Modelo 232 and transactions with your own company

What the 232 reports, and why it left modelo 200

Modelo 232 is the «Informative return of related party transactions and of transactions and situations linked to countries or territories classified as tax havens», approved by Orden HFP/816/2017 of 28 August. Until then, the detail of related party transactions was filled in inside modelo 200 itself, in an information schedule. The preamble of the order says it plainly: for tax periods starting on or after 1 January 2016, those schedules were moved from the corporate tax return to a new informative return, filled in only by the entities actually required to report, which cuts the indirect burden for everyone else.

What has to be reported is set out in article 3 of the order, and it is worth knowing before looking at the thresholds, because it explains how the amounts are added up. Transactions are entered separating income from payments, with no netting between them even where they relate to the same concept, and they are grouped by related person or entity and by type of transaction, provided the same valuation method was used; where the method differs, transactions of the same type go into separate records.

Each record asks for the tax number and the name or company name of the related party, whether it is an individual or a legal entity, the type of relatedness under article 18 of the Corporate Tax Act, the province code or the country of residence, the key for the type of transaction (eleven keys, from the acquisition of tangible goods to property rentals or loan interest), whether it is income or a payment, the valuation method of article 18.4, and the amount of the transaction excluding VAT.

It is a purely informative form: there is no payment and no refund, and it neither replaces nor summarises corporate tax. Being informative does not make it optional or harmless: the data it collects is exactly what lets the tax authorities spot related party transactions that might not be valued at market price, so what is written here can be the starting point of a later review of the tax return itself.

Who counts as related, and the 25% that decides it

Article 18.2 of the Corporate Tax Act lists the cases of relatedness. The two that most affect a small SL are the first ones: «an entity and its shareholders or members» and «an entity and its board members or directors, except as regards remuneration for the exercise of their functions». The list goes on with spouses and with relatives, in the direct or collateral line, by blood or by marriage up to the third degree, of shareholders and directors, and with two entities belonging to the same group, group being understood as in article 42 of the Commercial Code.

The last paragraph of that same section draws the line that gets asked about most: «where relatedness is defined by the relationship of shareholders or members with the entity, the holding must be equal to or greater than 25 per cent». Equal to or greater, so exactly 25% already creates relatedness. A shareholder with 10% is not a related party through that route; one with 30% is. The same paragraph adds that the reference to directors covers both de jure and de facto directors, so whoever actually runs the company counts even without appearing on the register.

Relatedness through office carries no percentage threshold: a director is a related party even holding no shares at all. In exchange, the law expressly excludes from that relatedness the remuneration for the exercise of their functions, so the director's own pay is not, on its own, a related party transaction for these purposes. Where the sole shareholder is also a paid director, that pay should be kept apart from the rest of the transactions following the director pay guide; the simplest case to spot, the single member company, is also the most common among people who open their SL without partners.

Before closing the analysis it is worth drawing the full tree: the spouse, the children and the parents of each shareholder, the other companies of the group and the directors of those other companies are all on the list, and these are relationships that are almost never written down in any internal company record.

Rule 1: 250,000 euros with the same related party

Article 2.1(a) of the order requires filing the 232 for «transactions carried out with the same related person or entity provided that the consideration for the set of transactions in the tax period exceeds 250,000 euros, at market value». Three details of that sentence decide almost every case.

First: it is calculated per counterparty, not by adding up all of the company's related party transactions. Two different shareholders, each with 200,000 euros of their own transactions, do not trigger this rule, even though between them they add up to 400,000 euros. Second: transactions of any type with that same person are added together. A loan, a lease and a sale of fixed assets to the same shareholder are not three separate analyses, but a single sum. Third: the rule says «exceeds», so exactly 250,000 euros does not oblige and 250,000.01 does.

The specific transactions of rule 2 have their own threshold, lower and calculated in a different way. Article 2 does not expressly say whether they are also taken out of the sum under this letter (a); kontora, when evaluating this rule, leaves them out, because they already count under their own. If in your case that difference decides between filing and not filing, the last section of this guide explains why the doubt is settled by filing.

