Spain's Ministry of Finance has published a draft law for consultation that includes amendments to the Corporate Tax Law and the Non-Resident Income Tax Law for the implementation of the hybrid mismatch rules of the EU Anti-tax Avoidance Directive. The consultation follows a reasoned opinion sent by the European Commission in November 2020 to remind Spain that it should have transposed the ATAD hybrid mismatch measures by 31 December 2019.

The measures of the draft law are in line with ATAD and include rules to address hybrid mismatches resulting in double deduction and deduction without inclusion outcomes. In general, this includes that where operations with related parties result in a hybrid mismatch, the expenses or losses corresponding to the operation will be non-deductible for tax purposes in Spain. As drafted, the measures of the law will enter into force the day following its publication in the Official Gazette and will apply for tax periods beginning on or after 1 January 2020 that have not yet concluded on the date the law enters into force.