In line with new international criteria, the term “tax haven” used in Spanish Royal Decree 1080/1991 (that’s right, 1991!) has been replaced by the term “non-cooperative jurisdiction” to make the concept more flexible. Under Spanish law, any countries and territories – as well as harmful tax regimes – indicated by Ministerial Order in accordance with the following criteria may be considered “non-cooperative jurisdictions” for Spanish tax purposes:

• The existence, or lack, of regulations on mutual assistance in the exchange of tax information with such country or territory, the fulfillment of an effective exchange of tax information with Spain, the result of inter pares evaluations carried out by the Global Forum on Transparency and Exchange of Information for Tax Purposes, or the effective exchange of information related to the beneficial owner, defined pursuant to Spanish regulations on the prevention of money laundering and financing of terrorism.
• Facilitating – or failing to prevent – the existence of offshore instruments or companies whose goal it is to attract profits that do not reflect real economic activity in such countries or territories.
• The existence of low or no taxation.

There are frequent references in the Spanish income tax laws to transactions undertaken with or by persons resident for tax purposes in, or otherwise located in a “tax haven” (now, a “non-cooperative jurisdiction”). Such references include, for example, the application of anti-abuse rules,  the shifting of the burden of proof with respect to tax deductible payments to the taxpayer, including additional documentation requirements, the requirement to value transactions at arm’s length, special CFC rules and the denial of domestic exemptions (such as the Spanish participation exemption) or access to tax neutral reorganizations.

On 10 February 2023 the Ministerial Order listing the countries and territories (and harmful tax regimes!) considered non-cooperative jurisdictions, was published in the Official Spanish State Gazette, as follows

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Any surprises? The new Order expands the list of non-cooperative jurisdictions. It includes Guam, Palau, American Samoa and Samoa (with regard to its harmful tax regime, i.e. the regime for offshore businesses) which had not been listed in Royal Decree 1080/1991. It also includes Barbados and Trinidad and Tobago which were included in the 1991 list, but excluded afterwards because Spain has a tax treaty with each of these jurisdictions. The tax treaties continue to exist, but no similar exclusion is available in respect of the new Order.

Of course, there are some countries or territories that “have done their job well” (plenty of time for self-improvement and reflection since 1991), which were included in the 1991 list, but have not made it onto the new list of non-cooperative jurisdictions: e.g. Liechtenstein, Monaco, Lebanon, The Cook Islands, and Jordan.

The new Order will generally enter into force on the day following its publication in the Official Spanish State Gazette (BOE) and will be applicable from such time, except for tax obligations that are assessed in respect of a given tax period, in which case the Order will be applicable to tax periods starting after its entry into force (and in the meantime, the 1991 “tax haven” list continues to apply). For example, in connection with Spanish Non-Resident Income Tax, for income obtained in Spain by a non-resident who does not act through a permanent establishment in Spain (e.g. dividends distributed by a Spanish company), the new list of non-cooperative jurisdictions applies from 11 February 2023. However, for Spanish Corporate Income Tax (e.g. limitations on the application of the Spanish participation exemption to dividends or capital gains derived from a non-cooperative jurisdiction), the new list of non-cooperative jurisdictions will generally apply for tax periods starting from 11 February 2023, so effectively from 1 January 2024 (given that the majority of Spanish companies follow a calendar year tax period).

However, in respect of countries or territories that were not included in the 1991 list – i.e. Guam, Palau, American Samoa and Samoa (with regards to its harmful tax regime, i.e. the regime for offshore businesses) – the new Order will enter into force six months after the date following its publication in the BOE. It is unclear whether this grandfathering regime applies to Barbados and Trinidad and Tobago, as those two countries were on the 1991 tax havens (albeit subject to an exclusion).

These entry into force provisions would allow taxpayers to restructure their operations, for example to move out of the affected jurisdictions, before negative consequences start to arise.

Now that the list of the countries and territories (and harmful tax regimes!) considered as non-cooperative jurisdictions is regulated via a Ministerial Order we hope that we need not to wait another 32 years for an update!