Model 232, do you know why it was created?

The Form 232 was created in 2017 to prevent tax fraud and is the informative declaration of related-party operations and of operations and situations related to countries or territories that are tax havens.

Initially, this information was included in Form 200 (Corporate Tax return), but to simplify this model, Form 232 was created.

What are linked operations?

To understand the model in depth, we must know what linked operations are. These are those between natural or legal persons with commercial or family ties.

The Corporate Tax Law establishes that transactions between related persons or entities will be valued at their market price. The market price is that which independent persons or entities would agree upon under conditions that respect the principle of free competition.

The relationship between natural or legal persons derives from several facts:

• A first or second-degree family relationship.
• Belonging to the same group of companies.
• Several companies have the same director.
• Several companies have common shareholders.

That is, it is about transfer prices following the rules of the free market and not being manipulated (up or down) by the parties to the transaction due to the existing relationship.

Who is required to submit Form 232?

Those required to submit the informative return on related-party transactions are the taxpayers of Corporate Tax and Non-Resident Income Tax who act through a permanent establishment.

Also obligated are entities under the income attribution regime established abroad but have a presence in Spain.

The obligation to present Form 232 occurs when:

• Operations with the same person or related entity during the tax period exceed 250,000 euros.
• The set of operations carried out in the tax period is greater than 100,000 euros in specific operations of the same type and valuation method.
• The set of operations carried out in the tax period of the same type and valuation method exceeds 50% of the entity’s turnover.
• The reduction of income from intangible assets is applied when obtaining income from transferring certain intangibles to related persons or entities.
• The taxpayer carries out operations or has securities in tax havens.

What is the deadline for submitting Form 232?

Form 232 must be submitted within ten months after the end of the tax period to which the information provided refers.

Therefore, as a general rule, the submission period will be November 1 to 30 each year.

How is Model 232 presented?

The presentation must be made electronically and must be done:

• The taxpayer or his legal representative.
• The voluntary representative of the taxpayer with powers or authority to file returns electronically.
• Persons or entities that are social collaborators in applying taxes.