Transfer pricing rules are designed to ensure that intra-group transactions are carried out under arm’s length criteria, ensuring an equitable allocation of profits and preventing the erosion of the tax base. For companies operating internationally, it is essential to understand how TP obligations and approaches differ between jurisdictions. This analysis offers a comparative overview between Spain and Serbia, addressing the required documentation, possible simplification regimes or safe harbors, and the priority areas that tax authorities typically examine in transfer pricing audits and disputes.
Comparative Overview of Transfer Pricing Documentation and Reporting Requirements: Spain vs. Serbia
Serbian legislation establishes that transfer pricing documentation consists of a single document, combining the contents of the Master File and the Local File, with the mandatory elements determined by the regulations. The content and the form of transfer pricing documentation is regulated by the Rulebook, stating that the documentation is submitted in the form of report or in the form of abbreviated report. Since January 1, 2020, Serbia requires Country-by-Country Reporting (CbCR) for large multinational groups. Only resident companies that are the ultimate parent entities of an international group with consolidated revenue of at least EUR 750 million must submit this annual report.
In Serbia, taxpayers must prepare and submit transfer pricing documentation along with their Corporate Income Tax (CIT) return within 180 days after the fiscal year ends. This documentation, which must be in the Serbian language, should encompass all intercompany transactions, both domestic and cross-border. Additionally, transactions with companies located in tax havens are treated as intercompany transactions.
In contrast, Spain the Master file and the Local file corresponding to a year should be at the disposal of the Tax Administration on the last day for submitting the tax return for that year. This information is provided to the Tax Administration only in case of a specific request to the taxpayer.
The Country-by-Country Reporting CbC report corresponding to a year should be submitted to the Tax Administration no later than 12 months after the last day of the corresponding fiscal year.
Also, Spain requires specific transfer pricing information requirement (Form 232). It contains basic information for risk assessment, including the type and amount of the controlled transactions, the method used, etc. It must be filled in the month following the 10 months after the end of the tax year period.
Transfer Pricing Simplifications and Safe Harbour Regimes
While Serbia has introduced certain simplified rules for small taxpayers, it does not currently offer traditional safe harbour regimes as seen in some more developed jurisdictions. Simplifications include exemption from full TP documentation. Namely, taxpayers whose total amount of transactions with one related party during a financial year are below RSD 8 million are allowed to submit a short-form TP report, which includes only basic information on the taxpayer and the nature of related-party transactions and related party, without a full functional and economic analysis. This possibility does not apply to interest payments based on loan agreements with related parties.
In Spain, transfer pricing rules apply to certain transactions between some individuals and companies. There is a safe harbour for services provided by professional shareholders to their related entities when certain specific circumstances are met. The safe harbour is looking for simplicity in common low complex transactions between professionals and their entities, while avoiding that profits are accumulated in excess in those entities. (CTA, Art 18.6). In relation to the simplifications, in Spain transactions below EUR 250,000 or intra-group transactions under a tax consolidation regime do not need to be documented. In addition, there are further simplification measures for medium-sized taxpayers (with annual income not exceeding EUR 45 million) and small taxpayers (with annual income up to EUR 10 million).
Audit Focus Areas
In recent years, the Serbian Tax Authority has significantly intensified transfer pricing audits, with particular attention given to the following areas:
- Transactions with offshore jurisdictions and non-resident related parties, especially where the foreign party is located in a low or zero-tax jurisdiction.
- Service transactions (management fees, IT, consulting services) – Authorities frequently challenge the actual provision of services and test whether the fees are aligned with market rates.
- Financial transactions (intercompany loans, guarantees) – Auditors verify whether interest rates are consistent with market benchmarks and whether the underlying agreements are valid and properly documented.
- Lack of proper functional and comparability analysis – Taxpayers who fail to justify their method selection or provide robust comparables often face transfer pricing adjustments.
In addition, there is increasing collaboration between the Large Taxpayer Office and the Department for International Cooperation, suggesting a future increase in automatic exchange of information and even potential joint tax audits with foreign tax authorities.
In Spain, similarly, the AEAT maintains its priority on TP, in accordance with the 2024-2027 Tax Control Plan and inspection guidelines.
- Beneficial owner: Verification of payments to non-residents (dividends, interest, royalties) to prevent abuse of agreements and misuse of EU regulations.
- Intragroup transactions: Review of intangibles, financing, service prices, and verification of the actual provision of such services.
- Information exchange: Requirements and comparison with international information (automatic exchange, CbCR) to detect risks and ensure compliance.
Additionally, the AEAT is reinforcing its “360º Strategy” on transfer pricing, integrating audits, advance pricing agreements, and mutual agreement procedures to enhance legal certainty and promote greater cooperation with foreign tax administrations through joint and multilateral audits.
Impact of Non-Arm’s Length Transactions on Other Taxes in Serbia
Serbia and Spain have signed a Double Tax Treaty (DTT) that provides reduced withholding tax (WHT) rates under certain conditions. For example, a preferential WHT rate at 10% may apply to interest payments made by a Serbian resident to a Spanish tax resident.
However, it is important to note that the preferential WHT rate applies only to the arm’s length portion of the interest. If any portion of the interest payment exceeds the market rate, the excess amount is subject to WHT at the standard 20% rate, as prescribed under the Serbian Corporate Income Tax Law.
This highlights the broader impact of transfer pricing compliance on withholding tax obligations, which is a growing area of scrutiny in Serbia.
In Spain, some intra-group or international transactions may affect VAT deductions or other similar taxes if transfer prices do not reflect actual transactions, i.e., if prices between related companies do not comply with the arm’s length principle.
Conclusion
Effective management of transfer pricing obligations demands a thorough understanding of jurisdiction-specific rules and enforcement priorities.
While Serbia and Spain adhere to OECD transfer pricing Guidelines, each jurisdiction introduce specific requirements.
Both Tax Authorities continue to expand their analytical capabilities and international cooperation, and transfer pricing audits are expected to remain a priority.
This series is prepared by the ETL GLOBAL Transfer Pricing Group. For a more detailed overview of transfer pricing regulations across different jurisdictions, please refer to the ETL GLOBAL Transfer Pricing Guide 2025/26.
