The recent doctrine established by the Spanish Supreme Court last July places particular emphasis on financing transactions between related entities, especially when structured under a centralised treasury system (cash pooling). While these schemes offer various operational advantages for participating companies, the Spanish Tax Administration has highlighted certain key aspects that must be addressed:
1. Applying a symmetrical interest rate to both funds contributed and received.
2. Assessing the credit rating of the business group as a whole, rather than that of each individual borrowing entity.
In this context, it is essential to review the transfer pricing policy applicable to financing operations between related entities. Such review must ensure compliance with current regulations and a proper characterisation of the type of financing, through a robust analysis of the functions performed and risks assumed by each of the entities involved.
Our Transfer Pricing department, headed by Arely Almaguer, offers advisory services and support in documenting these types of transactions, helping to minimise risks in the event of a potential tax audit.