SPAIN Trends and Developments Contributed by: Carolina del Campo, Joan Hortalà, Jaime Collado and Pablo Álvarez, Cuatrecasas
These aspects should be addressed through docu - mented credit analysis, appropriate covenants and subordination, pricing that reflects risk and, where necessary, capital structure adjustments. Intra-Group Services: Cost Base Discipline and When “Low Value Adding” Does Not Apply Rising cross-border service intensity, digital collabora - tion tools and post-pandemic operating models have expanded the scope of head office and shared service activities. Spanish audits frequently challenge whether a genuine benefit exists, whether the service is dupli - cative and whether the pricing reflects eligibility for the simplified LVAS approach. The 2026 focus is to tighten the benefit narrative, improve cost traceability and discipline the use of LVAS. Confirm a benefit and delineate the service The OECD’s benefit test remains the gatekeeper: the activity must confer an economic or commercial advantage that an independent enterprise would be willing to pay for or perform for itself. This is intensely factual and should be evidenced in policies, service catalogues, statements of work and contemporane - ous documentation. Generic labels should be avoided, and outputs, beneficiaries and decision rights should be described. Strengthen cost base traceability and allocation keys For standard support and corporate services, direct charging should be prioritised when feasible (time writing, project codes, ticket systems). Where pool - ing is unavoidable, costs should be linked to verifiable drivers (headcount, transactions processed, revenue for sales support) and allocation keys should be kept stable, transparent and reviewable. The correlation between keys and benefits should be back-tested, and governance minutes approving changes should be recorded. LVAS are a narrow category – the 5% mark-up should be used with discipline. The simplified approach and its 5% mark-up are not a safe harbour for high-value services or services involving significant intangibles, unique contributions or meaningful risk control. It is important to carefully test eligibility against OECD criteria and exclude services crucial to value creation
(eg, R&D strategy, algorithm design, market making analytics) or services involving DEMPE-related con - tributions. Positive and negative eligibility decisions should be documented, not just the ones included under LVAS. High-value services delivered by non-back-office profiles In many Spanish based groups, specialist teams – design, engineering, data science and optimisation experts – now sit outside traditional back office. These profiles often fail the LVAS criteria because they deploy scarce skills, rely on proprietary tools or control economically significant risks. Pricing should be supported by robust external comparables where available or profit-based methods where more reli - able, with explicit adjustments for location savings and workforce in place when material. When bench - marking fails to yield high-quality comparables, it is necessary to transparently explain why and consider applying a two-sided method to reflect mutual con - tributions. Interaction with global mobility The OECD has flagged that dispersion of senior talent and remote cross-border work can intensify transfer pricing issues, including potential permanent estab - lishments (PEs), profit attribution to PEs, and chal - lenges in delineating which affiliate controls key risks. For Spain-connected groups, it is important to map where critical functions are actually performed, who exercises control over risks and how decision-making is documented. Intercompany charges and margins should be aligned with that map, and PE risk check - lists, travel and presence thresholds, and escalation routes with HR and legal should be established. Practical actions for 2026 These include the following: • maintain a granular services catalogue mapping activities to beneficiaries and benefit tests; • implement time writing or other direct charge ena - blers for specialist teams; • tighten allocation keys with quantitative back test - ing;
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