INVESTING
IN
SPAIN
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
Telf. (+34) 91 435 10 55 [email protected] www.legalcontrol.com
(El contenido de este Documento es meramente informativo y no constituye un asesoramiento suficiente para la toma de decisiones sobre las materias tratadas)
Índice
A) STATUS OF FOREIGN INVESTMENT IN SPAIN
1. WHAT ARE THE GUIDING PRINCIPLES OF FOREIGN INVESTMENT IN SPAIN?........ 12
2. WHO CAN BE THE HOLDER OF FOREIGN INVESTMENT IN SPAIN?............................. 20
3. WHAT KIND OF OPERATIONS FOREIGN INVESTMENT CONSIDERED?....................... 21
4. STEP BACK STATEMENT OF INVESTMENT............................................................................ 22
4.1. What investments should be reported later?................................................................................. 22
4.2. Who is required to report?.................................................................................................................. 22
4.3. How, where, and in what timeframe must it be declared?........................................................ 23
5. EXCHANGE CONTROL REGULATIONS.................................................................................... 25
6. SUBMISSION FORMS..................................................................................................................... 28
7.ADDRESSES....................................................................................................................................... 29
8. CHARGES, PAYMENT AND TRANSFERS BETWEEN RESIDENTS BY REGISTERED
ENTITIES........................................................................................................................................... 29
8.1. Safeguard clauses.................................................................................................................................. 30
8.2. Exceptional measures.......................................................................................................................... 30
8.3. Suspension of the liberalization....................................................................................................... 30
8.4. Offenses and administrative penalties............................................................................................ 30
4
8.5. Addresses of interest............................................................................................................................ 30
9. CONSTITUTION OF COMPANIES, SUBSIDIARIES AND REPRESENTATIVE OFFICES 31
9.1. What are the formal aspects that must be observed prior to their constitution?................ 31
9.2. Limited Company New Business...................................................................................................... 32
9.3. The European Company..................................................................................................................... 34
9.4. Law 14/2013: To support entrepreneurs and their internationalization............................... 36
9.5. Places of interest.................................................................................................................................... 42
9.6. Kind contributions................................................................................................................................ 43
9.7. Social Capital.......................................................................................................................................... 43
9.8. Procedures subsequent to the constitution................................................................................... 44
9.9. Municipal Fee ........................................................................................................................................ 48
9.10. Ways to invest in Spain ....................................................................................................................... 48
9.11. Branch versus subsidiary.................................................................................................................... 50
9.12. Representative Offices......................................................................................................................... 51
9.13. The Corporations Unlisted Investment in the Real Estate Market (SOCIMI)........................ 52
10.OTHER WAYS TO OPERATE IN SPAIN...................................................................................... 56
Joint ventures (joint ventures).................................................................................................................... 56
B)NON RESIDENT TAXATION AND FOREIGN INVESTMENT IN SPAIN
1.INTRODUCTION............................................................................................................................. 59
Investing in Spain
5
2. FISCAL RESIDENCE IN SPAIN..................................................................................................... 59
2.1. The residence of individuals ............................................................................................................. 59
2.2. The residence of legal persons or companies .............................................................................. 60
3. MOST COMMON INCOME TAX FOR NON-RESIDENT TAXPAYERS................................. 62
3.1. Earned income obtained through a permanent establishment
(Permanent Establishment)................................................................................................................ 63
3.2. Earned income obtained through a permanent establishment............................................... 65
3 3. Other income......................................................................................................................................... 66
3.4. Income from land and buildings...................................................................................................... 72
3.5. Imputed income from urban real estate......................................................................................... 73
3.6. Capital gains........................................................................................................................................... 74
4. DEDUCTIONS FROM INCOME OBTAINED WITHOUT PERMANENT
ESTABLISHMENT............................................................................................................................ 76
4.1. Required to retain................................................................................................................................. 76
4.2. Amount withheld.................................................................................................................................. 77
4.3. Obligation to declare by required to retain.................................................................................... 77
5. STATEMENT OF INCOME OBTAINED BY NON RESIDENTS WITHOUT PERMANENT
ESTABLISHMENT............................................................................................................................ 78
5.1. Obligation to file.................................................................................................................................... 78
5.2. Model and deadline.............................................................................................................................. 78
5.3. Documentation...................................................................................................................................... 80
Investing in Spain
6
5.4. Filing of model 210............................................................................................................................... 82
6. SPECIAL TAX ON REAL ESTATE FOR ENTITIES NON RESIDENT..................................... 85
7. SPECIAL TAX ON CERTAIN LOTTERY AWARDS AND BETTING....................................... 87
8. SCHEME OPTIONAL...................................................................................................................... 89
