accepted file(s) to the Tax Authorities.
- If the debit fails, clients are asked to fund their accounts before Clearstream deadline mentioned below.
Therefore, clients are asked to fund their accounts with the declared amount when sending their declaration file(s).
After Clearstream deadline, all the declarations for which clients did not fund their account will be rejected by Clearstream and will not be sent to Iberclear.
Upon receipt of Iberclear or the Tax Authorities feedback, Clearstream Banking will report to clients the acceptance or rejection of their declaration file(s). Clients using Xact File Transfer to upload their declarations will be notified directly on the Xact File Transfer portal about the status of their declaration, while clients using Xact Web Portal will have to actively visit the portal to monitor the status of their declarations by Iberclear and the Tax Authorities.
In the event that Iberclear or the Tax Authorities rejects the declaration file(s):
- Clients will have to send a new declaration file(s);
- Clearstream will credit back clients’ accounts with the declared amount indicated in the rejected declaration file(s).
Deadline for submitting declarations
Clearstream Banking is subject to a declaration deadline set by Iberclear by close of business on the 10th calendar day in any calendar month, following the month in which the reportable transfer was settled (“Iberclear Deadline”). Clients are required to submit their declaration file(s) to Clearstream Banking by 17:00 CET, two calendar days before the Iberclear Deadline (“Client Declaration Deadline”).
However, if the Iberclear Deadline falls on a non-Business Day (as defined in Clearstream Banking’s General Terms and Conditions), then:
- the Iberclear Deadline shall be (by close of business on) the first preceding Business Day; and
- the Client Declaration Deadline shall be (by 17:00 CET) the second preceding Business Day.
A yearly Spanish FTT calendar will be published by Clearstream, detailing the exact deadlines for each submission month.
Iberclear will not accept declaration file(s) belonging to the current declaration period (M), if they are delivered during the voluntary filing period, between the 10th calendar day and the 20th calendar day of month M+1.
Iberclear will begin accepting these late declaration file(s) as of the 21st calendar day of month M+1.
Therefore, clients cannot submit late declaration file(s) belonging to the current declaration period (M) prior to the 21st calendar day of month M+1.
For declaration file(s) belonging to previous declaration periods (prior to M), clients can submit their file(s) on any business day of the month.
Upon receipt of the late declaration file(s), Clearstream will try to debit the account indicated in the declaration file(s) with the declared amount:
- If the debit is successful, Clearstream will forward the declaration file(s) to Iberclear. Iberclear will perform some validation checks and will forward the accepted file(s) to the Tax Authorities.
- If the debit fails, the declaration file(s) will not be rejected. Clearstream will forward the declaration file(s) to Iberclear only after the client has funded the account and the debit is successful.
Therefore, clients are asked to fund their accounts with the declared amount when sending their late declaration file(s).
Clients must send a declaration file for each month of acquisition if they had previous transactions from separate acquisition months. Clients won't be able to combine transactions from various months. Iberclear will reject the declaration file if transactions from various months are combined.
The late declaration file(s) will be processed by Iberclear after their receipt. Clients should be aware, however, that in the event of late declarations, the Tax Authorities might levy surcharges on the taxable person. Furthermore, Clearstream will not be involved in the collection of these surcharges.
Clearstream Banking will start billing clients for declarations and instructions received on and as of 1 November 2021 onwards via monthly billing as announced in Section 8.4 of the Clearstream Banking Fee Schedule valid from 1 November 2021.
In addition, Clearstream Banking will charge clients for obtaining the IIC at the level of incurred cost from Iberclear, and an additional hourly fee for special operational services.
The same hourly fee of special operational services will be charged to clients , in the event that Clearstream Banking intervenes manually to credit back clients' accounts, due to a rejection of their declaration file(s) by the Spanish Tax Authorities for incorrect inclusion of the TIN/IIC.
Clearstream Banking will announce any future fee updates in the Fee Schedule. Clients are therefore invited to refer to the Fee Schedule to monitor future changes.
Potential penalties, surcharges, or late payment interests
The Spanish Tax Law provides for potential penalties, surcharges and late payment interests on tax infringements, late filings, lack of submissions and incorrect or incomplete submissions.
Neither Iberclear nor Clearstream shall assume any potential penalties, surcharges, or late payment interests in any case, which will be completely assumed by each taxable person. Furthermore, Clearstream will not be involved in the collection of these potential penalties, surcharges, or late payment interests.
Role of Clearstream Banking
In general, the payment and reporting of the FTT will be done via Iberclear, as a CSD, and through its participants. To this extent, the taxable person should provide the participants with the information required to file the relevant tax return and with the amount of the FTT due. In turn, this information and the amount of the tax will be subsequently provided to Iberclear, which will file the tax return on behalf of the taxable person and pay the FTT due.
Where Clearstream Banking AG (CBF), in its role as participant of Iberclear, is not the taxable person of a transaction, taxable persons might in certain conditions appoint CBF for the payment and the reporting upon providing the relevant information and tax due. CBF, in turn, will provide the information to Iberclear, which will file the relevant FTT returns and pay the tax due on behalf of the taxable person. This will not trigger any specific tax liability for CBF.
A taxable person who appoints Clearstream Banking AG (CBF) as their reporting entity, in its role as an Iberclear participant, must record transactions settled only inside Clearstream’s books in their declaration file(s). Particularly, a taxable person cannot consolidate all of their transactions (both Clearstream and non-Clearstream in their declaration file(s)) via Clearstream Banking.
The taxable person understands and acknowledges that Clearstream Banking will not accept in the declaration file(s), transactions settled outside of Clearstream’s books.
In the very rare case that Clearstream Banking is the taxable person to a transaction, the acquirer of the shares must inform Clearstream Banking of the circumstances that determine the obligation to pay the tax and its quantification. Clearstream Banking will provide Iberclear with the information and the tax amount required for the latter to fulfil the tax obligations on its behalf. The acquirer of the securities who has not made the notification referred to or who has made it in an erroneous or inaccurate manner, shall be jointly and severally liable. Liability shall extend to the tax liability arising from failure to report or erroneous or inaccurate reporting.
This page as well as the attached reporting template and the calendar and FAQ pages are provided for information purposes only and do not aim to give any professional (legal, tax or otherwise) advice and should not be relied upon as such.
Clearstream Banking strongly recommends that clients independently assess whether and how their business is impacted by the new Spanish FTT before taking any action based on or raising from the information included in this page, and shall in no event be expected to any liability for the consequences arising, whether directly or indirectly, out of such actions. The reporting template shared on this page aims to give only an overview of the information to be filed to the Spanish Tax authorities and is subject to changes which, as the case may occur, will be disclosed by way of an updated version released on this page and notified by Clearstream Banking alert.