Transfer prices agreements with the Spanish Tax Office
As I explained in another post, transfer pricing is the price agreed between related parties for goods and services. This price can be cause for review by the Tax Agency. These prices should be those which would have been agreed between two independent companies that operate in the same market.
To avoid conflicts between related companies and the tax authorities, the company can reach preliminary transfer prices agreements with the tax authorities on valuation of related party transactions. These agreements can be both national and international.
Professional services firms in Spain
It is common among professionals the existence of companies in which several professionals come together for various reasons such as sharing the benefits of their work, share expenses without revenue sharing or to have a corporate image, although the services are provided by each professional individually.
These companies are not considered professional services companies, since its foundational purpose is not the provision of professional services.
For a company to be considered as a professional company it must comply with the conditions explained below.
Professional companies can be both limited partnerships and civil companies, cooperatives, corporations, etc.
Professional companies established in other EU countries can also be recognized in Spain.
Transfer pricing for goods and services in Spain
What is transfer pricing
Transfer pricing is the total value given to a transaction between two related companies.
It may happen that two related companies agree on prices, for certain products or services, different to those those which would had been agreed between two companies that have no relationship between them.
By doing this the linked companies, to their convenience, transfer between them a loss or a profit making one of the two companies pay less tax.
The problem is more evident in multinational companies that can transfer income to their own enterprises in areas of lower taxation.
For this reason the tax authorities of the different countries require that transactions between related companies are conducted according to the market price. The market price is the one that would be agreed between two unrelated companies.
Equity compensation for employees in Spain
It is common for companies to use different retributive options involving participation in the capital of the company. The aim is to retain employees and make them participant in the profit of the company. This is the so called equity compensation for employees.
Among these the most important compensation plans for employees are:
Share purchase plans for employees
in this case the company offers the employee shares at a below the market price. The employee becomes a shareholder of the company being entitled to dividends, voting, etc. For the company the cost is the difference between the share price offered to the employee and the current market price.