International Tax Services - Transfer Pricing - Spanish VAT Registration - Zurbano Advisers and Consultants

Transfer pricing services

Zurbano Advisers and Consultants

Transfer pricing is at the core of international trade within multinationals.

Zurbano’s Transfer Pricing Services helps entities implement economically sustainable transfer pricing policies, document said policies and respond to tax authority challenges.

The Spanish Tax Administration supports Base Erosion and Profit Shifting (“BEPS”) Action Plan, and legislation is already applicable regarding the treatment of hybrid instruments, hybrid income and limitations on the deductibility of financial expenses and new documentation requirements, which focus on transparency and Country-by-Country reporting (“CbC”).

Our services consist, among other, of:

  • Planning & Restructuring transfer pricing policies
  • Valuation of complex transactions
  • Value Chain Analysis
  • Elaboration of Global & Local Transfer Pricing documentation
  • Advance Pricing Agreement (“APA”)
  • Tax audits

OECD Guidelines

Spanish transfer pricing legislation explicitly endorses the application of the OECD Guidelines and those of the European Union Joint Transfer Pricing Forum (EUJTPF) — country by country reporting, master file and country-specific concepts are required.

Taxpayers’ documentation, when requested to be disclosed, should include the identification of the companies involved in the related transactions, legal, organizational and operational structure of the group, nature and volume of the intra-group transactions carried out, functional analyses of such transactions, transfer pricing policy applied to set the prices of the transactions and transfer pricing methodologies and economic analyses used to test such prices.

Country-by-Country reporting

The CbC reporting obligations are effective for fiscal years starting as from January 1, 2016 generally apply to Spanish tax resident entities which are the “head” of a group and are not at the same time dependent of any other entity, whether Spanish resident or not, to the extent the consolidated group’s net turnover in the immediately preceding fiscal year exceeds €750 million.

These rules also apply to Spanish entities and permanent establishments (“PE”) which are, directly or indirectly, held by a non-Spanish resident head entity when one of the following circumstances is met:

  • The country in which the head entity is resident has not established CbC reporting obligations in similar terms to Spain.
  • The Spanish resident entity or PE has been appointed by its non-resident parent entity to prepare the CbC reporting.
  • The country in which the head entity is resident has not signed an automatic exchange of information agreement with Spain in relation to these obligations.
  • The country in which the head entity is resident has systematically failed to comply and this systematic failure has been notified to the Spanish tax resident companies or PEs before the reporting fiscal year end.

In addition, the CIT regulations include the obligation for Spanish companies belonging to reporting groups to notify the Spanish tax authorities of the name and tax residence of the company within the group filing the CbC report. Such notification must be made before the reporting fiscal year end through Form 231.

The lack of transfer pricing documentation

The lack of a proper TP documentation has the following sanctions:

  • If the tax authorities do not make a transfer pricing adjustment, a tax penalty of €1,000 per item of data and €10,000 per group of omitted or misleading documentation may be imposed. There is an upper limit, consisting of the minimum value between 10% of the related transactions subject to corporate income tax, personal income tax, or non-resident income tax during the fiscal year and 1% of the company’s turnove
  • If the tax authorities do make a tax adjustment, the penalty would be equal to 15% of the adjustment.

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