8.1. Workers from abroad moving into Spanish territory.................................................................. 89
9. SPECIAL PROCEDURES FOR DETERMINING THE DEDUCTIONS FROM INCOME
WORK IF CHANGE OF RESIDENCE........................................................................................... 91
9.1. Workers moving to Spanish territory.............................................................................................. 91
9.2. Workers who move abroad................................................................................................................. 92
10.THE HOLDING COMPANY IN SPAIN........................................................................................ 92
10.1. Access to the scheme and objects of the ETVE............................................................................. 93
10.2. Treatment of income derived by the ETVE from investments and dividends to nonresident entities..................................................................................................................................... 94
10.3. Treatment of income distributed by the ETVE............................................................................. 95
10.4. Treatment of capital gains on the transfer of shares in ETVE.................................................. 95
11. LOANS FROM INTER-RELATED COMPANIES........................................................................ 96
12.DOUBLE TAXATION CONVENTIONS.......................................................................................105
13.TAX HAVENS.................................................................................................................................... 111
14.ECONOMIC AND FISCAL REGIME OF CANARIES................................................................. 115
Investing in Spain
7
14.1. Fiscal Incentives in the REF................................................................................................................ 115
14.2. ZEC ........................................................................................................................................................... 118
15.TAXATION OF THE BASQUE COUNTRY AND NAVARRE....................................................120
15.1. The Basque Country............................................................................................................................. 120
15.2. Navarre .................................................................................................................................................... 125
16.VALUE ADDED TAX ....................................................................................................................... 132
16.1. Returns to persons not established in the field of space tax .................................................... 132
C) BUSINESS TO BE CONSIDERED FOR THE DISCHARGE OF A
COMPANY IN SPAIN ISSUES FOR FOREIGN INVESTOR
1. INTRODUCTION............................................................................................................................. 137
2. BUSINESS BASICS OF FOREIGN LAW 4/2000 ........................................................................ 137
2.1. Entry and stay in Spain........................................................................................................................ 137
2.2. Access to employment......................................................................................................................... 138
2.3. Permits to work in Spain..................................................................................................................... 138
2.4. Rights and freedoms ........................................................................................................................... 139
2.5. Violations................................................................................................................................................. 140
3. OCCUPATIONAL PROCEDURES FOR OPENING OR REOPEN A WORKPLACE............140
3.1. Communication to the labor authority........................................................................................... 140
Investing in Spain
8
3.2. Registration of the company in the Social Security.................................................................... 141
3.3. Affiliation of workers to the SS.......................................................................................................... 141
3.4. Formalizing protection for occupational contingencies staff at your service, as well as
the economic benefit derived from common IT contingency................................................ 141
3.5. Acquisition and legalization of the Books Registration and Visit........................................... 142
3.6. Supervised the SS administrators, senior management and worker members
of capitalist corporations.................................................................................................................... 142
4. WORKERS COMPENSATION. SALARY...................................................................................... 143
4.1. Wage.......................................................................................................................................................... 143
4.2. Composition of Wages......................................................................................................................... 143
4.3. Obligations of the employer with respect to wages.................................................................... 144
5. CONTRACT WORK. RULES OF ENGAGEMENT...................................................................... 145
5.1. Information for workers...................................................................................................................... 145
5.2. Information for employee representatives.................................................................................... 146
5.3. Probation................................................................................................................................................. 146
5.4. Communication to the INEM............................................................................................................ 146
6. RULES OF ENGAGEMENT............................................................................................................. 146
6.1. The terms and contract types............................................................................................................ 147
6.2. Termination of Employment Contracts.......................................................................................... 148
7. QUOTES TO GENERAL REGIME. BASES AND TYPES........................................................... 151
Investing in Spain
9
7.1. Contribution base (BC)............................................................................................................................ 151
8. PAYMENT OF FEES. TERM OF MEMBERSHIP......................................................................... 152
9. SAFETY AND HEALTH. RISK PREVENTION............................................................................ 153
10.SPECIAL SCHEME FOR SELF-EMPLOYED OR SELF ............................................................. 154
D) THE INDUSTRIAL AND INDUSTRIAL PROPERTY IN SPAIN
a)Brands................................................................................................................................................ 159
b) Protection of inventions in Spain.............................................................................................. 162
c) Intellectual property....................................................................................................................... 163
d) Action against violations of intellectual property rights..................................................... 164
Investing in Spain
A) STATUS OF FOREIGN
INVESTMENT IN SPAIN
LEGAL CONTROL Abogados & Consultores de Empresas
12
1. WHAT ARE THE GUIDING PRINCIPLES OF FOREIGN INVESTMENT IN
SPAIN?
