The decision issued by the Spanish Central Economic-Administrative Court (TEAC) dated 25 February 2025 confirms that the application of the Mark-Up Cost Method is valid in cases of dual-related transactions. This means that the use of a margin applied to the incurred costs is considered as appropriate, taking into account the functions performed, the risks assumed, and the assets employed.
The proper application of this method shall reinforce the arm’s length principle and may prevent unexpected adjustments by the Tax Authorities.
Our Transfer Pricing department, led by Arely Almaguer, we can help you to better understanding and to apply this methodology.