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Spain: Spain set to introduce modifications to transfer pricing reporting requirements



Mario Ortega Calle

Teresa Cuenca Miguel

The Spanish government has recently published a draft Bill regarding corporate income tax regulations. Although it is still under parliamentary discussion, it is expected to be approved in the coming weeks. This draft Bill proposes significant changes to the existing legislation on controlled transactions, the most important of which are the introduction of country-by-country reporting (CbCR) obligations and the reinforcement of the transfer pricing documentation requirements.

New provisions are very much aligned with the latest developments coming from the OECD and its action plan aimed at tackling base erosion and profit shifting (BEPS).

CbCR obligations are to be introduced for Spanish-resident entities considered ultimate parent companies of a group, when the net revenues of such group within the previous 12 months amount to €750 million or more.

This information will be required from 2016 onwards, according to a specific template to be approved by the tax authorities that will accurately follow the recommendations published by the OECD.

In addition, from fiscal year 2018 onwards, Spanish tax authorities will be allowed to demand such information from any subsidiary located in Spain, owned directly or indirectly by a non-Spanish resident entity, provided the latter is not subject to similar requirements in its country of residence, or that there is no automatic information exchange agreement with the territory where it resides.

In connection with the specific transfer pricing documentation requirements, the draft Bill retains the existing double set of documentation – on the group to which the taxpayer belongs, and on the taxpayer itself.

Nonetheless, it adds a large number of new requirements, among which it is worth stressing that exhaustive information on the group's intangible assets and financing activities, comprising both internal and external strategies followed, as well as on its financial and tax positions, is demanded.

Entities belonging to groups with net turnover below €45 million in the preceding year will not be obliged to prepare the master file. Furthermore, taxpayers whose net turnover does not exceed such quantitative threshold could prepare a simplified local file.

However, information on certain specific transactions (for example, those performed with related entities by personal income taxpayers in the course of an economic activity, stock and business transfers, and transactions involving real estate and intangible assets) will not be excluded from the obligation to be reported, and the same will also not be able to be documented according to the simplified template.

It is also highlighted that an authorisation to re-characterise controlled transactions will be included, thus allowing the tax authorities to verify not only the price of such transactions, but also their real nature.

In light of the above, multinational groups operating in Spain should carefully consider how these incoming provisions are likely to impact their tax and transfer pricing policies as well as preparing to have the required information available.

Mario Ortega Calle ( and Teresa Cuenca Miguel (

Garrigues – Taxand, Madrid


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