Multinationals in Spain launch functional analysis programmes
March 17, 2008
Manuel Ángel Bouzas, of TP Week correspondent Garrigues, describes the process towards a new transfer pricing policy
After the enactment of Tax Fraud Prevention Measures Law 36/2006, of November 29, which approved new transfer pricing rules in Spain, large multinational groups are performing functional analyses as a prior step towards establishing a transfer pricing policy. This is guided by two main objectives. The first objective is preventive, that is, to avoid tax risks deriving from a policy which the tax authorities of a country may reject, thereby avoiding possible penalties and situations that lead to double taxation. Nonetheless, increasingly, this analysis has a second objective that is even more important than the first; we are referring to the use of transfer pricing as a bona fide international tax planning instrument.
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