There is an identical figure worth not confusing with this one: article 18.3 of the Corporate Tax Act exempts from the specific documentation the transactions carried out with the same related person or entity where the set of them does not exceed 250,000 euros of consideration at market value. Same number, different duty: one is about the informative return, the other about the file you have to keep in case it is requested.

Rule 2: 100,000 euros in specific transactions

Article 2.1(b) sets the second threshold: «specific transactions, provided that the combined amount of each of these types of transaction in the tax period exceeds 100,000 euros». The same letter defines what specific means: transactions excluded from the simplified content of the documentation referred to in article 18.3 of the Corporate Tax Act and article 16.5 of its regulation.

That list, read in the law itself, has five entries: transactions carried out by personal income tax payers under the objective assessment method with entities in which they, their spouses, ascendants or descendants hold at least 25% of the capital or equity; transfers of businesses; transfers of securities or holdings in the equity of entities not admitted to trading on regulated markets, or admitted to trading on markets located in tax havens; transactions involving real estate; and transactions involving intangible assets.

The key phrase in the threshold is «each of these types of transaction»: the amounts are added up per type of specific transaction, across every related counterparty, and different types are not mixed. Selling premises to the shareholder for 60,000 euros and transferring unlisted shares of another company to them for 45,000 euros does not make 105,000 euros for this rule: they are two different types, each one below its threshold. Two sales of real estate to the same shareholder in the same financial year, of 60,000 and 45,000 euros, do add up to 105,000 and do exceed the threshold.

Whether a transaction is specific is determined by its nature, not by its administrative label: selling a property to the shareholder is specific whatever the contract calls it, and it should be classified as such when it is recorded, rather than reconstructed months later with the form open and the memory cold.

Rule 3: 50% of turnover, with no minimum

Here is the rule that really reaches the small SL. Article 2.3 requires filing the form, «regardless of the amount of the consideration for the set of transactions carried out with the same related person or entity», in respect of «transactions of the same type which also use the same valuation method, provided that the combined amount of those transactions in the tax period is greater than 50% of the entity's turnover».

The preamble of the order explains what it is for: it is a special rule to stop related party transactions from being split into smaller pieces, and there the reference figure is named as the entity's net turnover. There is no floor in euros: what counts is the proportion against the size of the business itself, so a company with modest sales triggers the rule with equally modest transactions.

The extreme case, and not a rare one, is a company with zero turnover: newly incorporated, or in the stage before invoicing but already incurring expenses. Any related party transaction mathematically exceeds 50% of zero, so the rule obliges. It does not hide for being a borderline case: it is assessed just the same, and it triggers more easily, not less.

And it forces grouping before comparing: transactions of the same type that also share a valuation method are added together, even if each contract on its own is small. Several leases with the same shareholder, valued under the same method, form a single set against the 50%, and that sum is what has to be compared with half of the financial year's turnover.

The micro company trap: renting the owner's premises

The example that best illustrates rule 3 is the most common one in practice: an SL operating out of premises owned by its shareholder, paying them a monthly rent. In the form, that transaction has its own key, number 8, «rentals and other income from the transfer of the use of real estate». If the company invoices little, a rent of 700 euros a month (8,400 euros a year) can easily represent more than 50% of turnover, and at that point the 232 has to be filed for that single transaction, without coming anywhere near the 250,000 euros of rule 1.

It surprises people because the absolute amount sounds irrelevant next to the large thresholds, and that disproportion is exactly what makes so many small companies overlook it: they mentally compare themselves against the 250,000 or the 100,000 euros and never get around to calculating the percentage against their own turnover.

The way to avoid the surprise is to do that calculation at the close of each financial year, type of transaction by type of transaction, instead of watching only absolute amounts. The profile most exposed is precisely the one least likely to think about informative returns: the start up company, with expenses funded by the shareholder and hardly any sales yet.

The rent rarely travels alone. If the shareholder has also lent money to the company, the interest on that shareholder loan to the company is another type of related party transaction, with its own key, and distributing profits brings its own rules, explained in the guide to paying dividends. Two seemingly humble transactions can move two of rule 3's percentages at the same time.

