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BY SPANISH TAX DESK UPDATE
Law 36/2006, approved on November 29, 2006, and recently enacted, introduces important amendments to Article 16 of the Corporate Income Tax Law (CITL), which governs the tax treatment of transactions among related parties. The new legislation, which applies to tax periods beginning as of December 1, 2006, requires Spanish taxpayers to determine and prove the arm'slength remuneration of transactions with related parties. Further regulations, expected to be approved in 2007, will address the specific documentation requirements and exceptions.
The legislation introduced measures to prevent tax fraud. According to its declared objectives, the amendment aims to "adapt the Spanish legislation on transfer pricing to the OECD Guidelines and that of the European Union Joint Transfer Pricing Forum."...