Tax contribution report
Properly explaining the importance of the Colonial Group's tax contribution is a priority for Colonial from the point of view of transparency and corporate social responsibility.
In this regard, Colonial publicly breaks down the main tax payments in those countries in which it operates, which reflects the importance given by Colonial to tax matters, as well as its level of commitment to the main stakeholders.
All this information can be accessed in the following document: Colonial Group tax contribution.
Financial and non-financial tax information
Financial tax information
The breakdown of Colonial’s tax expense is detailed in the consolidated financial statements of Colonial and its subsidiaries and in the separate financial statements of Inmobiliaria Colonial, SOCIMI, S.A., specifically in Notes 18 and 18, respectively
Non-financial tax information
The breakdown of non-financial information can be found in section 2.2.2 of the Fiscal Transparency Report for fiscal year 2023.
Status of main tax inspections and litigation
Inspections
Periods open to review by the Tax Authorities
On 2 November 2022, Colonial was notified of the commencement of general verification and investigation audits for corporate income tax for 2018 to 2021, and for value added tax, withholdings on account of non-residents and withholdings and payments on account of income from employment, professional activities and economic activities for the period October 2018 to December 2021.
At year-end 2023, the rest of Spanish-registered companies have 2019 and subsequent years open for review for the other applicable taxes.
Inspections originating in prior years
In Spain, at the beginning of 2023, fourteen inspection processes for the Construction, Installations and Works Tax are open: seven for works carried out in buildings in Madrid.
Inspections closed during 2023
In 2023, Madrid City Council initiated twelve inspections of the Construction, Installations and Works Tax, while Barcelona City Council initiated a further six.
At year-end 2023, twenty-two procedures were closed out with Madrid City Council and one procedures with Barcelona City Council.
None of these have had a significant impact for Colonial.
Litigation
Most of Colonial's tax litigation processes arise from a process for returning undue income, where the relevant taxes are paid in a timely manner, and subsequently it asks for the amount paid to be refunded. Said refund request could be rejected by the Administration, in which case Colonial would challenge the refusal, thus starting court proceedings. By following this procedural strategy, Colonial avoids generating contingencies in its accounts without losing the legitimate interest to defend its position in the Courts.
The most relevant cases of litigation refer to the appeal against two additional settlements of the Transfer Tax and Stamp Duty arising from the purchase of property owing to disagreement concerning the value stated in the public deed and the value assigned by the Administration.
In addition, Colonial has several lawsuits regarding discrepancies in the cadastral values of certain properties located in Madrid and Barcelona.
Colonial has no reserves for tax litigation, nor does it expect potential significant impacts derived from open litigation.
Low tax territories
According to Article 529 of the Corporate Enterprises Act (RDL 1/2010 of 2nd of july), the boards of directors of listed companies may not delegate certain decision-making powers, including the power to approve the creation or acquisition of shares in special purpose vehicles or entities domiciled in countries or territories considered tax havens, as well as any other transactions or operations of a similar nature the complexity of which could make the company and its group less transparent.
In Colonial's eyes, a tax haven or non-cooperative jurisdiction is any territory that either allows tax avoidance or facilitates a lack of investment transparency and that qualifies as such under current law and regulations.
Colonial's policy is that investments must not be made in or through territories classified as tax havens or non-cooperative jurisdictions with the intention of reducing the tax burden. Furthermore, Colonial does not use entities based in tax havens or non-cooperative jurisdictions in order to hide the true owner of income, activities, assets or rights.
Colonial Group does not have any investments in territories classified as tax havens or non-cooperative jurisdictions.