Model 232 in Spain: Related party transactions

In Spain, related party transactions, reduction of income that comes from intangible assets and operations and situations related to tax havens must be declared in the Modelo 232.

• Tax identification number of the related entity or person (NIF);
• Information regarding whether the related party is a natural person, company or other;
• Name and surname of the related person or business name of the related entity;
• Type of relationship;
• Province / country code of the related party;
• Type of operation;
• Income / payment;
• Transfer pricing evaluation method; and
• Transaction amount (without VAT).

When should the related party tranactions be declared in the Modelo 232?

1. When the total amount of the operations between two related party exceeds the market value of 250,000, Euro all controlled transactions with that related party must be declared, independently of its amount. The declaration should be submitted for each related party, for type of transaction and valuation method, without the netting of amounts.

1. Sale of products: 100,000 Euro
2. Purchase of products: 60,000 Euro
3. Payment of interests: 95,000 Euro

All three operations should be declared independently.

• The transactions carried out by taxpayers subject to Personal Income Tax, in the development of an economic activity, to which the method of objective estimation is applied with those entities in which the taxpayer or spouse, ancestors or descendants, individually or collectively, hold a stake equal or higher than 25 percent of the equity or share capital.
• The transactions involving the transfer of business.
• The transactions involving transfer of equity or shares representing the participation in the share capital of any entity not admitted to a negotiation process in any regulated securities market, or admitted to a negotiation process in a regulated securities market situated in countries or territories considered as tax havens.
• The transactions involving real estate properties.
• The transactions involving intangible assets.

3. Operations of the same type to which the same transfer pricing valuation method applies and were carried out with the same related person or entity, as long as the total amount of all operations within the same tax period is greater than 50 percent of the turnover of the entity, regardless the amount of the compensation received as a whole for the operations carried out with the same related person or entity.

• Fiscal groups (regardless the volume of their operations).
• AIES, UTES (regardless of the volume their operations), except UTEs or other analogous forms of collaboration that benefit from the Exemption of income obtained abroad through Permanent Establishment(s) (Article 22 CITL).
• Transactions carried out in the area of public offers for the sale or acquisition of securities (regardless of the volume of transactions).

Reduction of income that comes from intangible assets or operations and situations related to tax havens

For the declaration of income that come from intangible assets (article 23 and transitory provision 20 of the CITL) or operations carried out with tax havens (in which all operations must be declared, not only related operations).