Amendment of form 030 (census declaration of entry into the taxpayers' register, change of address and/or personal data)

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1 LEGAL UPDATES FOR DECEMBER 2017 AND JANUARY 2018 TAX Working day calendar for 2018 On 18 December 2017, a Resolution adopted on 1 December 2017 by the Secretary of State for the Civil Service was published establishing the 2018 General State Administration non-working day calendar for the purpose of calculating specific time frames. Amendment of form 030 (census declaration of entry into the taxpayers' register, change of address and/or personal data) Order HFP/1247/2017 of 20 December amending Order HAC/3625/2003 of 23 December approving form 390 for non-regular VAT declaration-assessments, and Order EHA/3695/2007 of 13 December approving form 030 relating to the census declaration of entry into the taxpayers' register, change of address and/or personal data, which may be used by natural persons and determine the place and manner for the submission thereof, as well as other tax-related regulations, were published in the Official State Gazette on 21 December Form 030. A specific section has been created for telephone numbers and addresses for the receipt of notices from the Tax Authority for mere information purposes. Modification of forms 216 and 296 (Non-resident Income Tax) Order HFP/1271/2017 of 21 December amending Order EHA/3316/2010 of 17 December approving Non-resident Income Tax self-assessment forms 210, 211 and 213 used to declare income obtained without having a permanent establishment, withholdings from non-residents without a permanent establishment in the acquisition of properties and the special charges over properties belonging to non-resident entities - establishing the general conditions and procedure for the submission thereof and other non-resident tax regulations -, and Order EHA/3290/ November approving form 216 "Non-resident Income Tax. Income obtained without having a permanent establishment. Withholding and advance payments. Declaration-payment document" and form 296 "Non-resident Income Tax. Non-residents without a permanent establishment. Annual withholding and advance payments declaration", were published in the Official State Gazette on 23 December 2017.

2 Forms 216 and 296 The objective of these forms is to improve the information and identification of certain recipients of income to be included in the annual declaration form 296, pursuant to article 17.5 of the Personal Income Tax Act. Amendment to the Regulations on Personal Income Tax Royal Decree 1074/2017 of 29 December amending the Personal Income Tax Regulation, approved by Royal Decree 439/2007 of 30 March, the Corporate Tax Regulation, approved by Royal Decree 634/2015 of 10 July, and the Inheritance and Gift Tax Regulation, approved by Royal Decree 1629/1991 of 8 November, was published in the Official State Gazette on 30 December Personal Income Tax Regulation - With effect from 1 January 2017, (i) within the processing fees for the recruitment and retraining of employees who do not receive remuneration in kind are also those funded indirectly by the employer; and (ii) the application of the minimum amount for descendants for whom guardianship has been allocated by way of judicial resolution is extended. - With effect from 30 December 2017, (i) the procedure for the voluntary rectification of errors - introducing direct correction in the declaration form itself as an alternative means - has been simplified; and (ii) the new concept of withholding or advance payments applicable to the transfer of subscription rights from 1 January 2017 has been developed through this Regulation. - With effect from 1 January 2018, (i) the exempt sum of public grants and those granted by beneficiaries of patronage to undertake studies (generally between EUR 3,000 and 6,000) has been increased; (ii) the exempt daily amount of the indirect formulas for the rendering of cafeteria services (from EUR 9 to 11 per day) has been increased; and (iii) the obligation to provide information on capital reductions with the reimbursement of contributions or distribution of the issue premium corresponding to the taxpayers involved in such transactions has been modified. Amendment to the Regulations enacting the General Tax Act Four Royal Decrees amending the Regulations enacting the General Tax Act 58/2003 of 17 December were published in the Official State Gazette on 30 December: (i) Royal Decree 1070/2017 of 29 December amending the General Regulation on actions and management procedures and tax inspections, as well as the enactment of common

