International taxation on Spanish Tax Journal — Álvaro Crespo García

Transfer pricing adjustments and VAT: the CJEU judgment in Stellantis Portugal requires a legal relationship with reciprocal and identifiable performances

Wed, 27 May 2026 00:00:00 +0000

Analysis of the Court of Justice of the European Union judgment of 13 May 2026, Case C-603/24 (Stellantis Portugal, S.A.). The Court specifies that intra-group transfer pricing adjustments do not constitute, on their own, the consideration for a supply of services subject to VAT, unless there exists between the companies a legal relationship with reciprocal and identifiable performances and a direct link between the service and the adjustment. Implications for multinational groups practising year-end true-ups.

The Spanish Supreme Court confirms in the VELCRO case the cross-cutting reach of the beneficial-owner concept in international taxation

Sat, 25 Apr 2026 00:00:00 +0000

The Spanish Supreme Court, in its judgment of 12 January 2026 (VELCRO case, appeal 6111/2023), confirms that the interposed company without economic substance that transfers royalties to a third party is not the beneficial owner and is excluded both from the Directive exemption and from the reduced tax-treaty rate.

VELCRO: the beneficial owner operates cross-cuttingly over Directive and treaty

Sat, 25 Apr 2026 00:00:00 +0000

The Spanish Supreme Court, in its judgment of 12 January 2026 (cassation appeal 6111/2023, known as the VELCRO case), confirms that the concept of beneficial owner operates cross-cuttingly over the regime of intragroup royalty withholdings. Where the receiving company does not act as beneficial owner —because it is bound, contractually or in fact, to transfer the income to a third party— neither the exemption of article 14.1.m) of the Consolidated Text of the Non-Resident Income Tax Act (TRLIRNR), which transposes Directive 2003/49/EC —on a common system of taxation applicable to interest and royalty payments between associated companies of different Member States—, nor the reduced rate of the bilateral tax treaty, which in the case under review was the one between Spain and the Netherlands, applies. The applicable withholding is the general one of the TRLIRNR. The doctrine takes up the criterion that the Court of Justice of the European Union laid down in the Danish cases T Danmark and joined cases, where in 2019 it consolidated the beneficial owner as a specific manifestation of the general principle prohibiting the abuse of EU law.

The practical consequence for international groups with intermediate companies in Spain is direct: it is advisable to review case by case the economic justification of each structure, attending to the real substance of the receiving company —employees, operating offices, business decisions taken at its level—. For defensive purposes, it is advisable to preserve the contemporaneous documentation —intangible-licensing agreements, board minutes evidencing autonomous business decisions, budgets and annual accounts reflecting its own operations— that enables evidencing that the formal recipient does, in effect, have the powers of management and disposal over the royalties received. Mere formal interposition in a privileged jurisdiction is not sufficient.

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