Chapter 8. Transactions with related persons or entities
In accordance with article 10.3 LIS, the tax base is the accounting result, corrected by tax adjustments in the event that the tax regulations contain criteria for valuation, qualification or allocation of income and expenses other than the accounting ones.
To this end, according to the General Accounting Plan (PGC), the accounting criteria of the fair value It is applied generally in any transaction, even if it is not carried out between entities of the same group. According to the Conceptual Framework of the PGC, fair value is the amount for which an asset can be exchanged or a liability settled between interested and duly informed parties, carrying out a transaction on an arm's length basis.
For its part, the concept of market value provided for in article 18 LIS is consistent with the fair value referred to in the accounting standard. Thus, market value is understood to be that which would have been agreed upon by independent persons or entities under conditions that respect the principle of free competition.
From the above, it follows that market value and fair value are the same, with the only difference being that they have different names in accounting and tax fields. This similarity is recognized in Law 36/2006, of November 29, on measures for the prevention of tax fraud, which expressly establishes that the tax regime for related-party transactions includes the same valuation criteria as those established in the accounting field.
The Supreme Court has also indicated this (TS 28-312 EDJ 60096), by pointing out that the regulations (currently, article 18 LIS) cannot be interpreted in the sense that the taxpayer, when making his declaration, must make an extra-accounting adjustment to adjust his tax base to the market value of the related-party transactions, since this would mean recognising a previous accounting non-compliance that the tax regulation cannot protect.
Therefore, the recorded value must be understood to correspond to the fair value and, consequently, the market value, without the taxpayer being empowered to correct, for tax purposes, the values agreed upon in the related-party transactions in which it participates, replacing them with the market values for the purposes of determining the tax base.
However, since these are related-party transactions, the accounting valuation made by the taxpayer may be subject to verification and, therefore, modification by the Tax Authority when it determines that the valuation made by the taxpayer (fair value considered by the parties) differs from the market value. Ultimately, the adjustment is made by the Tax Administration when, during the verification phase, it determines that the agreed value differs from the market value.
The above should be understood without prejudice to the obligation of taxpayers to inform the Tax Administration of the operations carried out in the fiscal year. (information obligations); and on the other hand, that they have the necessary justification that proves that the assessment has been carried out correctly (documentation obligations).
For the tax periods beginning on or after 1 January 2015 , Law 27/2014, of 27 November, on Corporate Tax and, in particular, the Corporate Tax Regulations approved by Royal Decree 634/2015, of 10 July, in its Chapter V "Information and documentation on related entities and persons" of Title I, introduced a series of new features that have entailed a substantial modification of the information and documentation obligations for said operations.
Subsequently, and with effect for the tax periods beginning on or after January 1, 2016 , Royal Decree 1074/2017, of December 29, modified the regulation of information and documentation on related entities and transactions regulated in the Corporate Income Tax Regulations, to incorporate the obligation to submit the so-called country-by-country information . This amendment is based on the conclusions adopted in the so-called "BEPS" Action Plan, i.e. "Base Erosion and Profit Shifting» (the Action Plan against base erosion and profit shifting), which have been developed within the Organization for Economic Cooperation and Development (OECD) and which culminated in 2015 in the called "Action 13" which, among other aspects, includes a series of regulations aimed at providing this information.
Next, we will analyze the content of the information and documentation obligations, taking into account that the information obligation is a distinct and independent obligation from the documentation obligation .