3 regulations on applicable tax procedures approved by Royal Decree 1065/2007 of 27 July and Royal Decree 1676/2009 of 13 November governing the Council for the Defence of the Taxpayer. (ii) Royal Decree 1071/2017 of 29 December amending the General Tax Collection Regulation approved by Royal Decree 939/2005 of 29 July. (iii) Royal Decree 1072/2017 of 29 December amending the General Regulation of tax-related sanctions approved by Royal Decree 2063/2004 of 15 October. (iv) Royal Decree 1073/2017 of 29 December amending the general enacting Regulation of the General Tax Act 58/2003 of 17 December concerning administrative reviews approved by Royal Decree 520/2005 of 13 May. Among other updates, the following are the most noteworthy: (i) the validity period for provisional Tax Identification Numbers (NIF) is set at six months; (ii) the exception allowing the postponement or payment in instalments of debts corresponding to withholding and advance payments has been removed from the General Tax Collection Act; (iii) the calculation of the amount of the guarantee for postponements and instalments requested during the enforcement period has been made clearer; and (iv) a new information-related obligation on the use of housing for tourism purposes has been added. The purposes of the amendments, in force from 1 January 2018, include the fight against tax fraud, the boosting of legal and tax relations, an increase in administrative efficiency, the strengthening of legal protection and the reduction of disputes. Doctrine and case law A duration of stay lasting more than 183 days outside of Spain as a result of a scholarship may not be considered as a sporadic absence under article 9.1.a) of the Personal Income Tax, i.e. for the purposes of determining permanence in Spain for over 183 days during the calendar year and, therefore, habitual residence in the country. Judgment 1967/2017 delivered by the Supreme Court on 14 December With regard to the temporary allocation of amounts paid by the Salary Guarantee Fund (FOGASA) for unpaid wages, two scenarios must be distinguished: the existence or nonexistence of a dispute relating to the receipt thereof. In the first instance, the amounts paid are to be declared as work-related income in the fiscal year during which the judicial

4 resolution is delivered as final; in the second case, said amounts will be allocated to the different fiscal years in which they were owed via the submission of the corresponding amended self-assessments. Resolution of the Central Judicial Review Tribunal of 2 November As opposed to VAT, the Personal Income Tax regulation does not set forth any adjustment to the value of remuneration in kind relating to the employee's use of the vehicle during working hours. Given that by definition nobody should be using the vehicle during working hours for private means, the number of hours during which the vehicle is available for such private matters should be assessed. Said distribution criteria may be extended to VAT. Thus, where such availability for use to which VAT is tied arises, the tax shall be charged back and paid since private use of the vehicle represents consumption which - in comparison to the consumption by the end user who directly acquires or leases the vehicle - must be charged in an identical manner when the employer is the purchaser or lessee for the subsequent allocation of the vehicle to an employee. Resolution of the Central Judicial Review Tribunal of 22 November EMPLOYMENT Minimum wage for 2018 Royal Decree 1077/2017 of 29 December setting the minimum wage for 2018 reflects an increase of 4% in view of the 2017 figures. Thus, the minimum wage for this year amounts to EUR per day and EUR per month. Said increase has taken into account the general improvement in the economy, at the same time as continuing to promote competitiveness in a balanced manner and to be linked to the process for the recovery of employment figures. Neither the amount nor structure of the salaries received by employees will be affected by the minimum wage revision, provided that such salaries as a whole and when calculated annually are higher than the minimum. Increase of 0.25% in public pensions and benefits for 2018 Royal Decree 1079/2017 of 29 December on the revaluation of pensions for retired public servants, pensions under the social security system and other public benefits for 2018 prescribes

5 an increase of 0.25% from 1 January 2018 in the pensions and other social security and former civil servant benefits. Moreover, said regulation has two annexes in which the applicable pension and public benefit amounts for 2018 may be found, as well as the regulatory bases of former civil servants' pensions and the sums applicable to special war veterans' pensions. Contribution bases and rates for the General Social Security Scheme to remain at the same amount and percentage for 2018 The contribution bases and rates for the General Social Security Scheme have been set in Order ESS/55/2018 of 26 January establishing the legal regulations for Social Security contributions, unemployment, protection against the termination of activity, the salary guarantee fund and professional training for the 2018 fiscal year. The bases and rates are to remain at the same levels as last year for Please find below a table published in the aforementioned Order showing the minimum and maximum bases for each contribution group: Moreover, the contribution rates shall remain at the same levels as those applied in 2017, as shown below:

