Transfer pricing obligation. Country-by-country report


By way of a reminder and in connection to the regulations on transfer pricing, the Corporate Income Tax Regulations lays down two types of obligations which must be met by organizations belonging to a group of companies: transfer pricing documentation and information about related party transactions.

The transfer pricing documentation includes both the master file (connected to the group to which the taxpayer belongs) and the local file (connected to the taxpayer as such).

(i) Concerning the information about related party transactions, it includes the submission of information country by country by means of Form 231, created as a result of the action plan developed by the OCDE on Base Erosion and Profit Shifting (BEPS).


Who is required to submit this Form?

This duty to inform is aimed at multinational groups whose aggregated net turnover exceeds 750 million euros. Once this requirement is met by the group, particular attention must be paid by the following organizations:
Companies resident in Spanish territory which have a dominant position within their group and which are not dependent on another company.
Companies resident in Spanish territory which are directly or indirectly dependent on a non-resident company which is not dependent on another company.
Permanent establishments of non-resident companies located within Spanish territory.
However, in the event the foreign parent company has filed its country-by-country report, the Spanish dependent company will not be required to submit this Form.



What information must be communicated?

Generally speaking, the new duty to inform means that a country-by-country report must be filed covering (i) the group’s net turnover, (ii) profit before corporate tax, (iii) accrued corporate (or similar) tax, (iv) existing capital and other equity amount, (v) average headcount, (iv) tangible assets and real estate investments other than cash and credit entitlements, (vii) list of resident entities, permanent establishments and operations conducted, and (viii) any other information which may be relevant and any documents providing an information thereof.
According to the above, we must advise multinational groups present in Spain to adopt the necessary measures before the end of the financial year to make available the information required and analyze any potential effects which may arise from the mandatory communication of these particulars.




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