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Transfer Pricing in Spain, Regulations and Formal Obligations Required by the State Agency of the Tax Administration (AEAT)

The Corporate Tax Regulations (Royal Decree 634/2015 of 10 July 2015) set out detailed rules on documentation, criminal proceedings, tax audit transfer pricing procedure, secondary adjustments and a specific APA procedure. It also regulates the Mutual Agreement Procedure and the European Union Arbitration Convention (EU/90/436) from an internal Spanish perspective. The most relevant change in Royal Decree 634/2015 with respect to its previous publications is that a new Article14 has been included to regulate country-by-country reporting obligations.

Obligated subjects

However, the formal obligations shall apply as provided by law under the following conditions:
In accordance with Article 13.3.d) of the Corporate Income Tax Regulation (RIS), those transactions carried out with the same person or related entity, provided that the amount of the consideration for all the transactions does not exceed EUR 250,000, are not required to submit documentation.
Entities with a turnover of less than EUR 45 million (taking into account the entire turnover of the trading group) are exempt from the documentation obligation relating to the group, but the simplified documentation of the taxpayer shall be submitted.
In the terms set out in Articles 15 and 16 of the RIS. These groups will be obliged to have at the disposal of the Administration both the documentation relating to the group to which the taxpayer belongs and the taxpayer’s documentation (Local Report and Master).
Groups whose net turnover was at least EUR 750 million in the 12 months prior to the start of the tax period shall be obliged, in addition to the documentation relating to the group and the taxpayer, to provide country-by-country information regarding the related transactions carried out. The entity must be a Spanish resident and the parent of the business group.

Formal obligations

Penalties for non-compliance

With respect to the breach of the obligation, when the assessment does not result in a tax adjustment, the fine shall be EUR 1,000 or EUR 10,000 for groups of facts omitted or false.

In case the Tax Administration adjusts a transaction, the penalty can be up to 15% of the gross adjustment.