The Profit Split Method across Jurisdictions – Report on Spain

The profit split method (PSM) is expressly recognized as one of five accepted transfer pricing methods under the OECD Guidelines as well as the Spanish Corporate Income Tax Act. However, the challenges that its application encompasses render the PSM a last-resort method in favour of the other four methods. As such, its application is reduced in practice to cases in which it is manifestly warranted, with a strong preference for the residual analysis variant and with documentation becoming key in justifying both the merits of the case and the specific criteria considered.This article is part of a special issue of the International Transfer Pricing Journal on the application of the PSM across jurisdictions. The other articles include the General Report and contributions on Belgium, France, Germany, Ireland, Italy, Korea, the Netherlands, Portugal and the United States.