Code of Best Tax Practices
Drawn up and approved by the Large Enterprises Forum to foster a mutually co-operative relationship between the Tax Agency and the companies subscribing it.
Proposal for the voluntary contribution of documentation on related-party transactions within the Code of Good Tax Practices, approved in the plenary session of June 8, 2023
This document aims to advance the development of the cooperative relationship model between the State Tax Administration Agency (Tax Agency) and the companies covered by the Code of Good Tax Practices (CBPT).
The experience in the application of said Code has been, until now, useful and fruitful and has constituted an effective instrument for improving the relationship between the Tax Agency and the companies adhering to it.
In order to deepen this relationship, it is considered that certain actions aimed at producing new advances should be addressed, in particular and in accordance with this document, through the voluntary contribution of documentation referring to the related operations carried out by the taxpayer.
To this end, first of all, the scope of the information to be presented and its submission deadline are indicated.
Secondly, the reason why it is considered that the provision of this documentation could be convenient within the framework of the cooperative relationship is described.
Ultimately, it is analyzed what could be the usefulness or advantage that companies adhering to CBPT will obtain if they provide the Tax Agency with the reference information.
1. Scope of the information to be presented, taxpayers affected, form and deadline for submission.
The purpose of this document is to establish the possibility of providing information related to its related operations, on a strictly voluntary basis and by the entities that are members of the CBPT .
For these purposes, documentation relating to transfer prices is understood to be included in article 18 of Law 27/2014, of November 27, on Corporate Tax and articles 13 et seq. of the Corporate Tax Regulation, approved by Royal Decree 634/2015, of July 10. Said regulations establish the mandatory nature of its preparation, as well as the obligation for this documentation to be available to the Tax Administration from the end of the voluntary declaration period.
The voluntary provision of this documentation would affect both groups whose parent company resides in Spain and those that belong to non-resident business groups.
In order to determine the documentation to send, it would be necessary to distinguish:
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In the case of groups whose parent company is resident in Spain, the documentation should include that provided for in article 15 of the Corporate Tax Regulation (Royal Decree 634/2015) as regards the group (masterfile), and that provided for in article 16 regarding the entity/entities resident in Spain.
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In the case of subsidiaries or permanent establishments resident in Spain, which belong to non-resident groups, the documentation will refer exclusively to that provided for in article 16 of the aforementioned Regulation (local file).
As for the deadline, the information would be provided once six months have elapsed since the end of the Corporate Tax declaration period, therefore, in January of the year following its submission, in the case of companies whose tax period corresponds to the calendar year.
2. Reason why the provision of documentation could be convenient within the framework of the cooperative relationship between the Tax Agency and the entities to which the CBPT applies.
As already noted, the preparation of documentation related to transfer pricing, in particular, that included in article 18 of the Corporate Tax Law and articles 13 et seq. of the Tax Regulations, is mandatory. Likewise, these regulations establish the obligation for this documentation to be available to the Tax Administration.
This constitutes a key aspect, since it highlights the ease of the commitment that is set out in this document, since this documentation must not be prepared specifically by taxpayers when requested, but rather it is documentation that, in any case, case, they must elaborate.
The provision of this documentation, however, can only be required by the administration within the framework of tax actions and procedures, either for verification or derived from requirements to obtain information, unlike what happens in other countries in our country. close environment (1).
Obtaining this information early will provide the Tax Administration with a greater understanding of the taxpayer's activities and, in particular, the aspects included in the tax transparency reports.
To finish this point, and in relation to the actions that the Tax Agency could carry out after receiving the information, that is, how it will exploit the information and what consequences it could have for companies, we must refer to the regime provided for reports. of transparency. Therefore, its purpose would be none other than that included in the Proposal for the reinforcement of good corporate tax transparency practices of companies adhering to CBPT dated October 28, 2016, that is that is, to “ allow adequate and early knowledge of the tax policy and tax risk management of the companies adhering to the CBPT ”, for what the use of that information “ cannot be other than for the risk analysis activity of the Tax Inspection bodies ”.
3. Utility of the presentation of documentation of related-party transactions for companies.
As indicated above, the voluntary contribution by the companies adhering to the CBPT of the documentation of related-party transactions would generate a series of advantages for them that should be highlighted.
First of all, we must remember the little effort that must be made by the entities, as this is information that they must have already prepared and that must be available to the Tax Administration.
Secondly, the provision of this documentation would favor the Tax Inspectorate to carry out a correct analysis of fiscal risks of the company's transfer pricing policy, which would result in more efficient and earlier administrative control of the latter and, therefore, in obtaining legal certainty in a closer manner in time, allowing the company to know more quickly the aspects that can be considered fiscal risk by the Tax Administration and which cannot. Obtaining this documentation would serve, in particular, to complete and clarify the information collected in the transparency reports when these have been presented.
This greater understanding of the operations carried out by an entity can allow the Administration to rule out risks that, otherwise, and cannot be clarified by the Tax Administration by other means, would have to be the subject of a requirement to obtain information from the taxpayer or an inspection procedure, both situations that could be avoided by early ruling out fiscal risks.
This is, therefore, an essential aspect, since obtaining this information early could exclude the carrying out of inspection actions, which present a high opportunity cost and use of resources for the Tax Administration and attention to what is requested for the taxpayer. That is, advantages are obtained for both parties without there being an added cost for companies, given that the obligation to have this documentation is already included in current regulations.
Thirdly, the presentation of the corresponding documentation would strengthen the cooperative relationship by complementing the information contained in the transparency reports. This will contribute to the objective of reducing litigation and, if necessary, may even initiate a process of informal exchange of views with the Tax Agency in which the company will be able, if necessary, to clarify the information provided or provide additional details. in a sense similar to that provided for fiscal transparency reports, without the need for this process to necessarily occur within a formal verification procedure.
And as with transparency reports, taxpayers could obtain a written opinion from the Tax Agency on a specific issue that arises in this process, in accordance with the provisions of section 2.3 of CBPT , and benefit from the provisions of section 2.4 of the CBPT , which states that, to the extent that the data communicated is adapted to reality and the criteria applied are reasonably founded , this may be valued favorably for the purposes of determining the diligence, fraud or fault referred to in the General Tax Law.
(1) As an example, it should be noted that in Portugal the provision of this documentation is not conditional on the fact that tax actions or procedures are carried out, but its contribution is established on a general basis. (Back)