Related transactions are one of the areas that the Tax Agency receives most surveillance in recent years. If your company makes transactions with companies of the same group, with partners or with direct relatives, it is essential that you know the tax and documentary obligations that arise from these transactions. In this article we explain what they are, how they are valued and what documentation you must prepare to avoid sanctions.
What are related transactions and why does the Spanish Tax Agency control them?
The related transactions are commercial or financial transactions made between natural or legal persons who maintain some kind of special relationship. This connection may exist when the parties belong to it. business group, share managers or shareholders, or there is a first- or second-degree family relationship between those who carry out the transaction.
Every year, the Tax Agency strengthens control over these transactions because there is a risk that artificial prices will be fixed with the aim of reducing the tax burden. Therefore, the regulation requires these transactions to be valued according to the principle of free competition, i.e. at the same price as would be agreed between independent parties under market conditions.
The Annual Tax Control Plan continues to prioritize the inspection of related operations at both the national and international levels, with special emphasis on: emphasis on multinational groups and companies with cross-border activity.
How are linked operations valued?
All transactions between related parties must be assessed on the basis of their market valueThis is the price that would have been agreed between independent companies or individuals acting under normal market conditions.
In order to determine the transfer price correctly, Spanish tax rules allow the use of several valuation methods. The most common are:
- Non-Controlled Comparative Price Method (CUP): compares the price of the transaction linked to similar transactions between independent parties. It is the most direct and reliable method when there are comparable transactions with third parties.
- Resale Price Method: uses the margin that an independent distributor would obtain when reselling a similar product. It is usually applied in commercial distribution activities.
- Incremented Cost Method (Cost Plus): adds a reasonable margin on the costs incurred by the supplier. It is common in manufacturing or service delivery operations.
Choosing the right method will depend on the type of transaction, the information available and the characteristics of the sector. The Tax Agency can make value adjustments if it considers that the price set does not conform to the market value, which can result in tax adjustments and penalties.
Report the entry into force of RD 126/2026 and any adjustments to the applicable standard and convention.
Documentation obligations: what is the Local File?
Companies carrying out related transactions are required to keep at the disposal of the tax administration specific documentation proving the valuation of these transactions. This documentation includes two main reports:
- Master File o Master Report: offers a global view of the business group, its structure, economic activity and transfer pricing policy. It is mandatory for groups with consolidated turnover of more than 45 million euros.
- Local File o Local File: details the related transactions carried out by the Spanish entity, including the functional analysis, the valuation method applied and comparability studies with market transactions.
The Local File it must contain information on the nature of the transactions, their amount, a comparability analysis with similar transactions between independent parties, and the justification of the valuation method chosen. For companies with a turnover of less than EUR 45 million, the documentation has a simplified content.
When are you obliged to document your linked operations?
Not all companies have to prepare this documentation, as exceptions to the obligation to document, among others:
- Where the set of transactions with the same linked entity/person is less than € 250,000
- Transactions between entities of the same tax group
- Transactions in the field of public offers for sale or public offers for the acquisition of securities
Companies that, on the contrary, are obliged to prepare the documentation and keep it available at any request of the Tax Agency. Non-compliance can lead to very important penalties that can reach up to 1% of the net amount of the turnover.
Related transaction declaration: Model 232
In addition to internal documentation, companies must declare their related transactions by means of the Model 232, an annual information statement which is submitted in the month following the 10 months following the end of the fiscal year.
This model should include all transactions with related parties that exceed certain thresholds, as well as transactions with entities located in tax havens. The presentation of the Model 232 is mandatory even if the company is exempt from preparing the full transfer price documentation.
Practical guide: steps to properly document your linked operations
If your company carries out related transactions that exceed the exemption thresholds, follow these steps to comply with your tax obligations:
- Identifies all related transactions during the financial year: loans, rents, sale of goods, services, transfer of intangibles, etc.
- Determines the valuation method more suitable depending on the type of operation and your business activity.
- Collects comparable information of similar transactions on the market justifying the price applied.
- Prepares documentation (Local File simplified or complete according to your billing volume) with functional and economic analysis of each operation.
- Presents Model 232 in time, including all operations to be declared.
- Keeps all documentation at the disposal of the Tax Agency during the tax limitation period (four years).
Linked operations are a complex tax area that requires expertise in valuation, economic analysis and tax regulations. An error in documentation or choice of valuation method may result in significant fiscal adjustments and economic sanctions.
In Afianza we have a specialist in tax and accounting advice which will help you meet all your obligations in related transactions. We offer you:
- Personalized analysis of your operations and determination of tax obligations
- Complete preparation of transfer pricing documentation (Local File)
- Development and presentation of the Model 232
- Review of valuation methods and comparability studies
- Defence before the Tax Agency in case of requirements or inspections
Do you make transactions with group companies or partners? Do you need to make sure that your transfer prices comply with the regulations? Contact Afianza and our team will guide you to operate with complete tranquility and legal certainty.
