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2021 Corporation Tax practical guide.

Documentation obligations

Article 18,1 of the LIS requires that transactions carried out between related persons or entities be valued at market value.

Market value means any value that would have been agreed by independent persons or entities under conditions that respect the principle of free competition.

Article 18,2 of the Spanish Corporation Tax Act establishes that the following related persons or entities will be considered:

  1. An entity and its partners or participants.

  2. An entity and its directors or directors, except for remuneration for the performance of their duties.

  3. An entity and spouses or persons bound by direct or collateral relationship, by blood or affinity up to the third degree of the partners or participants, directors or administrators.

  4. Two entities belonging to a group.

  5. One entity and the directors or directors of another entity, when both entities belong to a group.

  6. One entity and another entity that is wholly owned by the first indirectly in at least 25% of the capital stock or equity.

  7. Two entities in which the same partners, participants or their spouses, or persons connected by relationship, in direct or collateral line , by blood or affinity up to the third degree, participate, directly or indirectly, in at least 25% of the capital stock or equity.

  8. A company resident in Spain and its permanent establishments abroad.

In cases where the association is defined according to the relationship of the partners or participants with the entity, the participation must be equal to or greater than 25%. The mention of the directors shall include those of law and those of fact.

There is a group when one entity holds or can hold control of another or other according to the criteria established in article 42 of the Commercial Code, regardless of its residence and the obligation to formulate consolidated annual accounts.

  1. Specific documentation
  2. Summary table