The basic regulations on foreign investment in Spanish territory have its foundation in various legislative texts:
1) Article 73 B of the Treaty on European Union, under which prohibits all restrictions on the movement of capital between Member States and between Member States and third countries and, consequently, are also no restrictions on
payments between Member States and between Member States and third countries.
2) Council Directive 88/361/EEC of 24 June for the implementation of Article 67 of the Treaty establishing the European
Economic Community (TEEC).
3) The Law 19/2003 of 4 July on legal framework of capital movements and financial transactions abroad. (The title of
this rule was amended by the entry into force of Law 10/2010, of 28 April, to prevent money laundering and terrorist
financing) largely replacing Law 40/1979 10 December on the legal framework of exchange controls.
4) Royal Decree 54/2005 of 21 January, Regulation of Law 19/1993 of December 28 on certain measures to prevent money laundering, approved by Royal Decree 925/1995 amending, 9 June, and other standards regulating the banking,
financial and insurance system.
5) Royall Decree 664/1999 of 23 April on foreign investment, replacing the Royal Decree 671/1992 of 2 July on foreign
investment in Spain and Royal Decree 672/1992 of 2 July on Spanish investments outside of Spain.
6) The Law 18/1992 of 1 July laying down detailed rules on foreign investment in Spain.
7) Law 14/2013 of 27 September, to support entrepreneurs and their internationalization, which aims to support entrepreneurs and businesses in the Spanish territory, both at the start of its activity, as in subsequent development,
growth and internationalization, and to this effect, introduces a number of important developments in the various
fields involved in the creation and implementation of new business ventures.
The general scheme of capital movements and economic transactions abroad is established in Law 19/2003 of 4 July that
declared “free of any acts, businesses, transactions and transactions between residents and non-residents involving, or
whose compliance, may result foreign receipts and payments and transfers to or from abroad, and changes in accounts
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
13
or financial debtor or creditor positions abroad, without restrictions other than those provided for in this law and sectorspecific legislation.”
More specifically, are regulated by Royal Decree 664/1999 of 23 April, on foreign investment, further developed by the
OM (Orden Magistral) of 28 May 2001, the Ministry of Economy, which are determined procedures applicable to foreign
investment statements and settlement, as well as procedures for the submission of annual reports and records release.
This Royal Decree provides:
1) Freedom of movement of capital of foreign investments in Spain. Generally foreign investments are fully liberalized.
This means that the procedures for authorization and verification prior to proceeding with such investments in Spain
disappear, leaving its legal regime characterized by the absence of administrative controls only with a few exceptions.
2) Declaration “ex-post” operations. It is only required, in general, administrative, economic and statistical purposes, the
processing of the statement to the Register of Investments of the Ministry of Economy and Finance of investments
(Registro de Inversiones del Ministerio de Economía y Hacienda) subsequent to its effective implementation.
3) Exceptions to the principle of free movement of capital. There are three exceptions investment that will require prior
notification or authorization:
a) Investments from tax havens: (encompasses the territories or countries set in Royal Decree 1080/1991 of 5 July)
will be necessary to make the statement prior to the investment, the Foreign Investment Registry (Registro de
Inversiones Extranjeras), and once declared will proceed to do it without having to wait for a notification from the
Administration.
However, the cited prior declaration of investment holders resident in tax havens, are not necessary in the case of:
• Investments in securities issued or offered publicly and are traded on a secondary official or unofficial market
(see Article 31 of Law 24/1988 of 28 July on the Securities Market), as well as holdings in investment funds
registered in Records of the National Securities Market Commission (Registros de la Comisión Nacional del
Mercado de Valores).
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
14
• In the event that foreign ownership does not exceed 50% stake in the Spanish company in the investment or
before the investment or as a result of it.
b) Ability to motivated suspension of the liberalization: preliminary investment control: Need for prior administrative
approval of the Cabinet.
b.1) Motivated, general or special character, suspension of the liberalization, by the Council of Ministers regarding investments by their nature, form or conditions of embodiment, affect or may affect the Agreement:
related activities, although in casual mode, with the exercise of public power, public policy, public security or
public health.
b.2) Suspension of the deregulation of foreign investment in Spain in activities directly related to national defense. Prior authorization by the Council of Ministers.
The process of liberalization suspension of the authorization and the grounds for suspension, are developed in
Articles 10 and 11 of Royal Decree 664/1999. Highlight concerning applications for authorization, which operates
a positive response in the absence of an express term resolution.
c) Direct and indirect investments that our made by non-members of the European Union for the acquisition of
property for their diplomatic or consular representations (Self Adic. 3rd Royal Decree 664/1999). There is need for
prior approval of the Cabinet, except in those cases where reciprocity is established by international agreement.
