The objective of the tax compliance policy of Soltec Power Holdings, S.A. and its subsidiaries (hereinafter «the Group») is the implementation of a tax organization and management model based on the due monitoring and reinforcement of an ethical corporate culture regarding the observance of tax obligations, which minimizes the risk of tax infringement and evasion due to negligence or willful misconduct by any member or collaborator of the company.
In this context, the Governance Body of the Group has implemented a series of internal measures and regulations for the supervision, surveillance and monitoring of the activity of the companies of the Group with the purpose of guaranteeing and recording due diligence in the fulfillment of tax obligations.
The Group is made up of different companies distributed in different territories. It is the purpose of the Governance Body of Soltec Power Holdings, S.A. to implement this Policy in every company over which it has control, regardless of the territory where the company is located, while adapting and adjusting the policy to the company in question. In those investee companies which the Group does control, the Governance Body will enforce the implementation of this policy or, at least, the implementation of a series of minimum supervision, reporting and surveillance measures adapted to the particular situation of each company regarding tax matters.
The control and prevention model adopted by the Group through this policy is based on the identification of risk activities, the implementation of procedures so that decisions about such risks can be made and put into practice, the express allocation of proper financial resources and the implementation of a disciplinary system in case of infringement.
Moreover, the control and prevention model adopted has specific mechanisms for its regular revision and supervision regarding the suitability of the implemented measures and its adequacy to the characteristics and circumstances of the Group.
- Principles and Foundations of the Tax Compliance Policy
The Group’s tax compliance policy is based on a series of practices whose foundation is due diligence and whose purpose is to implement control measures which guarantee optimal tax management, the elimination of possible fiscal risks and the elimination of criminal liability.
Conceptually, the Group’s tax compliance policy revolves around the following principles:
2.1 Objectivity. The tax compliance policy materializes in the adoption of concrete and specific measures which allow their homogeneous implementation throughout time, regardless of the person responsible for its adoption.
2.2 Suitability. The objective of the measures adopted for the implementation of the tax compliance policy is to demonstrate due diligence in the management of fiscal and customs risks and obligations by the managing bodies.
2.3 Measurability. The measures implemented pursuant to the tax compliance policy establish quantifiable targets, so that their monitoring is feasible and scalable.
2.4 Efficiency. The tax compliance policy is based on a minimum imposition of formal duties by promoting the use of synergies.
2.5 Relevance. The measures implemented pursuant to the tax compliance policy have a real impact on achieving the final goal.
The regulatory principles of the tax compliance model comprise measures whose objective is the system efficacy and effectiveness in order to achieve the final goal of good tax management and, eventually, the exemption of criminal liability for the corporate body.
The tax compliance measures developed and implemented by the group are based on the following principles:
2.6 Decision-making. The decisions on tax matters are made by the members of the fiscal department, under the supervision and management of the financial director (hereinafter «CFO»), within the framework of Fiscal Policy approved by the Governance Body.
The members of the Fiscal Department have the duty to inform the Governance Body of the fiscal and customs decisions and to have their approval for the most relevant ones.
2.7 Resources. The Governance Body shall have all necessary information to make any fiscal decisions. The persons responsible for making the decisions on tax and customs matters are sufficiently qualified and have the necessary material resources for that. However, pursuant to the principles governing the fiscal strategy of the Group and good practices arising therefrom, the persons responsible undertake to keep the CFO and the Governing Body informed before making any decisions on especially relevant tax matters.
2.8 Traceability. There are mechanisms in place to evidence the decision-making process and the assignment of the persons responsible for the compliance of fiscal duties and the implementation of measures. To that effect, traceability of information in the decision-making process regarding tax matters is part of the fiscal strategy of the Group. As evidence thereof, the persons responsible for fiscal matters undertake to formally record the decisions made or measures taken in the internal files of the Company.
2.9 Special operations. We have identified the operations which must have a special treatment regarding decision-making, allocation of resources and traceability, due to their particular relevance.
The tax compliance policy of the Group, promoted and approved by the Governance Body, requires full compliance with the tax legislation applicable to the Group and observance of the doctrine of the courts of law and of the Department of Taxation when it comes to the interpretation of tax regulations and to the classification of a transaction which is to be performed or has been performed by the Group for tax purposes.
The tax compliance policy is in line with the aims and objectives of the Group, which include eliminating the risk of tax infringement and evasion due to negligence or willful misconduct by any member or collaborator of the company, by implementing a tax organization and management model based on due tax control and reinforcement of an ethical corporate culture for the observance of tax obligations.
Therefore, the tax compliance policy expressly prohibits all members of the Group from willfully or negligently committing tax infringement or offenses, with the purpose of minimizing the perpetration of these actions.
Moreover, the tax compliance policy minimizes the Group’s exposition to tax risks in an effective and proportionate manner, by implementing a series of organizational and protocol Regulations that allow for the identification, detection, prevention and mitigation of fiscal risks.
Additionally, a series of organizational Regulations have been established, which provide an adequate framework for the definition, revision and achievement of tax compliance targets by analyzing the internal and external factors relevant to the tax compliance management system, determining the interested parties and the subjective and objective scope of the program.
The tax compliance policy also includes a Statement of Compliance from the Governance Body and an active Collaboration Agreement between the Group managers so that the targets established in the tax compliance management system can be met.
