There's a Spanish proverb that translates to 'The shrimp that falls asleep is carried away by the current'. In other words, we all need to stay constantly alert in order to stay ahead of events. Those wise words spring to mind when considering a recent judgment from Spain's National Court. It was handed down on 25 January this year, and is summarised and explained in this MNE Tax article by Kroll Advisory's Pilar Barriguete and Victoria Arozamena.
The title of the article says it all: ‘Spain’s National Court challenges the deductibility of intragroup services in the absence of a written contract’. The taxpayer claimed to have lost the contract, and instead provided an explanatory document by an independent expert with a detailed description of the specific services rendered. However, the Court did not attribute sufficient evidentiary value to this document.
This is yet another demonstration of the fact that taxpayers need to maintain a suite of up-to-date intercompany agreements that align with TP policies and accurately reflect the transactions concerned. Otherwise, they may find that their transfer pricing positions are swept away like a sleeping shrimp in the tide.
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