The provisions of Royal Decree shall apply without prejudice to special arrangements affecting foreign investment in
Spain established in specific sectoral legislation and in particular the following: air transport, radio, minerals and mineral
raw materials of strategic interest and mining rights, television, gaming, telecommunications, private security, manufacturing, trade or distribution of weapons and explosives for civilian use and Defense related activities.
To this end the Law 18/1992 of 1 July laying down detailed rules on Foreign Investment in Spain provides in Article One
that “represent sectors with specific rules concerning the right of establishment as follows:
• Games
• Activities directly related to national defense.
• TV.
• Radio.
• Transportation.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
15
This however, this exception does not apply to residents of a Member State of the EEC except as regards the activities of
production or trade in arms or on matters of national defense.
News of Law 14/2013 of support for entrepreneurs and internationalization
The Internationalization of the Spanish economy dedicates Title V (Articles 50 to July 6), with two sections dealing with
their promotion and international mobility respectively.
1. Promoting internationalization
a) Chapter I establishes how the Strategic Plan for Internationalization of Spanish economy will be built through collaboration of public and private sector.
b) Chapter II is aimed at strengthening the Foreign Service of the State, promoting on one hand, the performance of the
Foreign Network, composed of the Economic and Commercial Office of Spain in the integrated diplomatic missions or
the Permanent Representations on one hand, and External Network on the other hand. The role of ICEX Spain Export
and Investment Agency helps internationalization and competitiveness of Spanish companies.
c) Chapter III addresses the difficulty of access to credit for Spanish companies. To do this, the financial agencies of
government action (the Official Credit Institute, the Spanish Development Finance Company and Insurance Company
Spanish Export Credit, SA), as well as financial support instruments are systematized
d) And in Chapter IV develop the necessary mechanisms to encourage Spanish companies’ greater access to projects
open to competition in other countries.
Visas and authorizations for economic reasons
The measure is aimed at investors, entrepreneurs, employees of a certain company, highly skilled professionals and researchers, as well as spouses and older children, through a quick and fast process to a single authority, and for a varying
length depending on different cases referred. These residence permits shall be valid throughout the national territory.
This section does not affect citizens of the European Union who will not apply the law of the European Union to be beneficiaries of the rights of free movement and residence.
Article 6 2 sets general requirements, mainly based on EU regulations.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
16
For strategic sectors, see D. Ad. 5th.
A) Investors
Nonresidents who intend to enter Spanish territory in order to make a significant capital investment may apply for residence permit, or where applicable, residence for investors.
It will be understood as a significant capital investment that meets any of the following circumstances:
a) An initial investment equal to or more than 2 billion euros in government bonds Spanish, or equal to or greater than one
million euros in shares or shares of Spanish companies, Spanish or bank deposits in financial institutions.
b) The acquisition of real estate in Spain with an investment of equal or greater than EUR 500,000 per applicant.
c) A business project that will be developed in Spain and is considered and credited as general interest, based on certain
conditions such as employment, economic impact or innovation.
Investing can also be done through a legal person domiciled in a territory that is not considered a tax haven under Spanish
regulations and abroad has, directly or indirectly, most of their voting rights and have the power to appoint or remove a
majority of the members of its board.
The residence visa will last at least a year.
Holders of this visa can apply for a residence permit for investors, meeting the requirements of the art. June 6.II. Have an
initial term of two years, renewable for the same period on.
Foreigners must maintain for the duration of visas or permits the conditions that gave them access to, the authorities may
carry out proper checks (D. Ad. 7th).
B) Entrepreneurs and business
Foreigners may apply for a visa to enter and stay in Spain for a period of one year for the sole or primary purpose of carrying out the preparatory work to develop an entrepreneurial activity.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
17
They can access the status of residence for entrepreneurs, where warranted that previously produced the actual commencement of business activity for which the visa was requested. It will be valid throughout the national territory.
It will be understood as one that is entrepreneurial, activity for innovative special economic interest to Spain and to that
end on a favorable report of the competent organ of the Central Government.
C) Highly qualified professionals.
They may apply for a residence permit for highly qualified professionals, which will be valid throughout the national territory, same goes with companies requiring incorporation into Spanish territory of foreign professionals for the development
of an employment or professional relationship included in any of the situations listed, related to management or highly
qualified graduates and postgraduates from universities or business schools and renowned staff.
