Transfer Pricing guide: Spain
Read below for more detailed information on transfer pricing regulations, document requirements, and other considerations for Spain, as well as recent industry hot topics and key developments in the country's business landscape.
Page updated 1st July 2025
Transfer Pricing regulations
Is the jurisdiction part of OECD/G20 Inclusive Framework on BEPS?
Yes.
Relevant Transfer Pricing regulation
General State-wide Regime: Spanish Corporate Income Tax Law (Law 27/2014) and Royal Decree 634/2015 (Corporate Income Tax Regulation). Additionally, the Basque Country and Navarra—which enjoy special fiscal autonomy under Spain's "foral" system—have their own transfer pricing regulations, which broadly align with the state framework but can differ in certain compliance and procedural aspects.
Is this regulation aligned with the OECD Guidelines
Yes. The OECD Guidelines are recognized by the Preamble of the Corporate Income Tax Act as a source of interpretation of the internal legislation and as far as the Guidelines do not conflict with the domestic regulations.
Transfer Pricing documentation requirements
Documentation Threshold for Preparation of Local File/ TP Documentation
Local File preparation is mandatory when an entity engages in related-party transactions exceeding EUR 250,000 (regardless income or expense) per related entity. Simplified documentation for small groups is available. No threshold applies for transactions with entities located in tax havens — all such transactions must be documented.
Documentation Threshold for Preparation of Master File
A Master File is mandatory for Groups whose net turnover exceeds EUR 45 million across all companies.
Documentation Threshold for Preparation of Country by Country Report
Required when the ultimate parent entity is a Spanish resident and its consolidated group turnover exceeds EUR 750 million.
Submission of Local File, Master File, and CbC Report Required? If so, when?
Country by Country Report: Must be submitted within 12 months after the end of the reporting fiscal year.
Local and Master Files: Must be prepared by the corporate income tax return filing deadline and made available to the Spanish tax authorities upon request.
If No Submission Required, any Other Deadline?
Yes. Transfer pricing documentation (Local File and, where applicable, Master File) must be prepared and available by the corporate income tax return filing deadline (generally 25 days after the first six months following the fiscal year-end).
The documentation is not submitted automatically, but must be provided to the Spanish Tax Authorities upon request.
If requested during a tax audit, the taxpayer is typically required to submit the documentation within 10 business days.
It should be noted that this period is for submission, not for preparation. Transfer pricing documentation must be completed in advance and kept on file by the taxpayer.
Other Documentation Requirements
Not applicable in Spain.
Does TP documentation / Local file Need to be Prepared Contemporaneously with Tax Return Filing (i.e., before filing the return)?
Yes. TP documentation must be prepared contemporaneously, i.e., by the time the corporate tax return is filed.
Transfer Pricing Specific Returns
Preparation of TP Return Required?
Yes, Form 232 is required to report related-party transactions.
Deadline for TP Return Filing
Form 232 is due in the month following the 10-month period after the fiscal year-end (usually by the end of November for companies with a calendar year-end).
Key information to be included in the TP Return
Identification of related parties, nature and amount of transactions, country of residence, and type of method applied.
Benchmarking - Local Tax Authority Preferences
Local vs Regional Comparables Set
The Spanish Tax Authorities accepts pan-european comparable sets, although local comparables are preferred when available.
Single-Year vs Multi-Year Analysis
The Spanish Tax Authorities expect single-year results for the tested party to be compared against comparables built using multi-year data (typically 3 years). Multi-year testing for the tested party may be used if duly justified.
Public vs Private Comparables
Preferred public data, as long as the information is reliable and well-documented.
Interquartile Range or Full Range
Interquartile range is applied in line with OECD guidelines. Use of full range is not generally accepted.
Transaction-Based or Aggregate Approach, or Both
Preferred transaction-based but aggregate approaches could be employed if more suitable for the transaction (inter-related transactions, hence, depending on the nature and characteristics of the controlled transactions).
How Often are Benchmarking Sets Renewed (financial update versus full scope BMS preparation)
A full benchmarking study should be performed every 3 years if there are no significant changes in facts or circumstances. Financial updates of accepted comparables need to be performed annually for the subsequent two year.
