SPAIN Law and Practice Contributed by: Raúl Salas and Elena Ferrer-Sama, RocaJunyent
treaty countries used by foreign investors for making investments. 4.3 Tax Authority Scrutiny of “Treaty Shopping” Practices The use of treaty-country entities by non-treaty coun - try residents may be challenged by the Spanish Tax Agency, based on the argument that the recipient is not the beneficial owner of the relevant income. This approach is supported both by the OECD Multilateral Convention to Implement Tax Treaty-Related Meas - ures to Prevent Base Erosion and Profit Shifting (the “Multilateral Instrument”, or MLI) and the jurispru - dence of the CJEU. The General Guidelines of the 2026 Annual Tax and Customs Control Plan approved by the Spanish Tax Agency establishes as a priority area of attention the verification of the correct declaration of the withhold - ings applied to dividends, interest and royalties paid to non-residents. Likewise, whether the recipient of this income is the beneficial owner will be checked, in order to verify that there is no abuse of the EU regula - tions aimed at facilitating free movement of capital within the territory of the EU. 4.4 Transfer Pricing Issues for Inbound Investors In line with the SGAAP, the CIT Act clearly specifies that controlled transactions carried out by related parties must be valued on an arm’s length basis. In this sense, the burden of proof falls on the taxpayer, who must provide documentation to prove to the tax authority that the values applied in the transactions with related parties comply with the principle of valu - ation at fair market value or on an arm’s length basis. In recent years, the Tax Control Plan published by the tax authorities has included transfer pricing as one of the essential points for attention in the review of multinational groups – especially operations carried out with high-value intangibles, intra-group services, corporate restructurings and intra-group financing operations. In Spain, tax authorities usually check transfer pricing during the normal course of CIT tax audits, rather than conduct specific transfer pricing audits. These CIT
tax audits are mainly oriented towards understanding the role of the Spanish companies under scrutiny in the group’s value chain in order to check the consist - ency of the transfer pricing methods applied and the results of the benchmark analysis. These audits are also designed to detect and regularise the PEs of non- resident entities – an issue that may arise in certain operating structures of multinational groups, such as contracts for the provision of marketing, agencies, commissionaires and similar services. Therefore, the review of transfer pricing policies covers not only the quantification of operations but also the structure of the operations (and their different tax effects). 4.5 Challenges to Related-Party Limited Risk Distribution Arrangements Spanish authorities challenge the use of related-par - ty limited risk distribution arrangements – especially when there has been a change to the transfer pricing model and when, consequently, the Spanish entity has reduced its taxable base. 4.6 Local Transfer Pricing Rules and OECD Standards One significant point on which the Spanish transfer pricing regulations differ from the OECD Guidelines for Multinational Enterprises (the “OECD Guidelines”) is their broader parameters for related or associated parties. This requires the preparation of documenta - tion and the application of transfer pricing principles to operations that would not be regarded as related operations in other countries. 4.7 Transfer Pricing Disputes and Mutual Agreement Procedures The use of mutual agreement procedures (MAPs) in Spain has increased in past years. In some cases, international transfer pricing disputes are resolved through a MAP. Generally, the Spanish tax authorities are open to MAPs and willing to co-operate in these procedures. 5. Taxation of Non-Local Corporations 5.1 Compensating Adjustments If a transfer pricing adjustment is made by the tax authorities, they are obliged to execute the relevant
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