|Garrigues, Taxand Spain|
|Freshfields Bruckhaus Deringer|
|Transfer Pricing Services|
|Ramón y Cajal Abogados|
The Spanish economic recovery gathered impressive momentum in 2017.
GDP already exceeded pre-crisis levels and the IMF upgraded its growth forecast in July to 3.1% for 2017, up from 2.6% projected in a previous forecast.
Resilience has built up in the banking sector and the current account balance improved, building on a strong, export-oriented services sector. However, further adjustments in fiscal policy are needed to reduce debt, the IMF advised.
"We are stable and in the middle of a strong economic recovery," said José Ramón Vizcaino, head of tax at Dentons. "I don't think the Spanish government will make any big changes soon."
Multinationals trading across Spanish borders are most affected by compliance with the OECD's BEPS project. They demand TP planning advice from lawyers and accountants, enabling them to transform their business models to both comply with BEPS and improve their economic efficiency.
A new draft proposal was published in May concerning inter-party transactions and transactions involving lower tax jurisdictions.
If applied into law, taxpayers will be obliged to include information on inter-party transactions from their income tax return (Form 200) in the new Form 232.
It is still compulsory for taxpayers to report all controlled transactions with the same related party, irrespective of the value of the individual transactions, if the total exceeds €250,000 ($293,000). Taxpayers must still report individual dealings exceeding €100,000 with the same related party, applying the same valuation method with the arm's-length principle (ALP).
The first new rule proposes that taxpayers conducting the same type of transactions, with the same TP method, but below the above thresholds, should report these transactions if they account for at least half of the corporation's income.
The second rule states that taxpayers must account for 'specific transactions' if the value exceeds €100,000. These are currently excluded from the simplified content in the Spanish tax legislation.
The order is open to amendment at current as it is still in the drafting phase.
"Generally speaking, the ongoing trends in Spain are towards an increasing specialisation in tax matters, and firms not following this trend will gradually lose market share," said Alberto Estrelles, the managing partner of KPMG Abogados. "We have detected a particularly significant increase in the demand for multi-disciplinary global services that are coordinated locally. Moreover, the use of technological tools when rendering tax and transfer pricing services is becoming increasingly widespread."
(As of July 2017)
|Corporate income tax (a)||25%|
|Capital gains (b)||0% to 19%|
|Branch tax (c)||25%|
Withholding tax (d)
|Dividends (e)||0% to 19%|
|Interest||0% to 19%|
|Royalties from patents and licences||0% to 24%|
|Branch remittance tax||0% to 19%|
Net operating losses (years)
|Carryforward (f)||Without time limit|