Related-Party Transactions

Advice on the market value of Related-Party Transactions.

What is the Consultancy Service for Related-Party Transactions?

Market value in transactions between related persons or entities.

Related-party transactions are acts carried out between persons or entities who are related to a same group of companies. These transfer or rental transactions are valued based on their market value, which is the value that independent persons or entities would agree under the arm’s length principle. Related-party transactions are governed by Art. 18 of Spanish Law 27/2014 of 27 November on the Corporate Tax.

Who needs it?

Parties who wish to establish the market value or related-party transactions for the Corporate Tax.

Transactions between related persons and companies must reflect the market value, including transfers and acquisitions for free, contributions, transfers due to a winding-up, mergers or splits, total or partial, swaps and redemptions.

Also, a company’s balance sheet must always provide a true reflection of its equity and show the updated value of its real-estate assets. This is why it is advisable to check them regularly to make sure that the book value is accurate and the financial and tax structure of the company is appropriate. The reports to reappraise balance sheets are required by the Companies House, auditors, lawyers, shareholders and companies, including real-estate investment trusts (SOCIMIs) that must regularly update their asset value to meet the reporting standards and keep the market and their shareholders informed.

gloval What makes Gloval different?

Experts who specialise in appraising real-estate assets across Spain.

Thanks to our extensive network of experts we are able to take on market appraisals all over the Spanish territory.

How do we do it?

We do extensive research on the area to establish the market value.

To establish the market value for rentals, we analyse market offers on rentals. Likewise, to determine the value of a transfer, we analyse market offers and compare the values to existing valuations. This helps us determine the market value of a property more accurately.

1. Analysis

We meet with the client to discuss the specific needs in each case.

2. Order

The client orders the services and accepts the quote.

3. Report

We gather information, examine it if required and prepare the report.

4. Delivery

We sign-off and deliver the report to the client.

Frequently Asked Questions

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Art. 18, section 4 of Spanish Law 27/2014 of 27 November on Corporation Tax establishes the methods used to determine the market value.

The appraisal method chosen will depend on the nature of the related-party transaction, the availability of reliable information and if the related-party transactions can be compared to other similar ones. We may use the generally accepted appraisal methods and techniques that observe the arm’s length principle.

Here are some of the generally accepted appraisal methods for real-estate appraisals:

  • Comparison method: This establishes the market value by comparing identical or similar properties that are brought to the same level to make them equivalent.
  • Income update method: This establishes the market value for properties that are to be rented or, if a single-use property, may produce an income.
  • Cost method: Properties without a market.

Related-Party Transactions do not always need to be reported. This will largely depend on the companies’ circumstances in terms of net turnover during the tax period (less than 10 million euros) and if the total amount of related-party transactions exceeds 100,000 euros in market value. For more information and updates, we suggest you check the Spanish Tax Agency website on Corporate Tax.

To report the market value of a related-party transaction, you need reliable and verifiable knowledge of the real-estate sector. In this regard, the experience and sheer volume of all the appraisals made by GLOVAL make us an expert company in this type of appraisals. The qualified staff who is devoted to preparing this type of appraisal reports depending on the type and use of the property is made up of architects, architectural technicians, construction engineers and agricultural engineers.

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