Related-party transactions in the annual accounts
Posted: Thu Dec 26, 2024 4:17 am
When we talk about related-party transactions , we tend to think that it is something complex, concerning only large companies. But these operations are carried out on a daily basis in all types of business, including SMEs . Let us think of a mere provision of services by a partner to his company, or a loan or the collection of a salary. Related-party transactions occur constantly and sometimes are not even perceived as such.
Let's consider the case of a business premises owned by one of the partners that is used by the company for its economic activity. Such a simple situation could generate problems with the Tax Agency if it is not carried out as indicated by the regulations. The biggest conflict that related-party transactions pose is their valuation. According to regulations, they must be valued at market price , but what is that price?
It is best to consider the usa whatsapp number data transaction as if it were carried out with a third party and not with our own company . In the case of leasing a commercial premises, we would have to stipulate the amount that we would like to charge if, instead of using it with our own company, it were rented to a third party. And that is the figure that the owner will have to include in his Income Tax Return, whether he receives it or not.
Likewise, the provision of services to our company, whether paid in payroll or through an invoice, must be valued in accordance with the nature of the work performed and not arbitrarily. Otherwise, the Tax Agency may charge an additional income in our Income Tax as an adjustment, if it considers that the amount should be higher.
Related-party transactions must be reported in the Corporate Tax if their amount exceeds 100,000 euros per transaction, in the case of companies whose net turnover in the tax period is less than 10 million euros). They are also mandatory to be mentioned in the Annual Accounts Report , especially with regard to the salary of the administrator or senior management positions.
Let's consider the case of a business premises owned by one of the partners that is used by the company for its economic activity. Such a simple situation could generate problems with the Tax Agency if it is not carried out as indicated by the regulations. The biggest conflict that related-party transactions pose is their valuation. According to regulations, they must be valued at market price , but what is that price?
It is best to consider the usa whatsapp number data transaction as if it were carried out with a third party and not with our own company . In the case of leasing a commercial premises, we would have to stipulate the amount that we would like to charge if, instead of using it with our own company, it were rented to a third party. And that is the figure that the owner will have to include in his Income Tax Return, whether he receives it or not.
Likewise, the provision of services to our company, whether paid in payroll or through an invoice, must be valued in accordance with the nature of the work performed and not arbitrarily. Otherwise, the Tax Agency may charge an additional income in our Income Tax as an adjustment, if it considers that the amount should be higher.
Related-party transactions must be reported in the Corporate Tax if their amount exceeds 100,000 euros per transaction, in the case of companies whose net turnover in the tax period is less than 10 million euros). They are also mandatory to be mentioned in the Annual Accounts Report , especially with regard to the salary of the administrator or senior management positions.