In the same vein, communication channels have been established so that infringements or well-founded suspicions of infringement can be reported, while guaranteeing that the informant will not suffer retaliations, in the following terms:
As established in the corresponding Protocol for the Reporting Channel, it is the obligation of all personnel, regardless of their condition and category, to notify the compliance body of any well-founded suspicion or knowledge of possible infringements of any Policy, Regulation or Protocol implemented by the Group pursuant to the Corporate Compliance and Tax Compliance programs.
As established in the corresponding Protocol for internal reporting policy and procedures, no employee shall be discriminated against because of their reporting in good faith of any infringement of any Policy, Regulation or Protocol implemented by the Group as a consequence of the implementation of the Corporate Compliance and Tax Compliance programmes.
In this manner, the tax compliance policy of the Group expressly registers a commitment of continuous improvement of the tax compliance management system.
For that purpose, the Governance Body, on its own or through its Tax Compliance Body (hereinafter, «Tax Compliance Officer»), will promote the revision of this Tax compliance policy and of the organizational regulations thereof, and will adopt the modifications and improvements that they deem appropriate, in accordance with the applicable legislation from time to time.
In this sense, the Tax Compliance Officer is therefore the highest guarantor of the supervision, surveillance and control of the necessary requirements for the proper implementation of the tax compliance system and it has enough resources and personnel with the necessary competences, status, authority and independence for that. Finally, the regulations adopted by the Group within the framework of tax compliance policy are internal regulations. Therefore, any infringement will be sanctioned in accordance with the labor legislation in force, pursuant to the Statute of Workers Rights and the Collective Bargaining Agreement signed by the company, depending on the severity of the breach.
- General Principles of the Programme of Corporate Compliance
For the purposes of implementing this tax compliance policy, the following organizational regulations are established.
The Governance Body has approved the management framework upon which the tax compliance policy of the Group is based and delimited.
In this sense, a series of structural rules have been approved, whose purpose is to demonstrate and reinforce due diligence in the Group’s tax management.
Regulation 001: Conceptual framework of tax management. This regulation defines the Group’s organizational and tax management model. Additionally, this regulation includes a compliance statement from the Governance Body and a compliance statement from the CFO and the key persons in tax matters, which guarantee that the tax compliance policy has been properly implemented and is sufficient.
Regulation 002: Intervention of the Governance Body and the Senior Management in the company’s fiscal policy and its implementation. This regulation registers the intervention of the Governance Body and the Senior Management in the design of the Group’s Fiscal Policy and the stages of the process of making particularly relevant tax decisions.
Regulation 003: Appointment of the Tax Compliance Body. The purpose of this regulation is to register the duties of the Tax compliance officer and the specialized teams and their appointment by the Governance Body.
Regulation 004: Functional organization chart and chain of command in fiscal matters. The purpose of this regulation is to register the role of the Governance Body in the design of an operational structure and chain of command (functional organization chart) of the Group in fiscal matters.
Regulation 005: Annual training plan and responsibilities. The purpose of this regulation is to approve an annual tax training plan for the Group’s employees with the aim of training and updating all those members involved in the process of making or implementing relevant tax decisions. Moreover, the responsibilities of the members of the Group are registered.
Regulation 006: Protocol for monitoring the results of audits. The purpose of this regulation is to approve a measure assessment, monitoring and implementation protocol by the Governance Body regarding the results of tax audits, with the purpose of achieving the proper implementation of the consequences arising from unaudited fiscal years. This protocol shall be used by the persons responsible for the Group’s tax management regarding the tax audit procedures.
Regulation 007: Protocol for monitoring and preparing reports on matters relevant to future fiscal years. The purpose of this regulation is the implementation of mechanisms that guarantee the proper tax management of those matters that may have an impact on future fiscal years
Regulation 008: Definition of the special transaction framework. The purpose of this regulation is to define the transaction which shall be qualified as “special transactions” for the purpose of implementing the tax compliance policy of the Group.
Regulation 009: Protocol for recording the decision-making process in relevant matters. The purpose of this regulation is to establish recording mechanisms for the process of making tax-related decisions.
Regulation 010: Communication and dissemination of regulations. The purpose of this regulation is to establish the communication and dissemination guidelines and procedures for the managing regulations adopted by the Group in the framework of tax compliance policy.
Regulation 011: Management of tax compliance measures. This regulation establishes the management mechanisms for tax compliance policy and the regulations and procedures adopted pursuant to the same.
Regulation 012: Management of tax risks. This regulation approves the identification, assessment, management and implementation protocol for measures related to the Group’s tax risks.
Regulation 013: Protocol for keeping fiscal information. This regulation approves the protocol for keeping tax information regarding all those decisions, agreements or documents which, due to their nature, may be relevant to tax matters.
Regulation 014: Performance evaluation system. This regulation establishes the monitoring and evaluation of the performance of the tax compliance management system with the purpose of guaranteeing that the targets are met.
- Infringement of tax compliance policy: disciplinary system.
In the events of infringement of the tax compliance policy of the Group by any employee or collaborator, the applicable disciplinary system shall be the system established in the Statute of Workers Rights and the Collective Bargaining Agreement signed by the company, depending on the severity of the breach.
The Group’s Human Resources Department shall be in charge of adapting the sanction to every particular action.
See Regulation 002 Intervention of the Governance Body and the Senior Management in fiscal policy and Regulation 004 Functional organization chart and chain of command in fiscal matters.