Transfer Pricing
Documentation and Regulatory Compliance
ALS Transfer Pricing prepares Local Files, Master Files, CbCRs and Modelo 232 returns with the technical precision and regulatory consistency that tax authorities and BEPS standards require.
What we document
We document the related-party transactions of each group entity at the required level of detail: functional analysis, applied pricing policy, valuation method justification and comparative support.
We prepare the Master File with a global view of the group: value chain, organisational structure, key intangibles, intragroup financing policy and the overall transfer pricing policy.
We prepare the report with the aggregated revenue, profit, tax, employee and asset data by jurisdiction required under BEPS, verifying consistency with the Master File.
Under the Spanish common regime, groups with consolidated turnover below €45 million may use simplified documentation, and transactions below €250,000 with the same related party have a specific regime. We prepare both with full technical rigour.
We review Modelo 232 reporting obligations, verify the consistency of declared transactions with the transfer pricing documentation and prevent discrepancies that could trigger a tax audit.
We analyse the documentation you already have, identify the substantive and formal deficiencies that would compromise its defence in an audit, and deliver a prioritised report of concrete improvements.
The Local File: content and requirements
The Local File is the cornerstone of each entity's transfer pricing documentation. It must demonstrate that the conditions of related-party transactions are those that independent parties would have agreed, with enough detail for the tax inspectors to reproduce the reasoning applied.
Complete functional analysis
We precisely describe the functions performed, assets employed and risks assumed by each related party in the transaction — the essential foundation for determining the tested party's profile and selecting the most appropriate valuation method.
Valuation method justification
We argue why the selected method — whether comparable uncontrolled price, cost plus, resale price, transactional net margin or profit split — is the most appropriate for the specific transaction, and provide reasoned rejection of the alternatives.
Price support and arm's length range
We present the comparables used, the selection criteria applied and the resulting interquartile range, demonstrating that the price set falls within the values that unrelated parties would have agreed.
Master File and CbCR: the group perspective
The Master File and Country-by-Country Report place each entity's transactions in the context of the multinational group. Their purpose is to give tax administrations a coherent picture of how value is created and distributed across jurisdictions.
Value chain and group structure
We describe the group's main value-creating activities, its organisational and legal structure, and the role of each entity in the supply chain, at the level of detail required by the BEPS standard.
Intangibles and DEMPE functions
We identify the group's relevant intangibles, their legal and economic ownership, and document which entities perform the development, enhancement, maintenance, protection and exploitation functions that justify the associated returns.
Consistency between Master File and CbCR
We verify that the jurisdictional data in the CbCR is consistent with the activity descriptions in the Master File and with each entity's Local File, preventing contradictions that tax authorities could use to challenge the group's pricing policy.
How we prepare your documentation
Information gathering and scoping
We define the perimeter of related-party transactions requiring documentation, identify the applicable thresholds under the relevant regime and request the necessary information while minimising the burden on the internal team.
Functional analysis and method selection
We analyse the functions, assets and risks of each related party, determine the correct functional profile of the tested entity and select the most appropriate valuation method for each transaction.
Comparability analysis and drafting
We conduct the comparable search using documented and justified criteria, calculate the arm's length range and draft the Local File, Master File and CbCR with the level of detail and structure that regulations require.
Consistency review and delivery
We verify internal consistency across all documents and with the Modelo 232 return, carry out a final quality review and deliver the documentation in the appropriate format for retention and potential submission in a tax audit.
FAQs
Frequently asked questions about transfer pricing documentation
When must transfer pricing documentation be ready?
Regulations require that documentation be available by the Corporate Income Tax filing date — not when the tax authority requests it. In practice, a tax audit may not arise until months or years later, but the documentation must pre-date the return. Preparing it retrospectively, after a request has been received, is a risk that inspectors can use to question the reliability of the analysis.
What is the difference between the Local File and the Master File?
The Local File documents the related-party transactions of a specific entity: what it does, who it transacts with, which valuation method it applies and why that price is at arm's length. The Master File describes the multinational group as a whole: how it creates value, what intangibles it holds, how it is internally financed and what the global transfer pricing policy is. Both documents must be mutually consistent.
Must all related-party transactions be documented to the same level of detail?
No. Under the Spanish common regime, full documentation applies when consolidated group turnover exceeds €45 million, and transactions below €250,000 with the same related party are subject to a simplified regime. That said, the Modelo 232 reporting obligation is broader than the documentation obligation, so the two regimes should not be confused.
What are the consequences of incomplete or insufficient documentation?
Tax authorities can impose formal penalties for insufficient documentation even if the prices applied were at arm's length. Beyond that, deficient documentation weakens the taxpayer's position on the merits: if an adjustment is proposed, the absence of documentary support makes the defence significantly harder and can increase the financial consequences.
What happens if the documentation does not reflect the group's actual functional reality?
If the documented functional analysis does not correspond to the functions, assets and risks actually exercised by the entities, inspectors can conclude that prices are not at arm's length even where documentation formally exists. In that scenario the risk of a substantive adjustment increases considerably, because the existing documentation can be turned against the taxpayer.
Can transfer pricing documentation be submitted in English?
Spanish regulations require documentation to be submitted in Castilian Spanish or, where applicable, the official language of the relevant autonomous community. If the group prepares its documentation internally in English, it must be translated when the tax authority requests it. Not having that translation available promptly can create procedural complications.
ALS Transfer Pricing
We prepare your Local File, Master File and CbCR with technical precision and within regulatory deadlines, so your documentation is solid when it matters most.