On 28 November 2014, Laws 26/2014 and 27/2014, which modify the most important Spanish tax laws were published in the Spanish Official Gazette. This new legislation will generally come into force on 1 January 2015.
This new legislation modified in the following area:
Financial services
From 2015 there is a limit on the deductibility of interest on loans to purchase shares. Interest deductible is limited to 30% of the operating profit of the acquiring entity. This applies when the acquired and acquiring entities merge within a four year period or when new entities join the same tax group as the acquired and acquiring entities. The restriction does not apply in the year of acquisition if the acquisition debt is less than 70% of the cost of the shares. It will not apply in the following eight years provided that the acquisition debt is amortized down in that period to 30% of the total consideration. Also, intergroup profit sharing loans are characterized as equity for tax purposes so expenses paid in connection with the loan will not be deductible for tax purposes and the interest may be treated as a dividend.
Exemption from documentation requirements
From 2015 simplified documentation is introduced for taxpayers with a net turnover below EUR 45 million.
Priority of Methods
From 2015 the hierarchy of transfer pricing methods does not apply. For periods to 2014 a hierarchy of transfer pricing methods was specified under which, where possible, the transnational methods should be used to establish an arm’s-length price in preference to profit-based methods.