Moreover, foreigners intending to enter Spain, or being holders of a residence permit, wishing to conduct training, research, development and innovation in public or private, shall be provided with the appropriate visa or residence permit
to be valid throughout the national territory in the following cases:
a) The research personnel (art. 13 and D. Ad. 1st of Law 14/2011 of 1 June).
b) The scientific and technical personnel to conduct scientific research, development and technological innovation, business entities or R & D
c) Researchers received in the framework of an agreement by public agencies or private research.
d) Teachers hired by universities, agencies or institutions of higher education and research, or established business
schools in Spain.
Those foreigners who travel to Spain as part of an employment relationship, professional or vocational reasons, with a
company or group of companies established in Spain or in another country must bear the appropriate visa according to
the duration of the transfer and a residence permit for intra-firm transfer, which is valid throughout the national territory.
Companies or groups of companies with real business may apply for collective processing of permits, which will be based
on the planned management of a temporary quota authorization.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
18
D) General rules of procedure for granting authorizations
Apply only to visas and authorizations referred to in this section.
Stay visas and residence referrals shall be issued by the diplomatic missions and consular Spain
The uniform visa may be issued for one, two or multiple entries. The period of validity shall not exceed five years.
Residence visas will be valid for one year and authorize the residence of its owner in Spain
Visa applications are resolved and notified within 10 working days, except in cases of applicants subject to the consultation provided for in Article 22 of the Visa Code
The processing of residence permits shall be made by the Unit for Large Companies and Strategic Collective and shall
grant to the Department of Immigration.
The maximum period for withdrawal shall be twenty days from the filing of the application. If not resolved within that
period, the authorization shall estimated by administrative silence. Resolutions are motivated and may be subject to
administrative appeal
The authorization holder may apply for renewal for periods of two years as long as they maintain the conditions that
generated the right.
E) EU single permit
According to D. Ad. 4th, residence permits provided for in this rule shall be determined under the provisions of Directive
2011/98/EU of 13 December 2011 establishing a single application procedure for establishing a single permit for thirdcountry nationals to reside and work in the territory of a Member State and on a common set of rights for third-country
workers legally residing in a Member State is responsible.
Applications for issuance, amendment or renewal of these permits shall be submitted only by a single application
procedure.
Decisions to issue, amend or renew such permits only constitute a single administrative act, subject to the procedure for
issuing visas as appropriate.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
19
F) Residence in Spain with periods of absence from the Spanish territory
According to D. Ad. 6th, renewal of residence may be made counting absences exceeding six months a year in the case
of visas and residence permits for foreign investors or foreign workers from companies conducting business abroad.
This, notwithstanding the need to certify, under current law, continuity of residence in Spain for the purchase of long-term
residence or the Spanish nationality.
FOREIGN INVESTMENT
Investors
• Non-resident individuals (ie, Spaniards or foreigners domiciled abroad, or who have their primary residence).
• Legal persons domiciled abroad.
• Public entities of foreign sovereignty.
Regulated investments. Disclosure Obligations
• Participation in Spanish companies, including its constitution and the subscription and purchase of shares or ownership of shares, and any legal transaction under which political rights are acquired.
• The establishment and expansion of additional branches.
• The subscription and acquisition of marketable debt securities issued by residents (bonds, notes).
• Participation in investment funds registered in the Records of the National Securities Market Commission.
• Acquisition by non-residents of real estate located in Spain which the amount exceeds € 3,005,060, or where the investment comes from offshore, regardless of the amount.
• The constitution, formalization or participation in en participation, foundations, economic interest groups, cooperatives
and joint property, with the same features as above.
Obligors
• The investor
• The Spanish public notary
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
20
• Exceptionally, where materialized investment in certain assets (securities, mutual funds, registered shares), the obligation to declare may lie in other subjects involved in the transaction (credit institutions, financial, deposit or management
entities, the Spanish company receiving the investment).
Reporting arrangements
As a general rule, all foreign investments subject to declaration and payment must be reported after the Register of Investments of the Ministry of Economy and Competitiveness.
Investments from tax havens must be reported before and after the investment, except:
• Investments in securities issued or offered publicly, whether traded on an official secondary market or not, as well as
holdings in investment funds registered in the Records of the National Securities Market Commission.
• Cases in which foreign participation does not exceed 50% stake in the Spanish company investment.
2. WHO CAN BE THE HOLDER OF FOREIGN INVESTMENT IN SPAIN?
a) Non-resident individuals in Spain: Spanish or foreigners domiciled abroad or having their principal residence outside
the Spanish State.
b) Legal persons domiciled abroad and foreign public entities.
