The Organisation for Economic Cooperation and Development (OECD) recently published the initiative on taxation of multinational groups, which will undoubtedly  ignite a revolution in international taxation. In this context, in Spain, those companies whose FY ends at December 31st must report information on their tractions with related parties in the form Model 232, by November 30th .

Thus, all corporate taxpayers, and non-residents income taxpayers through permanent establishments or subsidiaries in Spain must carry out the exhaustive exercise of collecting and analysing all operations with related parties.

The first action to be carried out is to be clear about the map of related persons and entities. This can be a difficult exercise when there are complex corporate networks. In addition, the information to be declared does not include all operations. There are certain thresholds, depending on the amount of the transactions, and the nature of the transactions.

Operations to declare when preparing Model 232

Operations with the same counterparty entity must be declared, if the total set amount of operations exceeds € 250,000 in the tax period.

Along with this, it is necessary to report on “specific operations”, if the joint amount of operations exceeds € 100,000 in the tax period, regardless of the valuation method that is applied.

The following are considered “specific operations”:

  • Business transfer.
  • Transfer of securities or shares in unlisted entities and / or entities resident in a tax haven.
  • Transactions related to real estate and / or intangible assets.
  • Transactions carried out by IRPF (Personal Income Tax) taxpayers who carry out an economic activity by which the objective estimation method is applied with entities in which they or their spouses, ascendants or descendants own 25% or more of the share capital, jointly or individual

It is also mandatory to declare operations of the same type and they must be evaluated with the same evaluation method as with the related parties, provided they represent a sum greater than 50% of the entity’s turnover in the same tax period.

Model 232 must also disclose, separately, information about other operations. Even if this is not necessarily carried out with related entities and with tax relevance for the Administration it must still be disclosed. All taxpayers who apply the “Patent box” policy must report it; in the same way that it is mandatory for those who carry out operations with countries or territories considered as tax havens, regardless of the amount of the transaction.

The deadline for submitting Model 232, is the month after the ten month period at the end of the tax period to which the information refers. Hence, November 30 is the deadline for companies that close the fiscal year on December 31 of the previous year.

Finally, it is necessary to emphasize that not complying with this obligation will imply serious penalties. The non-presentation or inaccurate presentation of Model 232 will entail fines of up to 2% of the amount of the incorrectly declared operations.

It is important to devote time and effort to the complex process of gathering and the analysis of the information included in Model 232, in order to avoid penalties for incorrect or late submission.