Related-party transactions reporting obligations for corporate income tax purposes
The corporate income tax return form for tax periods commencing between January 1 and December 31, 2015 was approved on June 7, 2016. As in other years, taxpayers are required to present information in respect of transactions performed with related parties, although the recent tax reform has given rise to certain changes in the rules.
These include, in particular, the rule applicable to taxpayers whose turnover (or that of their group) for the previous period is less than 10 million euros, which will be able to fulfill their related-party transactions documentation obligations—and those relating to data to be declared in the return—by completing Schedule V to the return (indicating, among other details, the particulars of the related parties, the type of operation and valuation method applied, whether it resulted in revenues or a payment for the taxpayer, the amount accrued and the range of arm’s length values).
All other taxpayers, generally, are required to present information in their IS return on all related-party transactions subject to documentation obligations. The documentation obligations applicable to taxpayers whose turnover (or that of their group) exceeds 45 million euros, are those stipulated in the old IS Regulations, whereas the rules applicable to all other taxpayers are those set out in the new Regulations.
There are nevertheless certain specific related-party transactions (e.g. the transfer of real estate or transactions with intangibles, among others) to which the above criterion does not apply. These are required to be reported only when operations taking place between the same parties exceed 100,000 euros, such operations being of the same type and being valued by the same method, irrespective of whether or not they are required to be documented.
This year, the return also requires, on page 22, specific information on related-party transactions in respect of which the tax incentive consisting of the reduction of income from the assignment of certain intangible assets, or “patent box incentive“, has been applied in accordance with article 23 of the IS Law.
The specific circumstances of each taxpayer are to be reflected on page 1 of the return, on which it is required to state the type of reporting and documentation obligations to which it is subject.
In short, the Spanish tax authorities are focusing a great deal of attention on related-party transactions, ever more anxious to avoid the erosion of tax bases subject to taxation in Spain.
Garrigues’ Tax Department