TP Penalties
In Case of Delayed Submission of Documentation
Penalties apply if transfer pricing documentation is not made available upon request, or if it is incomplete, inaccurate, or false. The sanction consists of a fixed fine of €1,000 for each inaccurate, omitted, or false data item, and €10,000 per set of data related to the documentation obligations.
The total penalty amount is capped at the lesser of the following two amounts:
- 10% of the total amount of related-party transactions subject to Corporate Tax, Personal Income Tax, or Non-Resident Income Tax during the tax period, or;
- 1% of the net turnover.
In case of Income Adjustments in Course of a Tax audit
Penalties of 15% may apply in the case of TP adjustments. Additionally, late interest and surcharges may apply for general state wide regime.
Other Considerations
APA & MAP Availability
Taxpayers in Spain may request unilateral, bilateral or multilateral Advance Pricing Agreements (APAs). The APA process is administered by the National Office of International Taxation (Oficina Nacional de Fiscalidad Internacional – ONFI for general state-wide regime and in the foral system for the competent tax authorties) and is available to prevent future transfer pricing disputes, especially in complex or high-value transactions.
A Mutual Agreement Procedure (MAP) request may be initiated when a taxpayer considers that taxation is or will be imposed in a manner not in accordance with a double tax treaty (DTT) to which Spain is a party. Spain has domestic rules governing the MAP process.
Additionally, Spain participates in multilateral controls and joint audits as part of its commitment to international cooperation and dispute prevention.
Applicability of Safe Harbour Rules
Safe harbour rules are available for services provided by professional shareholders (e.g., lawyers, doctors) to their related entities when certain specific circumstances are met. The safe harbour is looking for simplicity in common low complex transactions between professionals and their entities, while avoiding that profits are accumulated in excess in those entities.
Critical Transfer Pricing Issues Prevailing in the Jurisdiction, if any
Critical issues include transactions involving intangible assets and intellectual property , intragroup financing operations, and related-party transactions with low profitability despite significant activity. Transactions with entities in low-tax or tax haven jurisdictions are also subject to increased scrutiny.
There is also a growing focus on the DEMPE functions and proper delineation of risks assumed by the parties.
Criteria/ Guidelines for Transfer Pricing Audit/ Assessments by Tax Authority
Spain applies a risk-based approach to audits. Taxpayers with large volumes of related-party transactions, repeated losses, or dealings with low-tax jurisdictions are more likely to be audited.
Audits focus on economic substance, justification of the applied method, functional analysis, and support for benchmarking.
Audits often involve detailed information requests and may include interviews or site visits.
Relevant Regulations and Rulings with Respect to Thin Capitalisation or Debt Capacity in the Jurisdiction
Spain does not have specific thin capitalisation rules, but the arm’s-length principle applies to financing transactions. Excessive debt levels and interest deductions may be challenged if they do not comply with market conditions. The tax authorities analyze the debt capacity of the entity and may disallow interest expenses exceeding what would be accepted under comparable independent transactions.
Spain has intensified its focus on transfer pricing compliance in recent years, particularly through increased specialisation, digitalisation, and alignment with international standards. The following developments and priorities have emerged:
- Heightened Audit Focus on Multinational Groups: Spanish tax authorities (AEAT) are prioritising audits of large multinational groups, especially transactions involving intangible assets, intra-group financing, royalties, and service agreements. There is a particular emphasis on business restructurings and entities reporting recurring losses.
- Advanced Use of Technology and Risk Assessment Tools: AEAT is enhancing its automated risk analysis systems, integrating information from Model 232, Country-by-Country Reports, and international exchanges to identify high-risk transfer pricing arrangements.
- Increased Scrutiny of Documentation Compliance: Authorities are focusing on the proper preparation and content of transfer pricing documentation (Local File and Master File), including functional and risk analysis, financial segmentation, and pricing policies. Model 232 filings are also subject to detailed review.
- Adaptation to International Standards: Spain continues to implement OECD transfer pricing guidelines and EU directives and enhancements in transparency, consistency, and dispute resolution mechanisms.
