At the end of 2022, OECD celebrated "Legal Certainty Day", which presented 2021 Mutual Agreement Procedures statistics for 127 jurisdictions around the world and awarded awards to different States for their management of international tax controversies.

Among these awards, the one awarded to Spain stands out, in category 1.1, relating to the average resolution time of mutual agreement procedures on transfer pricing.

This award recognizes that Spain is the country in the world that has spent the least average time resolving its transfer pricing disputes. This, in relation to all the cases that our country concluded in 2021, which reached the record number of 142. And taking into account, furthermore, that the result of the majority of these cases was positive; that is, they concluded with the elimination of double taxation.

Said average period was 19.6 months, significantly below the 24 months established as an objective by the minimum international standard on the matter, as well as the 32 months that, on average, have been used in the total number of cases that , at a global level, were resolved last year.

Behind Spain are the United Kingdom (20.9 months), Germany (23.1), Canada (25.4) and Denmark (26.8 months) in this category.

The agility in the resolution of mutual agreement procedures is an element of great importance to provide legal certainty to groups affected by the international economic double taxation that transfer pricing adjustments usually generate.

The management of the Tax Agency in this area has been recognized in previous editions of these awards, as can be seen in the abundant information that the OECD website offers on this matter.

Such recognitions, which are based on statistical data, are explained, to a large extent, by a varied set of factors that can be grouped into two categories: strategic and operational factors.

The first refer to the decisions that each tax administration adopts regarding the general elements that define the management activity of mutual agreement procedures. Among them, it is worth highlighting the organization, specialization and integrated treatment of transfer pricing.

The Spanish Administration chose, in 2016, to place the jurisdiction of mutual agreement procedures on transfer pricing in the Tax Agency. Taking into account the nature of these cases, which refer to the particular situation of specific taxpayers, in which information and interaction with verification and prior agreement functions are fundamental factors, this form of organization presents undoubted competitive advantages.

Still in the organizational field, but already linking with specialization, the Tax Agency opted in 2013 for the creation of a central Office specialized in international taxation and transfer pricing: the National Office of International Taxation. The experience and maturity acquired since then by the ONFI , in the treatment of transfer pricing, also constitutes an advantage in the intense debate that is usually established with other tax administrations to resolve this type of disputes.

Finally, and although the friendly procedure has its own rules and objectives, it should not be considered in isolation from the rest of the procedures that affect the transfer pricing policy of a group, whether inspections, APAS or the internal review channel itself; So it is necessary to articulate a strategy that guarantees the adequate interrelation between all of this, and which in Spain embodies the so-called 360 strategy on transfer pricing.

Among the operational factors, it is worth highlighting the planning of the negotiating rounds, the tools for monitoring cases, the objective orientation of the procedures and the human team.

The negotiating rounds are planned more than a year in advance, holding one, or even two annual meetings with our main partners: European countries and the United States. Since the end of 2021 they have been face-to-face again. As a result of the pandemic, videoconference meetings have become widespread, allowing, in some cases, to replace in-person meetings and, at other times, to prepare them or close "fringes."

Holding these rounds is key to closing cases; since a few months before the teams from both competent authorities must exchange position reports and the necessary information. The collaboration of taxpayers and advisors is very important in this phase to expedite discussions.

After each negotiating round, it is necessary to closely control and monitor the cases on which an agreement has been reached and those that have not been closed. For this, as well as to collect the statistical data required annually by the EU and the OECD , the involvement of the IT Department of the Tax agency; which has developed the computer application for processing mutual agreement procedures incorporated into the new Inspection Plan.

Along with the above, it is necessary to always keep in mind the objective of mutual agreement procedures: eliminate double taxation, which means that the competent authorities must make the defense of technical arguments compatible with the necessary pragmatism and flexibility, in order to maintain positions that allow reaching agreements. Especially taking into account that Spain's agreements with its main partners provide for an arbitration clause, guaranteeing an agreement in any case, whether between competent authorities or by an arbitration commission.

Friendly procedures are processed and negotiated by people, so the human element is essential. The training and specialization of Spain's mutual agreement procedures team and the good understanding with teams from other Administrations allows agreements to be reached within very reasonable deadlines, which is precisely what is recognized by the award received in 2022 from the OECD .