During the next month of November those companies, whose fiscal year coincides with the calendar year, have the obligation to inform the Tax Administration about the transactions carried out with related persons or entities during the fiscal year 2019 by means of Form 232.

Those obliged to present this information return will be all Corporate taxpayers and those of Non-Resident income taxpayers through a permanent establishment or subsidiaries in Spain (branches and other PE).

In order to comply with this obligation, it is necessary to carry out an exhaustive exercise of compilation and analysis of all the transactions that the parties obliged to submit it carry out with related parties, in order to determine whether and, if so, how such information should be filled in on Form 232.

We must first determine the map of people or entities linked, which sometimes is not a simple task, especially if the company participates in a complex corporate network.

Additionally, it must be considered that the information to be declared does not include all transactions, since there are certain limits or thresholds, both in terms of the amount of the transactions and their nature, which makes the analysis more complex.

Which operations should be declared:

In Form 232, those transactions carried out with the same counterparty entity must be declared, provided that the total amount of all such transactions exceeds 250,000 euros in the tax period.

Likewise, the so-called “specific transactions” must be declared, provided that the combined amount of each of these transactions exceeds 100,000 euros in the tax period, regardless of the valuation method that is applied.

“Specific operations” are as follows:

  • 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 personal income taxpayers who carry out an economic activity for which the objective estimation method is applied with entities in which they or their spouses, ascendants or descendants hold 25% or more of the capital stock, jointly or individually.

In addition, it will also be compulsory to declare those transactions carried out with related parties that are of the same type and are assessed using the same valuation method, when they represent a sum greater than 50% of the entity’s turnover in the same tax period. It will therefore be necessary to relate the amount of the related-party transaction to the entity’s turnover, in order to verify whether the conditions of this reporting requirement are met.

Form 232 must also include information about other transactions, which have not necessarily been carried out with related entities, but which are of tax significance for the Administration. These transactions are those that apply the “Patent Box” regime and those transactions, regardless of their amount, that the taxpayer carries out with countries or territories considered as tax havens.

Form 232 must be filed in the month following the ten months following the end of the tax period to which the information refers. Therefore, for those companies whose fiscal year end is December 31, they must file this Form 232 during the month of November, reporting the transactions carried out during the previous fiscal year.

Failure to comply with this information obligation implies a series of relevant penalties. Thus, the non-presentation or inaccurate presentation of Form 232 will result in fines of up to 2% of the amount of the undeclared or incorrectly declared transactions, which may involve very heavy penalties.

Therefore, in order to avoid unwanted penalties for incorrect or late submissions, we would like to point out the importance of devoting time and effort to the complex process of collecting and analyzing the information to be included in Model 232.

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Marta Reguera

Marta Reguera Prada
Director Tax Support

All information contained in this publication is up to date on 2020. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.