Transfer Pricing and Related-Party Documentation in Spain

All entities carrying out related-party transactions must value them at arm’s length. However, the obligation to prepare specific documentation (Master File and Local File) applies to entities whose group has consolidated net turnover exceeding EUR 45 million (Article 18.3 LIS and Article 13 RIS). The Country-by-Country Report is mandatory for groups with consolidated turnover of EUR 750 million or more. Regardless of size, Form 232 must be filed if related-party transactions exceed the EUR 250,000 or EUR 100,000 thresholds.

Article 18.13 LIS establishes fines of EUR 1,000 per omitted, inaccurate or false data item, with a minimum of EUR 10,000. If the Authority makes a valuation adjustment and the taxpayer lacks adequate documentation, the penalty can reach 15% of the adjustment amount, minimum EUR 10,000. These penalties are in addition to the resulting tax assessment and late-payment interest, currently calculated at the legal money rate plus 25%.

Form 232 is a mandatory annual informative declaration on related-party transactions. It must be filed in November of the year following the fiscal year. Transactions with a single related entity exceeding EUR 250,000, transactions of the same type exceeding EUR 100,000 in aggregate, and Article 21 LIS exempt transactions exceeding EUR 100,000 must be declared. The AEAT uses this information to select taxpayers for transfer pricing inspections.

For management fees, the most common methods are Cost Plus and TNMM. Cost Plus starts from the service provider’s cost and adds a comparable mark-up. TNMM analyses the provider’s net operating margin. The AEAT requires proof that the service was effectively provided, generated a real benefit for the Spanish subsidiary, and the cost allocation method is reasonable. Time sheets, specific deliverables and documented service level agreements are required. The market mark-up for management services typically ranges 5%-10%.

Intra-group loans must apply a market interest rate. The AEAT analyses both the rate and terms (maturity, guarantees, subordination clauses, conversion options). The usual reference is Euribor at a comparable tenor plus a spread reflecting the borrower’s standalone credit risk (assessed independently, as if the borrower had no group support). Loans with rates significantly above or below market, or with conditions an independent bank would not accept, will be adjusted. Loans without a defined maturity or perpetually renewed may be reclassified as capital contributions.

The CbCR is mandatory for multinational groups with consolidated turnover of EUR 750 million or more, per BEPS Action 13 and Article 14 of the RIS. It contains aggregated information by jurisdiction: related and unrelated party revenue, pre-tax profit, corporate tax paid and accrued, stated capital, undistributed earnings, employee headcount and tangible assets. Spain automatically exchanges CbCRs with other jurisdictions, enabling the AEAT to detect misalignments between declared profits and actual economic activity.

Yes. Transfer pricing documentation does not prevent an adjustment if the AEAT demonstrates the prices are not at market value, but it is the taxpayer’s primary defence tool. Robust documentation — with detailed functional analysis, justified method selection, reproducible comparable search and well-founded conclusions — significantly reduces adjustment probability and strengthens the taxpayer’s position before the TEAC and courts. With complete and adequate documentation, penalties for valuation adjustments are eliminated. The burden of proof for price inadequacy lies with the Authority.

As a member of INPACT Global, with presence in over 70 countries, Euroaccounts coordinates directly with the group’s tax advisers in other jurisdictions. This ensures the Spanish Local File is consistent with the global Master File, valuation methods are applied consistently across jurisdictions, and financial data reconciles. In case of adjustment by a tax authority, this coordination facilitates Mutual Agreement Procedures (MAP) under double tax treaties and correlative adjustments to eliminate the resulting economic double taxation.