6 Approval of the Spanish Employment Impulse Strategy for The consolidated text of the Employment Act approved by Royal Legislative Decree 3/2015 of 23 October sets forth the Spanish Employment Impulse Strategy as one of the National Employment Institute's three coordination programmes together with the Annual Employment Policy Plans and the Information System for Public Employment Services. The Strategy will be developed in conjunction with the regional authorities and the involvement of the most prominent business organisations and trade unions, as well as being researched by the Employment and Labour Sector Council and subject to consultation and a report by the General Council of the National Employment Institute. Moreover, the Self-employed and Promotion of the Non-profit Sector Councils shall also be consulted. The Strategy sets out the conceptual and organisational framework to which all actions carried out within the National Employment Institute shall refer with regard to policies on the activation and professional training for employment, as well as the principals, common objectives (structural and strategic), tools to be used, strategic planning of the actions to be performed and the financial resources foreseen for the fulfilment of such objectives and actions. Thus, it has a pivotal role in the individual strategies of each of the public employment services with regard to the supply and demand of employment, as well as the design and management of active employment policies, with the determination of the specific actions to be performed in order to reach the structural and strategic objectives set in the Strategy corresponding to the various agencies comprising the National Employment Institute within the framework of the principles and resources also provided for in said Strategy. The Strategy outlines the amendment to the schedule for the implementation of the successive Annual Employment Plans, bringing forward their preparation to the year prior to execution in order for the regional authorities to be aware at the start of each year of the criteria and weighting upon which they will be assessed the following year. In essence, the purpose of the Strategy is (i) to incentivise activation and continuity in the labour market to include all potential workers in employment; (ii) to promote investment in human resources throughout their working life in order for employees to remain permanently qualified and therefore able to adapt to changes, as well as increasing growth in productivity; and (iii) to provide employment with rights, equality and quality, with a particular focus on work-life balance.

7 The Court of Justice of the European Union's judgment of 29 November 2017 upholds the right to allowance in lieu of annual leave not taken due to reasons beyond the worker's control The referred judgment analyses the case of Mr. King, who worked for the defending company on the basis of a "self-employed commission-only contract" from 1 June 1999 until his retirement on 6 October Under that contract, the employee in question was paid on a commission-only basis. When he took annual leave, it was unpaid. Upon termination of his employment contract, Mr. King sought to recover payment for his annual leave taken and not paid, as well as not taken for the entire period of his engagement. The company rejected Mr. King s claim on the grounds that he had the status of self-employed worker and not an employee. Thus, Mr. King made a claim to the competent Employment Tribunal, which considered that he was a worker within the meaning of EU regulations and that he was entitled to the holiday pay claimed. Nevertheless, the defending company appealed against the Employment Tribunal s judgment, with the Court of Appeal of England and Wales (Civil Division) referring several questions to the Court of Justice of the European Union in relation to the claim for allowance in lieu of annual leave in the different scenarios in question. The European Court affirms that Directive 2003/88 does not allow Member States either to exclude the existence of the right to paid annual leave or to provide for the right to paid annual leave of a worker, who was prevented from exercising that right, to be lost at the end of the reference period and/or of a carry-over period fixed by national law. The above is without prejudice to the fact that such right may be limited in certain circumstances, for example a worker who is unfit for work for several consecutive holiday years. However, the Court believes that in this case the assessment of the right of a worker, such as Mr. King, to paid annual leave is not connected to a situation in which his employer was faced with periods of his absence which, as with long-term sickness absence, would have led to difficulties in the organisation of work. In essence, the Court concludes that the aforementioned Directive precludes national provisions or practices that prevent a worker from carrying over and, where appropriate, accumulating, until termination of his employment relationship, paid annual leave rights not exercised in respect of several consecutive reference periods because his employer refused to remunerate that leave.

8 "SISTEMA RED" Act 6/2017 of 24 October on urgent self-employment reforms introduces several amendments to the self-employed worker scheme One of the key amendments relates to the registration of self-employed workers in the social security system, which must be submitted prior to the rendering of services by such individual, and under no circumstances prior to 60 calendar days before the beginning of the services. Along the same lines, the system will enable the prior notification of de-registration up to 60 days before the end of the activity, although the maximum period of three days for such notification following the termination of such activity remains in place. Another significant amendment is reflected in the changes to the contribution bases given that those included in the Special Self-employed Scheme (RETA) may make up to four changes to their contribution base each calendar year. Lastly, further amendments are introduced with regard to certain contribution discounts and, specifically, concerning the extension of the reduced fee for self-employed workers included in the RETA - group for the special sea workers' scheme -, as well as persons with a disability or victims of domestic violence or terrorism who undertake or retake activity on their own behalf. Amendments concerning those with part-time and fixed seasonal contracts in cases of temporary disability When an employee is on a part-time contract or reduced working hours and also in a situation of temporary disability, maternity, paternity, risk during pregnancy or risk during breast feeding, the applicable contribution regulations are those of daily contribution, even if the employee falls within a monthly contribution group or daily group with a monthly indicator. Thus, the adjustment to 30 of the contributed days is removed in these cases. Thus, in the categories corresponding to said situations, the contribution base is set at daily and must be multiplied by the number of calendar days during which the employees remain in such situation. As of collection in December 2017, the controls regarding the minimum contribution base have been modified and the adjustment of contributed days for employees with fixed seasonal contracts and in situations of temporary disability, maternity/paternity and risk during pregnancy or breast feeding have been removed.