The Spanish Ministry of Finance released a draft regulation on Corporate Income Tax on March 18, 2015. Included in the regulations are some transfer pricing changes that are summarized below;

Country-by-country reporting:

  • A group of companies (Spanish-resident ultimate parent companies) whose net revenues are equal to or higher than 750 million euros, must file the country-by-country report which is similar to the proposed Annex III of the draft new Chapter V of the OECD Transfer Pricing Guidelines.
  • Spain’s MoF will approve a specific tax filing for this country-by-country reporting;
  • The filing period is within the 12 months following the end of each tax period.
  • Taxpayers belonging to a group whose net revenues are equal or higher than 45 million euros are obliged to keep a Masterfile for the group at the disposal of the Spanish tax authorities;
  • The contents of the Master file is similar to the proposed Annex I of the draft new Chapter V of the OECD TP Guidelines, and represents a significant increase in the details and amount of information to be disclosed at group level;
  • The Masterfile should be at the disposal of the tax authorities from the deadline for filing the annual corporate income tax return.

Taxpayer’s file

  • Spanish-resident companies and permanent establishments (PEs) in Spain belonging to a group whose net revenues are equal to or higher than 45 million euros are also obliged to keep a Taxpayer’s file at the disposal of the Spanish tax authorities;
  • The contents of the Taxpayer’s file are similar to the proposed Annex II of the draft new Chapter V of the OECD TP Guidelines, which is basically a transfer pricing study of the related-party transactions;
  • The Taxpayer’s file should be at the disposal of the tax authorities from the deadline for filing the annual corporate income tax return.

Documentation exclusions

These include the following transactions:

  • Controlled transactions carried out within a tax group;
  • Controlled transactions carried out by Economic Interest Groupings or Temporary Business Associations and their members (or other companies of the same tax group);
  • Controlled transactions carried out in the framework of the Securities’ Public Offering;
  • Those controlled transactions carried out with the same counterparty when the overall value is less than 250,000 euros.

SME’s simplified documentation requirements:

  • Companies belonging to groups with revenues up to 45 million euros should include the following:
    • Description and amount of the controlled transactions;
    • Identification details of taxpayer and the related-parties;
    • Transfer pricing method selected;
    • Comparable transactions used and the arm’s length value/range derived from them.
  • Companies belonging to groups with revenues up to 10 million euros should file a reporting form including:
    • Description and amount of the controlled transactions;
    • Identification details of taxpayer and the related-parties;
    • Transfer pricing method selected;
    • Arm’s length value/range.

The draft regulations also include the formal requirements for cost-sharing agreements, the procedure for secondary adjustments and the procedural regulations applying to unilateral/bilateral/multilateral advance pricing agreements (APAs).