Spain: High court judgment places spotlight on deductibility of certain intragroup services

Tax Controversy & Dispute Resolution ()

A recently published Supreme Court judgment (STS 3054/2013) addresses the deductibility of expenses for intragroup services received by companies resident in Spain from related non-resident entities. The issue is currently one of the most questioned in transfer pricing inspections and the possible repercussions of the judgment on current and future inspections is of keen interest. The purpose of this Alert is to provide some highlights of the decision, the potential impact on multinational companies with Spanish operations, and suggestions on how to proactively avoid a potential dispute.