Royal Decree 634/2015 of July 10- approving the Corporate Income Tax Regulations- and Law 27/2014, contains the specific documentation on related-party transactions or transfer pricing in Spain required by the Tax Agency and to which taxpayers must comply with.

The net turnover amount (INCN) is the indicator to be taken into consideration when preparing such documentation. This documentation must be prepared prior to the end of the voluntary period for filing the corporate income tax return and, in the event of an inspection, the deadline is 10 days from the date of the request by the AEAT.

The transfer pricing documentation in Spain to which the taxpayer is subject is as follows:

Simplified documentation

For small-sized companies only the following information has to be submitted:

  1. Description of the nature, characteristics and amount of the related transactions
  2. Name and surnames or company name or full name, tax domicile and tax identification number of the taxpayer and of the related persons or entities with which the transaction is carried out
  3. Identification of the valuation method used
  4. Comparables obtained and value or ranges of values derived from the valuation method used.

Less than 45 million: companies with an INCN of less than 45 million euros, only have to have the Simplified Documentation available to the Tax Authority.

Master File

Which must provide an overview of the multinational group’s activities, and its content is as follows:

  1. Information related to the structure and organization of the group;
  2. Information regarding the group’s activities;
  3. Information relating to the intangible assets of the group;
  4. Information relating to the financial activity; and
  5. Financial and tax position of the group.

Local File

Which must provide information on Spanish entities with related-party transactions, and its specific content is as follows:

  1. Taxpayer information;
  2. Information on related operations; and
  3. Economic-financial information of the taxpayer.

More than 45 million: in the case of companies with an INCN of more than 45 million euros, they must have both the Local File and the Master File available to the Tax Authority.

Country-by-Country report

This report aims to provide a global financial overview of the operations of multinational companies, which will be used as a risk assessment tool for tax administrations, and its contents are as follows:

  1. The gross income of the group, distinguishing between those obtained with related entities or with third parties
  2. Profits or losses before taxes
  3. Corporate income tax (paid and accrued)
  4. The amount of capital and reserves
  5. Number of employees
  6. Tangible assets (tangible fixed assets)
  7. The list of resident entities, including permanent establishments and main activities carried out by each of them
  8. Other information considered relevant and an explanation, if applicable, of the data included in the information.

More than 750 Million: parent companies of multinationals, with a consolidated worldwide net turnover of more than 750 million euros, must file the Country-by-Country report in their tax domicile of residence.

Víctor Sáez

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