From February this year, Spain is introducing changes to the tax reporting models 196 and 170, marking a shift from annual reporting to mandatory monthly reporting.
These changes remove the previous ‘periodic filing’ framework and will expand the scope to include e-money and payments firms. Previously, Model 196 primarily applied to banks and was typically an annual reporting obligation. Model 170 applied only when a transaction threshold of €3,000 was exceeded, and non-Spanish payments and e-money firms were generally out of scope.
Which PSPs will now be in scope?
- E-money and payment institutions providing services in Spain;
- Firms providing POS, acquiring or collections services in Spain;
- Spanish branches of EU and non-EU firms; and
- Firms operating under the freedom to provide services (passporting), where authorised and registered with the Bank of Spain or the EBA.
What does this mean for firms providing services in Spain?
- Certain payment and e-money firms will now be required to file Model 196 on a monthly basis;
- The previous €3,000 threshold for Model 170 reporting will be removed, widening its scope; and
- Firms previously considered out-of-scope(including passporting firms) may now fall within the reporting requirements.
What do the Models 170 and 196 actually cover?
Model 170 - payments information
Model 170 is focused on payment activity and the movement of funds. E-money and payment firms will be required to submit data on a monthly basis, such as the following, to the Agencia Estatal de Administración Tributaria (the central tax agency in Spain):
- Transaction amounts and frequencies;
- Card and mobile payment information;
- Sales terminal usage (whether located in Spain or elsewhere); and
- Identification of the banks involved in payment collection and any subsequent payment destinations.
Model 196 - accounts information
Model 196 concerns where funds are held (as opposed to payment flows). It applies to all types of accounts, including current, savings, credit and payments (including non-band) accounts.
The reporting obligation is monthly, with a more onerous reporting obligation required in the year-end December period.
For January to November, the following must be reported:
- The complete identification of accounts; and
- The identification of account owners, beneficial owners and beneficiaries.
For December, the following additional information must be reported:
- Year-end account balances and average balances for the final quarter;
- Total annual credits and debits;
- The returns associated with accounts; and
- Contact details for the declarant of information.
How are the returns submitted?
Both Model 170 and Model 196 reports must be submitted via the online Web Service portal.
What if I make an error in my submission?
If material errors occur (i.e. an incorrect IBAN), the erroneous records can be modified or cancelled. However, firms should note that when amending a record, the entire affected will need to be re-submitted – not just the corrected field. As such, it is recommended that you keep a record of details submitted (just in case).
Firms should also be aware that each monthly submission is treated independently. If an error made in January affects future periods, each impacted submission must be corrected separately.
Are cryptoasset accounts in scope?
No; cryptoasset accounts are not affected by these changes.
Can non-Spanish firms be in scope?
Yes; non-Spanish firms will fall within scope if they serve merchants or account holders established in Spain, including firms operating under passporting arrangements.
Next steps for payment and e-money firms:
Firms should urgently ascertain whether they will fall within the expanding reporting scope. Those in scope will need to:
- Identify and collect the data required for the ongoing monthly reporting;
- Ensure reporting in XML format;
- Prepare for enhanced year-end reporting obligations; and
- Allocate sufficient resources.
For firms seeking support with these reporting obligations, Comply First is currently assisting a number of firms. For further information, please contact Dan Jelly at Dan@complyfirst.co.
This post contains a general summary of advice and is not a complete or definitive statement of the law. Specific advice should be obtained where appropriate.
