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In February 1st, Spain’s Official Gazette published the general guidelines of the Tax and Customs Control Plan for the year 2021.

Following the trend set by previous years, issues relating to the audit of related-party transactions and transfer pricing are gaining weight and forcefulness among the so-called «actions for the investigation and verification of tax fraud», i.e. inspections of companies.

Among the measures outlined in the guidelines of the control plan, we can highlight the following:

Control campaign on form 232

Throughout the plan, the AEAT’s interest in having exhaustive and reliable information on taxpayers’ transactions with tax implications is highlighted. The plan highlights not only the amount of information to be obtained and processed, but also its quality and reliability.

For this reason, it is announced in the Tax Control Plan that in 2021 a control campaign will be carried out on the correct compliance with the reporting obligations of related-party transactions reported in form 232.

In this regard, we must highlight the need for companies to verify not only that they have submitted this reporting return, but also the accuracy of the information contained therein (type of relationship, valuation method, amounts of transactions). The quality of this information, as we will explain below, is relevant for the Agency’s tax administration work, and deficiencies in this information could be grounds for imposing tax penalties.

Completion and implementation of the transfer pricing risk assessment software tool

Last year, when we commented on the 2020 Tax Control Plan, we highlighted as a novelty the Agency’s intention to develop an IT tool to process the large amount of information relevant to transfer pricing available to it from various sources: «country-by-country» reports filed in Spain or shared by other tax administrations, information on related-party transactions declared in Form 232, balance sheet data and results of other tax returns, customs data, and more recently information on tax planning mechanisms declared in the framework of the DAC6.

Finally, this IT system could not be put into operation during 2020, but it is expected to be completed during 2021 and to allow the AEAT «a better risk analysis through the development of indicators, indices and models, and the identification of high-risk tax behaviour patterns». In other words, to select for a transfer pricing review those taxpayers that present quantitative or qualitative indicators of higher risk, and assign them inspection teams with transfer pricing experience and expertise.

Economic effects of the COVID-19 pandemic

The Control Plan recognises the special conditions that the COVID-19 pandemic has created for businesses and the challenges it poses for the application of the arm’s length principle in transfer pricing. In this regard, the Agency acknowledges that its actions will take into consideration the guidelines recently approved by the BEPS Inclusive Framework on the application of the OECD Transfer Pricing Guidelines to the situations arising from the pandemic.

However, it should be noted that, at this point, it adds a sentence to indicate that the impact of the pandemic on transfer pricing will be considered taking into account «its consistency with the group’s overall pricing policy». This addition forces us to draw attention to the need for the operating results for 2020 and 2021 to take into account not only the losses or additional costs suffered due to the pandemic, but also whether these are attributable to the Spanish subsidiary or to another entity of the group by virtue of the transfer pricing policies previously in force in the multinational group. In short, the pandemic cannot be an excuse to inapply, without further reason or economic support, the transfer pricing policies previously in place, and any variation or deviation must be carefully considered and supported.

Recurring issues…

Finally, the 2021 Control Plan reiterates aspects that are already familiar to transfer pricing professionals in both firms and companies:

  • There will be a continued focus on the review of transfer pricing documentation obligations, with an emphasis on the substantial analysis of the valuation of functions, assets and risks contained in such documentation. In other words, the review of documentation will focus on the correct application of transfer pricing methodologies, rather than on the mere formal review of the content of the documentation.
  • business restructurings;
  • the valuation of intra-group transfers of various intangible assets;
  • royalty payments arising from the transfer of intangibles;
  • payments for intra-group services;
  • the existence of recurring losses;
  • financial transactions between related parties;
  • low-risk functional structures, both in manufacturing and distribution;
  • failure to report intra-group income from the provision of services or transfers of intangible assets that are not passed on;
  • the so-called «joint audits» of the same group in several countries.

Likewise, the AEAT continues to encourage prior transfer pricing agreements, both unilateral and bilateral/multilateral, as an instrument to reduce potential disputes in this area, which generate so many costs in terms of litigation for both companies and tax administrations.


By way of recommendations, we can highlight the following:

  1. The preparation of transfer pricing documentation should cease to be considered a «formality» and focus on the correct valuation of related-party transactions, which should follow a correct methodology to avoid being a source of tax risks for the company;
  2. Similarly, the information reported in Form 232 must be consistent with such documentation and the previously established valuation methodologies, given that they are a key element for the Agency’s tax administration processes; and
  3. The inevitable economic impact of the pandemic must be subject to specific analysis and treatment, which cannot ignore previously existing transfer pricing policies and intra-group agreements.

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