Tax advice on transfer pricing and related party transactions

We provide advice on the best design and business structure to implement transfer pricing tax obligations, as well as to optimize the management of the risk arising from these legal obligations.

Related-party transactions are those carried out between persons between whom there is a relationship. Either because they belong to the same business group, or because they are first- or second-degree relatives, or because they have common shareholders in different companies.

Among the most common related party transactions that must be valued at market price and documented in accordance with current legislation are the following:

• Loans between companies and partners.
• Remuneration of partners and/or directors.
• Property leases.
• Provision of professional services.
• Provision of services between group companies.
• Transfer of the use of a trademark between companies.
• Purchase and sale of real estate between partners and companies.
• Guarantees and sureties between partners and companies.

Currently, related-party transactions are becoming a key point in corporate income tax inspections. Therefore, special care must be taken when setting the price of transactions carried out with related persons or companies, as well as complying with the documentation obligations of the aforementioned transactions, justifying that the agreed price corresponds to the market value.

The regulation also provides for the imposition of heavy penalties in the event of non-compliance with the regulations applicable to related-party transactions.

Given the complexity of the issue and the tax risk to which taxpayers are exposed, Letslaw is at your disposal.

Our team of experts in this area will analyze and study the specific characteristics of your related-party transactions in order to minimize your tax contingencies in this area:

• Transfer pricing documentation.
• Analysis, valuation and treatment of related-party transactions.
• Preliminary valuation agreements before the Tax Authorities.
• Defense of transfer pricing policies in inspections and other tax procedures.