Spanish Tax Administration (STA) sends letters to SMEs with «anomalous» margins

According to the Europa Press news agency, the Spanish Tax Administration (STA) has launched for the third consecutive year a letter campaign aimed at small and medium-sized enterprises, in which it informs them of «inconsistencies» between the data declared by them and that collected from other sources of tax information.

Among the «inconsistencies» highlighted are the percentages of gross and net margins of the taxpayer and of the taxpayer’s industry average, as well as percentages of card payments, both by the taxpayer and at the sectoral level.

In this sense, the STA warns that these data can be used as an indication of «tax risk» when they reveal inconsistencies between the available information and the income declarations of the economic activity or the declarations and VAT of the taxpayers.

We should highlight that gross and net margins are also a measure for assessing fiscal transfer pricing risks. Therefore, if companies carry out a significant volume of transactions with related parties, we recommend to review the transfer pricing policy to ensure that it allows them to obtain an arm’s length remuneration. If, due to exceptional business circumstances, the company’s results differ from those received by comparable entities, it would be advisable to justify such circumstances in the specific transfer pricing documentation (“Local File”)required by the Corporate Income Tax Regulations.

In TPS we can help companies and law firms in the identification and management of transfer pricing risks.