The three rules are not the only ones

The three rules above are those of the related party transactions schedule, but article 2 has two further sections that also require filing the form. Article 2.4 requires it where the taxpayer applies the reduction for income from certain intangible assets under article 23 of the Corporate Tax Act, because it earns income from licensing those intangibles to related persons or entities: in that case the specific schedule for that reduction has to be filled in.

Article 2.5 requires filing the form and completing the block on «transactions and situations linked to countries or territories classified as tax havens» where the company carries out transactions with those territories or holds securities linked to them, and it says so in wording that leaves no room: whatever the amount.

In the opposite direction, article 2.2 takes three cases out of the related party information: transactions between entities forming part of the same tax consolidation group, without prejudice to article 65.2 of the Corporate Tax Act; those carried out by economic interest groupings and by temporary business joint ventures with their members, except joint ventures under the regime of article 22; and transactions within the scope of public offerings for the sale or acquisition of securities.

For a small SL with one shareholder and one director none of these cases usually applies, but it is worth knowing that they exist: they are the difference between reading the whole of article 2 and settling for the three rule summary that circulates online.

The deadline: the month after ten months from year end

Article 4 of the order sets the deadline in a sentence that has to be read slowly: filing «must take place in the month following the ten months after the end of the tax period to which the information relates». For a calendar year closing on 31 December 2026, the ten months after that close end on 31 October 2027 and the following month is November: the window runs from 1 to 30 November 2027.

That deadline arrives long after modelo 200, which under article 124.1 of the Corporate Tax Act is filed «within the 25 calendar days following the 6 months after the end of the tax period», that is, from 1 to 25 July for a calendar year. Confusing the two calendars is a common mistake precisely because both forms deal with the same transactions of the same financial year.

For a financial year that does not match the calendar year the calculation is identical, only shifted: ten months from the close and the whole following month, whatever date the company chose in its articles.

Filing is electronic and compulsory online: article 5 of the order refers to the general conditions of Orden HAP/2194/2013. Marking the date on the company's own calendar, in a slot clearly separate from the 200's, is what prevents filing late through assuming they share a date.

Filing when you did not have to carries no penalty; not filing does

Article 198 of the General Tax Act classifies as a minor infringement «failing to file returns or self assessments on time», provided no economic harm to the public purse has been or can be caused, which is exactly the case of an informative return like the 232. Article 198.1 sets a fixed penalty of 200 euros and, where the return is one required generally in compliance with the reporting duty of articles 93 and 94, of 20 euros for each item or set of items relating to the same person or entity, with a minimum of 300 euros and a maximum of 20,000 euros.

Article 198.2 halves the penalty and those limits where the return is filed late without a prior request from the authorities. Realising late and filing on your own initiative therefore costs half as much as waiting for the call.

What does not appear anywhere in that article is an infringement for filing when you did not have to: what is penalised is the failure to file on time, not the filing of an informative return by someone who was not obliged to file it. Hence the practical asymmetry that settles almost every doubt in this guide: where there is reasonable doubt about whether any rule obliges, filing works out cheaper than not filing.

It is also worth not confusing this penalty with the regime of article 18.13 of the Corporate Tax Act, which punishes the failure to provide, or the incomplete or false provision of, transfer pricing documentation with 1,000 euros per item and 10,000 euros per set of items, capped at the lower of two amounts (10% of the combined amount of the transactions or 1% of net turnover), and only where the tax authorities make no valuation corrections; where they do, paragraph 2 of the same article turns it into a proportional penalty of 15% of the corrected amounts. They are two different duties and two different regimes. If the deadline has already passed, the guide to a missed deadline explains how to put it right as soon as possible.

How kontora handles it

kontora classifies your related party transactions from the accounting fact, evaluates the three rules against your real figures and tells you whether the form is triggered, with the reason. It does not choose the valuation method: that field travels empty and you fill it in on the tax agency's form, because kontora does not value transactions. As no method is entered, the 50% rule is grouped by type of transaction alone, which is the conservative reading: the rule triggers sooner, never later. It also does not cover the non-cooperative jurisdictions section or the intangibles income reduction, nor does it generate the specific transfer pricing documentation. Filing the form is done by you.

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