Related party transactions

A REPORT JUSTIFYING “NORMAL MARKET VALUE”

Tax legislation provides for special schemes regarding Related Party Transactions, which are those transactions between an entity and its partners or shareholders; between an entity and kin or between entities belonging to the same group.

Tinsa, leader in the real estate valuation sector, issues reports justifying “normal market value” according to the rules established by the Tax Office. It requires an explanation of everything from the selection process of the method used, how it was applied and a description of the reasons justifying its selection, to the comparability analysis used in each case.

COMPANIES FROM ANY SECTOR
COMPANIES THAT CARRY OUT PURCHASE AND SALE TRANSACTIONS OR LEASING WITH AN ENTITY OR A PERSON CONNECTED TO THE ENTITY.

BUSINESS GROUPS AND HOLDINGS

1. THE SITUATION.
A company wanted to sell a property to one of its shareholders, an operation that should be reflected in the Company Tax of the company. The Tax Office requested the required documentation from the client for these types of operations.

2. OUR SERVICES.
Having analysed the Related Party Transaction, Tinsa issued a report justifying that the legal transaction, either the purchase and sale or rental of a property, has been performed in accordance with the definition of the tax concept “normal market value” as set out by the Tax Office.

3. THE RESULT.
Thanks to the report, the client avoided a fine from the Tax Office for a missing document and has adequately justified the Normal Market Value of the transaction. The potential fine could be up to around €60,000.