SPAIN Law and Practice Contributed by: Carolina del Campo, Joan Hortalà, Jaime Collado and Pablo Álvarez, Cuatrecasas
does not exempt the taxpayer from performing the analysis. Article 18.6 of the Spanish Corporate Income Tax Law is not specifically a safe harbour, but it effectively operates as one for services rendered by individual professional partners to their related professional enti - ty. If all of the following conditions are met, the agreed price is presumed to be at arm’s length: • over 75% of the entity’s revenue derives from pro - fessional activities, and there are adequate person - nel and tangible resources; • the aggregate remuneration paid to all professional partners for those services equals at least 75% of the entity’s result before deducting such remunera - tion; and • each partner’s individual remuneration is set by reference to their contribution and is not lower than one-and-a-half times the average salary of employ - ees performing comparable functions (or, if there are no comparable employees, not lower than five times the Public Indicator of Multiple Effect Income ( Indicador Público de Renta de Efectos Múltiples , or IPREM) benchmark, which is tested yearly by the Tax Administration). A failure of the final one of these conditions by one partner does not prevent the presumption from apply - ing to the others. The regime is elective and narrowly focused on intra-group professional services, and the general TP analysis applies where any condition is not satisfied. 11.2 Rules on Savings Arising From Operating in the Jurisdiction Location savings and integrated workforce synergies are recognised comparability factors and should be considered explicitly where relevant to pricing. 11.3 Unique Transfer Pricing Rules or Practices Operations with residents in noncooperative jurisdic - tions attract heightened documentation duties and deductibility constraints under the RIS. Even where parties are not “related”, special rules may require documentation for certain cross-border dealings (eg, services and goods under specific conditions).
TP and customs valuation are distinct regimes; one does not mechanically determine the other. Taxpayers should maintain coherent facts but satisfy the legal
tests of each domain separately. 11.4 Financial Transactions
Spanish law applies the arm’s length principle to intra- group financial transactions without a specific statuto - ry safe harbour. General interest limitation rules apply in parallel and do not replace TP analysis. Cash Pooling TEAC criteria for cash pooling stress economic reality: where the leader is an administrator of liquidity (not a lender bearing full bank-like risk), group credit qual - ity can be the appropriate reference, and standalone borrower ratings may be less probative. For cash pooling, there are two important tests to complete before establishing the interest rate. • Substance: demonstrate whether the pool leader acts as a liquidity administrator (agency-like) or as a principal assuming bank-like credit and maturity transformation risks; the answer to this question drives both the leader’s return (service versus spread) and the participants’ remuneration. • Pricing architecture: if the leader is administrative, one should benchmark a cost plus for treasury services and set participant deposit/borrowing rates by reference to group credit quality adjusted for tenor, currency and collateral, ideally setting an interest rate that suits the whole group. Alter - natively, intermediation fees could also be applied on debtors’/creditors’ rates (which should be the same before the fee; the fee impacts debtors and creditors negatively and positively, respectively) to remunerate with respect to the administrative func - tions. 12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation There is no statutory requirement to align TP and customs valuation outcomes. They are governed by
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