The regulation regarding the accreditation status of nonresident and resident in Spain, as well as a change of address
referenced below are contained in Article 2 of Law 19/2003 of 4 July established the following classification:
A) Residents:
a) Individuals ordinarily resident in Spain, except as provided in the relevant section of the “non-resident”
b) Spanish diplomats abroad and Spanish personnel providing services in Spanish embassies and consulates or international organizations abroad.
c) Legal entities established in Spain.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
21
d) Branches and permanent establishments in Spanish territory by natural or legal persons resident abroad.
e) Other specified in the regulations in similar cases.
B) Non-Residents:
a) Individuals who have their usual residence in a foreign country, except as provided in the relevant section of the “Residents”.
b) Foreign diplomats accredited to the Spanish government and the foreign personnel serving in embassies and consulates or international organizations in Spain.
c) Legal persons established abroad.
3. WHAT KIND OF OPERATIONS FOREIGN INVESTMENT CONSIDERED?
Under Article 3 of the RD 664/1999, foreign investment can be channeled through the following operations, being subject,
as appropriate, to the notification requirement of prior authorization or the following:
1) Participation in Spanish companies. This mode includes both the constitution of society, such as total or partial
subscription and purchase of shares or ownership, if any, of shares. Also included: the purchase of securities such
as rights to subscribe for shares, convertible bonds or similar securities which by their nature give right to equity and
any legal transaction by which rights are acquired by politicians.
2) Constitution and opening additional branches.
3) Subscription and acquisition of marketable debt securities issued by residents. (In the event of non-marketable securities, its treatment is not foreign investment but external financing)
4) Participation in investment funds registered in the Records of the National Securities Market Commission (CNMV).
5) Acquisition by non-residents of real estate located in Spain which the amount exceeds € 3,005,060, or where the
investment comes from offshore, regardless of the amount.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
22
6) Constitution, formalization or participation in participations, foundations, economic interest groups, cooperatives and
community property, when the total value corresponding to the participation of foreign investors exceeds the EUR
3,005,060.52 or when, regardless of the amount, applicable tax havens
Foreign investments not included in the above list (eg equity loans) are fully liberalized, with no communication in this
regard is necessary. This is without prejudice to the sectoral rules that might be relevant to them and to the provisions of
the rules relating to exchange control arising from such investments.
4. STEP BACK STATEMENT OF INVESTMENT
4.1. What investments should be reported later?
All foreign investments should be reported to the Registry of Investment of the Ministry of Industry, Tourism and Trade. In
this sense both investments need prior statement, as you do not require it, who are the majority are included.
4.2. Who is required to report?
a) General rule: The investment shall be established by the holder of foreign investment. In addition, if the operation is
operated by a Spanish notary, you should refer to the Investment Register information on the transaction. This course
will be taken as the date of completion of the investment. You must also submit to the Directorate General for Trade and
Investment (DGCI), written in the months of January and July of each year, a list of the operations that have intervened
during the preceding semester for which has not been interested in the notary public presentation of the declaration
(Article 17.4 28.05.2001 OM).
b) Special rule:
1) In the case of marketable securities, the investment services firms or credit institutions are required to declare in
accordance with Law 24/1988
2) In cases where they are non-transferable (other than shares in Spanish investment funds) values, but the parties
have deposited or registered these values voluntarily, the obligation to declare the investment shall be paid by the
Custodian or manager thereof. This course will be taken as the date of realization of the investment, the deposit
or registration.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
23
In the case of registered shares, the subject will be required to declare to the Spanish company receiving the investment, once aware of the transmission through the corresponding entry in the logbook (under Article 120 of the
Companies Act). This course will be taken as the date of registration of shareholders in that logbook.
3) In the case of investment through the subscription of shares in investment funds registered with the CNMV, it shall
be declared by the management company of the fund to which it relates.
4.3. How, where, and in what timeframe must it be declared?
The declaration must be made, as provided by the Orden Magistral of 05.28.2001, by the standard forms approved by
resolution of July 1, 2010, the Directorate General of Trade and Investment, by approving the model statement when the
foreign investment is required to be declared by the investor or the company with foreign participation and replacing
previous resolutions on this subject.
Annex I: Foreign investments in Spain, consists of the following forms to be completed:
DP-1: Prior declaration of foreign investment from tax havens in unlisted companies, branches and other
forms of investment.
DP-2: Prior notification of foreign investment from tax havens in real estate.
D-1A: Statement of foreign investment in unlisted companies, branches and other forms of investment.
D-1B:Statement liquidation of foreign investments in unlisted companies, branches and other forms of
investment.
D-2A: Statement of foreign investment in real estate.
D-2B: Declaration of liquidation of foreign investment in real estate.
