Form 232 replaces form 200 in the annual return of related-party
During the month of November, corporate income taxpayers who carried out transactions with related persons or entities in 2016 must file a new informational return (form 232), which replaces the information on related-party transactions previously forming part of the annual corporate income tax return (form 200). The new form 232 includes significant new features regarding the scope of the related-party transactions to be reported, expanding on it with respect to the criteria established on the table formerly included on form 200.
Thus, although on one hand there continues to be an obligation to report transactions carried out between the same two parties where their market value exceeds €250,000, on the other hand new obligations are added, based on reporting certain specific transactions (e.g., royalties, transfers of shares, of businesses or of real estate) where they are of the same type and together exceed €100,000 (regardless of whether they were carried out between the same two parties); as well as transactions which are of the same type, are priced using the same method and together (without necessarily being with the same counterpart) entail more than 50% of the taxpayer’s revenue.
This last case is aimed at identifying “captive” companies, i.e., companies whose transactions are carried out, whether via expense or revenue, principally with related parties.
Notwithstanding the foregoing, the exemption from reporting is maintained for transactions carried out between two entities taxed under the same consolidated tax group.
Also exempt from reporting are transactions carried out by economic interest groupings and joint ventures with their members/venturers or with other members of the same consolidated tax group, with certain limitations, as well as transactions carried out in the context of public offers for the acquisition or sale of shares.
There has been no change to the contents of the return, which must continue to indicate the person with whom the transaction was carried out and his identifying particulars, the reason giving rise to his tax relationship with the taxpayer, the type of related-party transaction (from among those listed in the Order approving the form), the pricing method used (to be determined on the basis of an advance transfer pricing analysis aimed at identifying the information that will be available to support the fact that the transaction was priced at arm’s length, as well as the standpoint from which such information can be analyzed and compared) and the amount payable for accounting purposes during the tax period (without VAT and in euros).
As you see, new developments continue to be made in matters of transfer pricing, aimed at enhancing taxpayer transparency and, thus, helping the tax authorities to control tax fraud more effectively, all of which increasingly entails a need to ensure that transfer pricing policies comply with the legislation in force and are applied consistently throughout the entire group of companies.
Garrigues Tax Law department