The AEAT continues to reinforce its transfer pricing enforcement as part of its broader international tax compliance strategy. The 2025 Annual Tax and Customs Control Plan, published in the Spanish Official Gazette (BOE) on March 17, 2025, outlines the government’s renewed commitment to combat base erosion and ensure alignment with OECD guidelines.
Key developments include:
Enhanced Audit Focus on Multinational Groups
Increased reviews of transfer pricing documentation for large enterprises, including in-depth analysis of functional profiles, risk segmentation, and application of transfer pricing policies.Special emphasis on Form 232 compliance and the consistency of financial reporting with the declared transfer pricing positions.
Use of Advanced Risk Analysis Tools
Expansion of automated risk assessment systems tailored to detect irregularities in intercompany pricing.Integration of data from domestic sources, international exchanges, and Country-by Country Reports (CbCR).
Specific Focus Areas
Business restructurings, particularly the transfer or valuation of intangibles, intra-group service arrangements, and recurring losses in related entities.Financial transactions, including intra-group loans and guarantees, are also being closely examined.Increased scrutiny of limited-risk entities in manufacturing and distribution structures, evaluating the appropriateness of pricing methods and profit indicators used.
International Cooperation Initiatives
Continued participation in ICAP (International Compliance Assurance Programme) and ETACA (European Trust and Cooperation Approach).Implementation of new joint audit mechanisms within the EU, applicable from 2024, fostering multilateral inspections and simultaneous controls across jurisdictions.
Double Taxation and Dispute Prevention
Greater emphasis on avoiding double taxation through the use of Mutual Agreement Procedures (MAPs).Encouragement of Advance Pricing Agreements (APAs) to provide legal certainty and reduce audit risk, supported by AEAT’s integrated 360° Strategy.
Adherence to OECD and EU Frameworks- OECD Pillar One, Amount B
Spain supports the implementation of OECD Pillar One – Amount B, which is designed to simplify and standardize the pricing of baseline marketing and distribution activities. Under this approach, a fixed return is allocated to entities performing routine distribution functions, based on predefined criteria (e.g., low-risk distributors operating within specific financial thresholds).Although Amount B is not yet fully implemented, Spain is expected to align with the OECD’s final framework once adopted. The AEAT is already reinforcing the review of such limited-risk entities, including their characterisation, applied profit indicators, and transfer pricing methods.
Spain has a highly active transfer pricing audit program, often requesting extensive documentation, economic analyses, and intercompany agreements. Disputes frequently involve valuation of intangibles, allocation of synergies, or justification of cost-plus markups in service transactions.
The Spanish Tax Authorities apply a risk-based approach to select taxpayers and transactions for transfer pricing audits. Audits primarily focus on high-risk areas such as intangibles, intragroup services, and financial transactions.
There is frequent demand for transfer pricing documentation, particularly the Local File and Master File, to support declared prices. The AEAT has specialised teams and collaborates internationally through automatic information exchange mechanisms.
Non-compliance may lead to significant tax adjustments and monetary penalties.
Spain allows taxpayers to request Advance Pricing Agreements (APAs) to gain legal certainty over transfer pricing methods applied to specific transactions.
APAs can be unilateral, bilateral (BAPAs), or multilateral, consistent with OECD guidelines and the BEPS framework. In practice, BAPAs are the most common applied one. The tax authorities have established procedures for APA negotiation and approval.
The Mutual Agreement Procedure (MAP) mechanism is available to resolve double taxation disputes related to transfer pricing and other international tax issues. Spain is a party to international treaties facilitating the use of MAP to avoid prolonged tax litigation and ensure tax consistency.
Alignment with OECD Guidelines
Spain's transfer pricing legislation is broadly aligned with the OECD Transfer Pricing Guidelines. The Spanish tax authorities follow the OECD’s “arm’s length principle” as the standard and have adopted the OECD’s three-tiered documentation approach (Master File, Local File, and Country-by-Country Report).
Spain also actively participates in international cooperative initiatives, such as the OECD's ICAP program and the EU Joint Audits, reflecting a strong commitment to OECD-aligned practices in risk assessment and audit activity.