D-4: Annual Report on the Development of Spanish investment in companies with foreign participation in
their capital and branches.
The DP-1 form is used to perform pre-Registration of foreign investments in Spanish companies investments in unlisted
securities and originating from one of the countries or territories called tax havens.
The DP-2 form is used to pre-register foreign investment in real estate located in Spain coming from one of the countries
or territories called tax havens by the RD 1080 / 1991 and its subsequent amendments. Excluded from the obligation of
filing of this statement are those prior acquisitions of property by non-residents in Spain as a result of lucrative transmissions inter vivos or mortis causa.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
24
For other forms of investment, form D-1A must be completed if the foreign investment seeks participation in contracts in
participations, foundations, economic interest groups, cooperatives and joint property.
Additional Documentation: The first operation of foreign investment in the Spanish company, the D-1A form must be accompanied by the Fiscal Identity Card.
The change of the name of Spanish or foreign company, shall be communicated by letter accompanied by a copy of the
deed of change of name. Changing the extent of the non-resident investor, without making any investment or liquidation,
shall also be communicated by letter within three months from the completion of the transaction.
Prior Declaration: For investments from countries or territories called tax havens by Royal Decree 1080/1991 and subsequent amendments, the number of DP-1 model (on Declaration) in the ‘DP-1 box nº is indicated. “and its filing date in the
format: day / month / year.
Form/model D-1B is used for statements to the Register of Investment for total or partial liquidation of foreign investments
in Spanish companies unlisted Securities. The statement must be submitted within one month from the settlement and
investment.
D-1B is completed in case of liquidation of foreign investment participation accounts, foundations, economic interest
groups, cooperatives and joint property if the aggregate amount of foreign investment exceeds EUR 3,005,060.52, or irrespective of the amount if the investment came from one of the countries or territories called tax havens by Royal Decree
1080/1991 and subsequent amendments.
D-2A form is to be completed in order to make statements to the Register of Investment for foreign investment in real
estate located in Spain whose cumulative amount exceeds 3,005,060.52 euros, or whatever amount for investments
originate from one country or territories called tax havens by Royal Decree 1080/1991 and subsequent amendments. The
statement must be submitted within one month from the completion of the investment.
Model D-2B is used to make statements to the Investment Registry of total or partial liquidation of foreign investment in
real estate located in Spain whose cumulative amount exceeds 3,005,060.52 euros or whatever their amount to liquidation of investments coming from one of the countries or territories called tax havens by Royal Decree 1080/1991 and
subsequent amendments. The statement must be submitted within one month from the liquidation of the investment.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
25
Model D-4 is used to present the Annual Investment Registry report on the development of foreign investment in Spanish companies. The report shall be submitted within a maximum period of 9 months from the end of the year to which it
relates.
5. EXCHANGE CONTROL REGULATIONS
The basic exchange control regulation is contained in Law 19/2003 on Capital Movements and Foreign Transactions and
Prevention of Money Laundering, and in Royal Decree 1816/1991 on economic transactions with other countries, which
maintain the principle of liberalization of capital movements.
The main features of the control provisions currently in force can be summarized as follows:
1) Freedom of action
As a rule, all acts, transactions and business transactions between residents and nonresidents that involve or may
involve payments abroad or receipts from abroad are completely liberalized, including payments or receipts (directly
or by offset), transfers or abroad and changes in financial position accounts or debit or credit. Import and export of
means of payment are also included.
2) Safeguard clauses and exceptional measures
EU rules may prohibit or restrict the performance of certain transactions and the corresponding payments, receipts,
bank transfers or changes in accounts or financial positions to third countries.
The Spanish government may also impose prohibitions or restrictions in respect of a State or a group of them, a territory or an offshore center, or suspend the liberalization regime for certain acts, businesses, transactions or operations.
3) Types of bank accounts
Non-resident individuals and legal entities can hold bank accounts in the same conditions as residents. The only
requirement is to open a bank account is the accreditation of the non-resident status. Moreover, this status must be
confirmed to the bank every two years. The legislation also provides other minor formalities.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
26
Furthermore, residents may, subject to certain reporting requirements, freely open and maintain bank accounts in
foreign denominated Euros or in foreign currency (whose opening must be declared to the Bank of Spain) and foreign
currency denominated bank accounts and open entities registered in Spain
4) Residence for the purposes of exchange control
It is believed that individuals are residents in Spain, in order to track changes, if they regularly reside there. Legal entities established in Spain and Spanish settlements and territory branches of natural or legal person’s resident abroad
are likewise resident in Spain for the purposes of exchange control.
Individuals who have their habitual residence abroad, legal persons established abroad, and permanent and overseas
branches of natural or legal persons resident in Spain establishments, are considered non-resident for the purposes
of exchange control.
