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New transfer pricing provisions on income tax
Amendments have been made to transfer pricing in recent legislation regarding corporate income tax. Taxand Spain highlights the key features.
Transfer pricing methods
- The update of the Spanish law in this point looks set to be beneficial, although in actual fact, flexibility in the application of both the methods and the use of certain pricing methodologies and practices had already become commonplace in determining the market value of controlled transactions.
Rules on determining related parties
- In step with the rules in Spain’s neighboring countries, the necessary ownership interest for parties to be related has been raised to 25% where related-party status is defined by reference to the relationship between the entity and its members or investors, instead of the 5% (or 1% in the case of listed shares on a regulated market) set out in the former law.
- Broadly speaking, the amendments to the documentation obligations for controlled transactions follow the same principles as the existing rules and are very much in line with the guidelines contained in the various projects carried out on this subject by the OECD and by the European Union.
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