However, Spain has some specific domestic requirements regarding transfer pricing documentation that go beyond OECD recommendations, particularly in the level of detail required in Local Files, including segmented financials, detailed benchmarking, and transaction-level analysis.
Benchmarking Analyses Nuances or Preferences
The AEAT accepts the use of comparables, provided they meet the standards of comparability set in the OECD Guidelines. Common practices include:
- Use of pan-European comparables is acceptable, although Spanish comparables are generally preferred if available and sufficiently reliable.
- The interquartile range is commonly applied to determine the arm’s length range, and adjustments are expected if the tested party’s result falls outside that range (typically to de median).
- The most appropriate method rule is followed (similar to the OECD), and the Transactional Net Margin Method (TNMM) remains the most frequently applied method in practice.
- The use of multiple-year data (typically 3 years) for comparables is preferred to smooth out anomalies.
- It is expected that a full benchmarking study is updated every 3 years, with financial updates annually in the interim years.
Thin Capitalisation Considerations for Intercompany Loans
Spain does not have specific thin capitalisation rules since they were abolished in 2015. Instead, the arm’s length principle governs the deductibility of interest on related-party loans.
This means that:
- All intercompany financing transactions must be priced at arm’s length and properly documented.
- The deductibility of interest is limited under general anti-base erosion rules.
- Spanish tax authorities closely examine the economic substance and business purpose of intercompany loans.
In transfer pricing audits, the AEAT typically assesses:
- Whether the loan would have been granted by an independent party under the same terms (arm’s length nature)
- Whether the borrower had the capacity to repay, and
- Whether the amount of the loan is justified given the borrower’s functions and risks.
Taxpayers may consider seeking APAs for complex financing structures to gain legal certainty.
There are general limitation to the deductibility of financial expenses. CTA, Art. 16 includes a general limitation on the deduction of financial expenses according to Art. 4 of the Council Directive (EU) 2016/1164, of July 12, 2016 (ATAD 1) and it is consistent with standards set up on Action 4 final report of the OECD/G20 BEPS project.
Specific limitation to the deductibility of financial expenses in cases of leveraged intra-group sales of shares. CTA, Art. 15, letter h), establishes the non-deductible of financial expenses generated within a commercial group to carry out certain operations between entities belonging to the same group (i.e: acquisition of intragroup shares), unless the taxpayer proves the transaction is reasonable from an economic perspective.
No deductibility of financial expenses in the case of hybrid instruments or entities. CTA, Art. 15 bis contains anti-hybrid rules fulfilling transposition of Council Directive (EU) 2016/1164, of July 12, 2016, laying down rules against tax avoidance practices that directly affect the functioning of the internal market as amended by Council Directive (EU) 2017/952, of May 29, 2017 regarding hybrid mismatches with third countries. Provisions to neutralize hybrid mismatches contained in the aforementioned article are consistent with standards set up on Action 2 final report of the OECD/G20 BEPS project.
Transfer Pricing Primary Risk Areas in Jurisdiction
Business restructurings, particularly those involving a shift of functions, risks, or assets from Spanish entities to low-tax jurisdictions, are subject to close scrutiny by the AEAT. This includes migration of intangibles or principal structures where Spanish subsidiaries are converted into limited-risk distributors or contract manufacturers.
Financial transactions, especially intragroup loans and guarantees, are a high-risk area, given the AEAT’s strict stance on economic substance and the arm’s-length nature of terms. The AEAT often challenges the deductibility of interest if there is no clear business rationale or supporting benchmarking.
Low-margin entities with significant functions performed in Spain (e.g., high headcount, strategic roles) may attract audit attention when profitability appears misaligned with economic substance.
Cost Contribution Arrangements (CCAs) and shared services (e.g., regional or global service centres) are reviewed carefully to ensure proper benefit allocation and that services meet the “benefit test.”
Royalty payments to offshore related parties are often reviewed to verify the existence, ownership, and economic exploitation of intangibles. The AEAT frequently requests supporting contracts, DEMPE analysis, and actual usage evidence.
Recurrent low or negative margins over multiple years, even in challenging industries, tend to trigger queries if not supported by benchmarking or documented exceptional circumstances.
