Transfer pricing

According to the OECD, 43months is the average time required in Spain to close a Mutual Agreement Procedure on Transfer Pricing.

OECD AVERAGE OF 30 MONTHS.

According to the OECD, 43 months is the average time required in Spain to close a pre-2016 Mutual Agreement Procedure on Transfer Pricing while the OECD average is of 30 months.

2016 statistics released by the OECD show that tax administrations have a double language when claiming that they foster agreement and collaboration with taxpayers and other tax administrations while not putting adequate resources to accomplish this goal.

A Mutual Agreement Procedure (MAP) is the amicable mechanism that the authorities of two different jurisdictions follow at the request of a taxpayer that is suffering double taxation on a particular transaction, typically on transfer pricing matters.

The Spanish Ministry of Finance had 59 TP cases started in 2016 and only 4 of those closed. The pipeline and lead times are bound to grow fast. More recent cases are supposed to be resolved quicker, but, only time will tell.

If the MAP takes some 2,5 years to be resolved in the OECD and 3,5 years in Spain, the taxpayer will probably have a case open for 8 to 10 years. This is simply not acceptable in developed democratic societies. Administrations should be properly penalized for such lack of resolve.

Juan José Terraza
Partner at Augusta Abogados