Transfer Pricing studies.

Art. 18 of the Corporate Income Tax Act defines the link mainly by holding: two entities are related if one holds, directly or indirectly, at least 25% of the capital of the other, or if the same person or entity holds at least 25% of the capital of both.

Transactions between an entity and its directors or managers are also considered related, as well as transactions between an entity and its individual shareholders (subject to specific conditions).

Any transaction carried out between related parties: sales of goods, provision of services (including intra-group and management services), licensing of intangibles, intra-group financing, transfers of asset use, business restructurings, shared costs. All must be agreed at market price and, depending on volume, documented.

The OECD Guidelines provide that the "most appropriate" method to the circumstances of each transaction must be selected; there is no fixed hierarchy between methods.

In practice: CUP applies if there are direct internal or external comparables (rare outside commodities). The Transactional Net Margin Method (TNMM) is the most widely used due to its flexibility. Profit Split is reserved for transactions where both parties contribute unique and valuable intangibles.

The choice must be justified in the Local File with a detailed comparability analysis.

The documentation obligation always exists, but the format depends on volume. For small groups (turnover below EUR 45M), simplified documentation is sufficient. For specific transactions below EUR 250,000 with the same related party (within a tax period and by type), no specific documentation is required either.

It is advisable, even below thresholds, to keep contemporaneous evidence (contracts, price justification) that allows the transaction to be defended if the tax authority challenges it.

The tax authority can reassess the price applied and demand additional payment with late-payment interest. If the transaction is cross-border, this creates potential double taxation: the Spanish entity pays more in Spain, but the entity in the other country does not automatically obtain a corresponding reduction.

Defence routes: submissions during the inspection procedure, administrative appeals (REA, REC), judicial review, and, to avoid double taxation, a Mutual Agreement Procedure (MAP) between the tax authorities of the two States involved.

A standard Local File for a medium-sized group requires between 4 and 8 weeks of work from signing the engagement. Timelines depend on the volume and complexity of the related-party transactions, the availability of client information and the comparables search (which may be quick or very complex depending on the sector).

For a multinational group Master File, the timeline typically extends to between 8 and 16 weeks.

Yes, for groups with consolidated turnover above EUR 750 million. The CbCR is filed in the jurisdiction of the ultimate parent and is automatically exchanged with the tax authorities of the other countries where the group has a significant presence. Preparation requires global accounting coordination and knowledge of the local rules in each jurisdiction.

Yes. Transfer pricing audits are technically demanding and are handled by a specialised team. We cover the full procedure: review actions, submissions, administrative appeals and judicial review. For cases involving double taxation, we coordinate the MAP between tax authorities.