Spain: local rules

Spain applies the arm's length principle through Article 18 of the Corporate Income Tax Law (Ley 27/2014, LIS). Related-party transactions must be valued at market value, which is the value independent parties would agree. Related parties include a company and its partners with 25% or more, its directors, other group members and its permanent establishments abroad. Documentation, comparability and range rules are in Articles 13 to 18 of the Corporate Income Tax Regulation (Real Decreto 634/2015, RIS). This research covers the common tax territory. The Basque Country and Navarre have their own foral rules.

Spain uses a group file (RIS art. 15, the master file) and a taxpayer file (RIS art. 16, the local file). The group file is not required when group net turnover is below EUR 45m, and the taxpayer file has a simplified content when turnover is below EUR 45m. No documentation is needed for transactions with the same related party that total EUR 250,000 or less at market value, or for transactions inside the same tax consolidation group (with some exceptions). The simplified content never applies to business transfers, sales of unlisted shares, real estate or intangibles. The files must be available from the end of the voluntary corporate income tax filing period and are handed over when the tax authority asks. Companies with turnover below EUR 10m may use the official standard form and do not need comparables. Companies must also file the annual Modelo 232 return.

LIS art. 18(4) lists five methods: comparable uncontrolled price, cost plus, resale price, profit split and transactional net margin. There is no fixed hierarchy. The choice depends on the nature of the transaction, the reliability of the data and the comparability. Other accepted valuation methods may be used when none of the five can be applied. If a range of values can be determined, statistical measures may be used to reduce the risk of error (RIS art. 17(7)). The law does not set a fixed interquartile range or median rule.

If documentation is missing, incomplete or false and the tax authority makes no adjustment, the fine is EUR 1,000 per data item and EUR 10,000 per set of data, capped at the lower of 10% of the year's related-party transactions or 1% of net turnover (LIS art. 18(13)). If there is an adjustment and the documentation is missing, incomplete or false, or the market value in the documentation differs from what was declared, the fine is 15% of the adjustment for each transaction. If the documentation requirement is met, the usual tax penalties do not apply to the adjusted amount (a penalty protection rule in LIS art. 18(13)). Late or wrong informative returns such as Modelo 232 fall under the General Tax Law, for example EUR 20 per data item with a EUR 300 minimum and EUR 20,000 maximum for a return not filed on time, halved (EUR 10, minimum EUR 150, maximum EUR 10,000) if it is filed late before any request from the tax authority (LGT art. 198(1) and (2)).

Law 7/2024 of 20 December 2024 applies the EU Pillar Two directive to groups with revenue of at least EUR 750m in two of the four prior years. The domestic top-up tax (QDMTT) and the income inclusion rule (IIR) apply to periods starting on or after 31 December 2023, and the undertaxed profits rule (UTPR) to periods starting on or after 31 December 2024. Three filings are due: Modelo 240 (names the entity that files the GloBE information return), Modelo 241 (the GloBE information return) and Modelo 242 (top-up tax self-assessment and payment). Modelo 241 is due by the last day of the 15th month after year end, or the 18th month for the group's first period, and never before 30 June 2026. Modelo 242 is due 25 calendar days after that month: 25 July 2026 for calendar 2024 (moved to 27 July because it is a Saturday) and 25 April 2027 for calendar 2025 (moved to 26 April because it is a Sunday).

Advance pricing agreements are available and can last up to 4 periods after approval, with possible effect on earlier open periods (LIS art. 18(9)). Intra-group services must give the recipient a benefit, and cost sharing agreements must meet set conditions (LIS art. 18(5) and 18(7)). A TP adjustment is taxed according to the nature of the income it creates, such as a dividend or a capital contribution for shareholders (art. 18(11)). Net interest is deductible up to 30% of operating profit, and always up to EUR 1m (LIS art. 16). There is no standard extension of the corporate income tax return. Late filing without a request carries a surcharge of 1% plus 1% per full month, rising to 15% after 12 months (LGT art. 27).