SPAIN Law and Practice Contributed by: Carolina del Campo, Joan Hortalà, Jaime Collado and Pablo Álvarez, Cuatrecasas
3.4 Ranges and Statistical Measures Spain accepts ranges/intervals derived from the selected method when properly supported and doc - umented. The Tax Administration has issued a note about this matter, expressing a preference for points inside the interquartile range and rejecting any value outside of it. Failure to reach the interquartile range will lead to an adjustment to the median value. Analysis Design in Spain In applying ranges, Spanish practice typically expects an interquartile range when external comparables are heterogeneous. Crucially, the reliability of the range turns on three design choices that should be pre- emptively defended in the local file. • First, screening logic: articulate the economic rationale for each quantitative and qualitative filter (size, geographic scope, product proximity), and disclose the sensitivity of results to alternative but reasonable filters. • Second, multiyear versus single-year measures: while multiyear averages can stabilise volatility, the tested year still drives the tax base; the file should both present the multiyear perspective and justify the tested year position, especially in the context of shocks (eg, supply chain disruptions) that unevenly affect tested parties and comparables. • Third, loss-making comparables: loss-makers are often excluded by the Tax Administration; nevertheless, it is advisable to collect evidence regardless of whether losses reflect structural non-comparability (eg, chronic distress, differ - ent business model) or cyclical effects relevant to the tested facts. Where appropriate, one should document robust comparability adjustments (eg, working capital) and show their quantitative effect, both before and after adjustments, to demonstrate that the final interval is not merely aspirational but decision-grade. Choosing a Value in the Interval As a practical point on “tightening” intervals, if the full interquartile range is wide due to dispersion, present - ing a point within range justified by functional intensity (eg, lower quartile for routine distributors with mini - mal intangibles) should be considered, supported by a transparent narrative.
processes for Pillar One certainty and expanded joint/ multilateral controls.
2. Definition of Control/Related Parties 2.1 Application of Transfer Pricing Rules Rules apply to “related” persons/entities as defined in Article 18 paragraph 2 of LIS, a flexible concept that captures legal and factual control, management and ownership ties (including “group” under Commercial Code standards). The 25% direct or indirect participation threshold is a common trigger for shareholder company relat - edness, and directors/de facto controllers are also covered. Consolidated tax group transactions have specific reliefs for documentation duties but remain subject to arm’s length valuation. 3. Methods and Method Selection and Application 3.1 Transfer Pricing Methods Spanish law recognises the comparable uncontrolled price (CUP), resale price, cost-plus, transactional net margin and profit-split methods, mirroring the OECD catalogue. The RIS emphasises that the most appro - priate method depends on the transaction’s nature and available, reliable comparables. 3.2 Unspecified Methods Unspecified methods are allowed where they produce the most reliable arm’s length outcome. In practice, valuation techniques such as discount cash flow (DCF) may be used for unique intangibles or restructuring where traditional methods are inapposite, provided assumptions are coherent with business plans and observable data where feasible and properly docu - mented. 3.3 Hierarchy of Methods There is no legal hierarchy. Taxpayers must select and substantiate the most appropriate method given func - tions, assets, risks and data quality, in line with Article 18 LIS and the RIS.
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