What are transfer prices?
Transfer prices are the values assigned to transactions between related companies or companies that are part of the same corporate group. These transactions include the purchase and sale of goods, the provision of services, and the transfer of intangible assets such as trademarks or patents. This concept is vital for multinational companies, which must follow the arm’s length principle. This principle ensures that transactions between related parties are valued in the same way as if they were between independent parties, at arm’s length.
Compliance with this principle is key to avoid tax penalties and to ensure that companies do not unduly benefit from lower tax jurisdictions. Global regulations, such as the OECD guidelines and the BEPS (Base Erosion and Profit Shifting) scheme, seek to prevent tax avoidance and ensure that multinationals are taxed where they generate value.
Legal Framework for Transfer Pricing in Spain
In Spain, transfer pricing is regulated by the Spanish Corporate Tax Law (LIS), which obliges companies to carry out their linked transactions at market values. In addition, it requires companies to maintain adequate documentation to justify the prices applied. This documentation is essential to demonstrate that transfer prices comply with the arm’s length principle.
Form 231 is one of the most relevant documents in this area. It is the Country-by-Country Report, an obligation for multinationals with a turnover of more than EUR 750 million. This report allows the Spanish tax authorities, such as the Spanish Tax Agency (AEAT), to monitor international operations and adjust tax bases in case of detecting base erosion or profit shifting practices.
Why is Transfer Pricing compliance important?
Transfer pricing compliance is an essential pillar of international tax planning. With the increase in tax audits and automated tools that analyse the risks of related-party transactions, companies must be prepared to properly justify the valuations they assign to their internal transactions.
At the international level, the OECD Guidelines provide a uniform framework for member countries, including Spain, to regulate and review transfer pricing. These guidelines were updated in 2022 to include a more detailed focus on the valuation of intangible assets and intra-group financial transactions, areas that frequently generate tax adjustments. Multinationals should take these new guidelines into account to avoid penalties and optimise their tax structure.
Our Transfer Pricing Services
At GPASOC, we offer a comprehensive and customised approach to transfer pricing management, ensuring regulatory compliance and tax optimisation for our clients. The services we provide include:
- Transfer pricing policy advice: We create policies that comply with international regulations and are aligned with each client’s business strategy.
- Transfer pricing documentation: We prepare all the necessary documentation justifying the agreed values in transactions between related companies, ensuring compliance with the arm’s length principle and OECD guidelines.
- Transaction review and analysis: We evaluate transactions between companies in the same group to identify potential tax risks and areas for improvement in the tax structure.
- Defence before tax authorities: We represent our clients before audits and requirements from local and international tax authorities, guaranteeing a solid defence based on correct documentation and regulatory compliance.
How can we help you?
At GPASOC, we understand that every company has specific needs. That’s why we offer customised solutions that fit each client’s structure and operations. We keep up to date with changes in tax regulations, allowing us to offer an up-to-date and effective service. Whether your company needs a review of its current policies or assistance in creating new documentation, we are ready to help.
Our commitment to transparency and compliance
Our team of international tax experts has extensive experience in dealing with transfer pricing in different jurisdictions. We work closely with our clients to ensure that their operations comply with local and international tax regulations, minimising penalty risks and optimising their tax structure.
Why choose GPASOC?
Choosing us means relying on a team with extensive experience in the field of transfer pricing and international taxation. Our approach is based on transparency, compliance and adaptation to the latest international regulations.
For more information on how we can help your company with transfer pricing management, contact us and find out how to optimise your operations with the support of a team of experts.
Conclusion
Transfer pricing is a key tool in international tax planning. At GPASOC, we are committed to helping you comply with tax regulations, both locally and internationally, minimising risks and optimising your company’s tax structure. Contact us for more information and find out how we can help you!