Related party transactions
According to article 18 of the Law 27/2014 on Corporate Income Tax, transfer prices between related parties will be established on a market value basis. This means that prices should be the same as they would have been, had the parties to the transaction been independent to each other (arm’s length principle).
In this regard, related parties need to prove that related party transactions fulfil the arm’s length principle by making transfer pricing documentation available to tax authorities.
Article 18 describes an entity or a person as being a related party in the following scenarios:
B) An entity and its directors;
C) An entity and the spouse or persons related directly
or horizontally by blood or by marriage to the third grade of the partners, shareholders, or directors;
D)Two entities that belong to the same mercantile group;
E) An entity and the directors of another entity when both entities belong to the same mercantile group;
F) Two entities when one of them has an indirect interest of at least 25% in the share of capital of the other entity;
G) Two entities in which the same partners, shareholders, or their spouse or person related directly or horizontally by blood, by marriage to the third grade have a direct or indirect interest of at least 25% in the share of capital of the other entity;
H) A Spanish resident entity and its foreign permanent establishments.
Tax Advisors and Consulting Companies
We have put together a client service team of qualified professionals, lawyers and economists, with extensive experience in transfer pricing and international taxation.
Our philosophy is based on providing services of the highest quality, with maximum flexibility and a practical and creative approach essential for the current dynamics of business issues, whilst maintaining the personal relationship between lawyer, advisor and client.
Each client is always assigned a contact person, with whom they can discuss any issues, without prejudice to the fact that, in specific cases, their files will be dealt with by a team formed by professionals specialized in the legal fields applicable to each specific case.