Key Transfer Pricing Insights for the Tourism Industry
The fiscal year-end is a crucial moment for tourism companies. A proper analysis of income and expense items not only ensures regulatory compliance but also prevents unexpected adjustments in related-party transactions, particularly in the area of transfer pricing.
Intragroup Services: The Key Challenge for the Tourism Sector
Tourism companies often rely on services provided by related entities, such as technology management, marketing, or management fees. These transactions are closely scrutinized by tax authorities, making it essential to justify their market value and utility.
At Mylegalinbox, we help Travel Tech companies effectively manage these services, ensuring they are correctly documented to avoid issues with tax authorities.
How to Justify the Deductibility of Intragroup Services
Spanish law establishes that these services must:
- Have been effectively provided.
- Clearly specify their nature and cost distribution methods.
- Generate a clear benefit for the recipient entity.
- Be properly recorded and allocated.
- Directly correlate with the generated income.
This is particularly relevant for hotel chains, airlines, and travel agencies, whose services often involve multiple jurisdictions. At Mylegalinbox, we specialize in meticulously documenting these processes to protect you from unexpected tax audits.
The Key Lies in Contracts
Recent court rulings emphasize that the absence of clear contracts significantly complicates defending the deductibility of intragroup services. Therefore, we recommend that all sector companies formalize contracts that detail:
- The nature of the service.
- The scope of the service.
- Its value to the recipient entity.
At Mylegalinbox, we help you draft and structure these contracts to meet current tax requirements and withstand any audit.
Shareholder Costs or Deductible Services?
Tourism companies often receive services from their international parent companies, which are sometimes categorized as “shareholder costs,” making them non-deductible. However, if it can be demonstrated that these services provide direct value to the subsidiary, they can be deductible.
With our advice, we help you identify which of these expenses can be justified as valid intragroup services.
Expenses from Foreign Parent Company Services: How to Act?
If your tourism company incurs expenses for services centralized by the parent company (such as accounting, technology development, or booking management), it is vital that these costs align with the market value in Spain.
At Mylegalinbox, we analyze these expenses and advise you to ensure compliance with regulations and avoid tax adjustments that could harm your profitability.
Steps to Minimize Tax Risks
Tourism companies seeking to avoid tax surprises should:
- Formalize clear contracts for all intragroup services.
- Maintain exhaustive documentation of each related-party transaction.
- Prepare transfer pricing documentation that justifies each transaction.
- Conduct periodic internal audits.
- Evaluate potential adjustments to the tax base when there are doubts about the deductibility of certain expenses.
Why Trust Mylegalinbox?
At Mylegalinbox, we have years of experience advising Travel Tech sector companies, helping them optimize their transfer pricing policies and ensuring maximum legal security in their international operations.
Do you want to minimize tax risks and optimize your cost structure? Contact us and discover how we can help make your fiscal year-end safer and more efficient for your tourism business.
