New transfer pricing regulations issued in Spain
September 27, 2007
Manuel Bouzas of Garrigues in Spain reports on new transfer pricing regulations in Spain
The recent approval of Law 36/2006 of November 29 on measures for the prevention of tax fraud, has resulted in major changes to the regulations in force to date. The situation with respect to the burden of proof is reversed, the onus now falling upon the taxpayer. On the other hand, the taxpayer is under the obligation to demonstrate that the prices it has applied conform to arm's length conditions and is required to keep adequate documentation of its transfer prices. In addition, major penalties are to be imposed on taxpayers for failure to comply with applicable rules. In short, the new rules establish major changes as a result of which multi-national groups established in Spain will need to review their transfer pricing policies and document these adequately in order to avoid significant penalties.
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