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Related parties transactions report – tax form 232

During the month of November, for most companies, the related parties transactions report – tax form 232- is due. In this post we explain everything you need to know about this

General rules

This report is any one of the followings circumstances are met:

  1. The sum of the transactions with a related party exceed 250,000 Euros or,
  2. The overall of related party transactions of the same type exceed the 50 % of the 2019 company turnover or,
  3. The specific rules for sales / purchases of patents, shares, business, and real estate apply. The threshold for these specific transactions is 100,000 for the same type of transaction

Who are Related Parties in Spain

The following will be considered related persons or entities:

  • An entity and its partners or shareholders (or their family members) having a stake of 25 % or more
  • An entity and its directors or administrators (or they family members), except in the case of remuneration for the exercise of their functions.
  • Two entities that belong to the same group of companies, as defined in the Commercial Law
  • An entity and the directors or administrators of another entity, when both entities belong to a group.
  • An entity and another entity indirectly owned by the former in at least 25 percent of the capital stock or equity.
  • Two entities in which the same partners or shareholders (or they family members) participate, directly or indirectly in, at least, the 25 percent of the capital stock or equity.
  • An entity resident in Spanish territory and its permanent establishments abroad.

Family members reach the third degree (up to nephew /niece). Cousins would be out of the scope. Likewise, directors include de facto ones (not formally appointed but acting as such in practice).

Examples of reportable related parties transactions

Example 1 (a company with a turnover of 1,000,000 Eur in 2019):

·         Sales to related party A: 240,000

·         Purchases to related party A: 220,000

·         Loan to related party B: 100,000

The transactions with party A must be reported because together they exceed 250,000

The transactions with party B must not be reported because they do not exceed 250,000

Example 2 (a company with a turnover of 1,000,000 Eur in 2019):

·         Sales to related party A: 200,000

·         Sales to related party B: 200,000

·         Sales to related party C: 200,000

·         Loan to related party B: 100,000

The sales with party A, B and C must be reported because they exceed the 50 % of the 2019 turnover. Note that none of them exceed individually the threshold for reporting (250,000) but being of the same type exceed the 50 % of the turnover of the reporting period.

The loan with party B must also be reported because the overall transactions with party B exceed 250,000 so all the transactions with this party must be reported.

Example 3 (a company with a turnover of 1,000,000 Eur in 2019):

·         Sales to related party A: 200,000

·         Sales to related party B: 200,000

·         Purchases to related party C: 200,000

·         Loan to related party D: 100,000

None must be reported

Example 4 (a company with a turnover of 1,000,000 Eur in 2019):

·         Sales of shares to related party A: 80,000

·         Sales of shares to related party B: 21,000

·         Services provided to related party B: 140,000

The sale of shares to A and B must be reported because this is a special transaction with a lower threshold (100,000). Once this is reached, all the transactions of this type – sale of shares- must be reported. The services provided to party B must not be reported because the overall transactions with party B do not exceed 250,000

To know more about how to related parties transactions are treated, read our post about the Spanish Corporation Tax

You may also find a detailed explanations on the rules to file the Related Parties Transactions report – Tax Form 232 at the website of the Spanish Tax Office

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Related parties transactions report - tax form 232
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During November, the related parties transactions report is due. We explain who and in what cases this report must be done
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Tax Partners
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