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An analysis by Garrigues, Taxand Spain
Spanish tax authorities have recently increased their focus on transfer pricing due to its subjective nature and lack of clear legal guidelines. This has resulted in more litigation most favouring the State.
Authorities are scrutinising related-party transactions, particularly in debt financial operations, cash pooling systems, and companies with recurring losses, stressing the need for proof of transaction nature, market-based rates, and condition reasonableness. The scrutiny also covers restructurings, intra-group services, intangibles, and shareholder-company relations.
Taxpayers should implement coherent transfer pricing policies and robust documentation to meet tax authority standards. Miguel Hernández Ruiz from our Spanish member firm Garrigues has published a detailed analysis and provided recommendations for taxpayers in Spain which can be read here.
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