The Tax Administration is ramping up its efforts to monitor related-party transactions between companies, an increasingly significant focus of its tax enforcement strategy. These transactions—covering sales, loans, or services between subsidiaries or partners—must be conducted at arm’s length, meaning the terms should be the same as if they were made with independent third parties.
The main goal is to prevent companies from shifting taxable profits to low-tax jurisdictions, thereby reducing Spain’s tax revenue. Such practices, often involving transfer pricing adjustments, have a direct impact on tax collection. In response, the Treasury has intensified its inspections, including conducting interviews with employees and clients to confirm compliance with pricing regulations.
In 2025, the Tax Agency will pay close attention to the fiscal year 2020—a period heavily impacted by the COVID-19 pandemic—reviewing whether reported losses are legitimate and attributable to Spanish operations.
This strategy, a priority for the Agency, highlights the importance of companies meeting their reporting obligations, such as filing Form 232, and maintaining thorough and up-to-date transfer pricing documentation. It also underscores the value of proactive tax planning to avoid significant adjustments that could jeopardize a company’s profitability.
At addwill, we can assist your company in valuing its related-party transactions and preparing the necessary legal documentation on time. With extensive expertise in taxation, we deliver tailored analyses based on your operations and group structure.
If you would like to learn more or receive advice from our tax experts, feel free to submit your inquiry by clicking here. We would be happy to help.