Normal residence means the provisions of the tax but with the adjustments established by regulation rules.
In order to determine the balance of payments and maintain statistical and fiscal control of monetary flows, certain
formalities are carried out for the realization of the receipts and payments with foreign countries. At present, these are:
»» Generally, the receipts and payments between residents and non-residents, as well as transfers to or from abroad,
which are encrypted in euro or foreign currency, should be through a service provider payment recorded in the Official Records of the Bank of Spain (Registered Organizations), to which the resident must provide certain information
(eg; name and address of the parties involved in the transaction) and, specifically, a description of the transaction
giving rise to the payment, collection or transfer.
»» Movements in credit and debit of bank accounts held by non-residents in Spain are subject to this regime.
»» Movements credit and debit of bank accounts held overseas residents should contact the Bank of Spain if they
exceed a certain amount or expresses his request.
»» Payments and receipts between residents and non-residents can be made in Spain or abroad, in coins, bank notes
and bearer checks denominated in euros or in foreign currency, and must be declared by the resident party within
30 days, if the amount exceeds the amount of overall 6,000 euros (although the limit depends on the mode of payment).
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
27
»» Nonresidents intending to credit accounts held in Spain by non-residents through the delivery of banknotes or bearer checks, denominated in euros or foreign currency, or to transfer abroad the amount of such payment methods
should provide the source of those funds. Otherwise, registrants may not perform these transactions.
In addition, non-residents are required to justify the origin of the funds used to purchase bank checks, money orders
and other instruments, both euro currency, a registered entity, or to make purchases against other airline tickets licensed premises Exchange.
For purely statistical and informational purposes, residents engaged in businesses or transactions abroad should
declare to the Bank of Spain in the following cases:
»» Open accounts abroad.
»» Loans received from abroad
»» Loans and credits granted abroad.
»» Compensation foreign receipts and payments.
»» Foreign receipts and payments with banknotes or bearer checks.
»» Marketable securities held in non-resident entities.
Moreover, the Spanish authorities and the Bank of Spain may require data in order to perform a statistical and fiscal
control.
Without prejudice to the obligation of information described above, that will need to be declared before December 31,
2013, resident in Spain for individuals and legal entities (public or private) to conduct transactions with non-residents
or maintain assets or liabilities outside the system for the information generated from January 1, 2013 is as follows:
»» If the amounts of the transactions during the previous year, or the balances of assets and liabilities on December 31
last year, are equal or superior to 300 million euros, the information must be submitted on a monthly basis, within
20 days following the end of each calendar month.
»» If the amounts of the transactions during the previous year, or the balances of assets and liabilities on December
31 last year, are equal to or greater than EUR 100 million and less than 300 million euros, the information must be
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
28
sent periodically quarterly, within 20 days of the end of each calendar quarter.
»» If the amounts of the transactions during the previous year, or the balances of assets and liabilities on December
31 last year, are less than 100 million euros, the information must be submitted annually, no later than January 20
the following year.
»» When the aforementioned amounts do not exceed one million euros, a statement will only be sent to the Bank of
Spain to express this requirement and a maximum period of two months from the application date.
»» However, those residents who, not having reached the thresholds set forth above statement exceeded throughout
the current year shall be required to file returns with the appropriate intervals from the time when these limits are
exceeded.
Notwithstanding, where neither the amount nor the balances of transactions exceeding 50 million, the statements
may be made in summary form, containing only the beginning and ending balances of assets and foreign liabilities,
the sum total collection operations and the total amount of payment transactions of the declared period.
5) Import and export of certain payment methods and movements by country
The EHA/1439/2006 Order, regulating the declaration of movements of means of payment in the area of prevention of
money laundering, in force since February 13, 2007, provides that the export of coins, banknotes, and bearer checks,
denominated in euros or in foreign currency, although deregulated, is subject to prior declaration for information
purposes only if the amount exceeds 10,000 euros per person per journey. Failure to make such a declaration, the
Spanish customs officials will retain these means of payment.
6. SUBMISSION FORMS
To make statements, only the preprinted forms, available on the General Register of the Ministry of Industry, Tourism and
Trade and the Territorial and Provincial Departments of Commerce may be used through electronic Subsided of Ministry
of Commerce (http://subsede.comercio.mityc.gob.es), in the section on Procedures and Electronics-> Service assistance
programs Download -> AFORIX Program for completing Forms of Foreign Investment.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
29
7. ADDRESSES
Ministry of Economy and Finance: Registration of Foreign Investments
Paseo de la Castellana, 162
MADRID 28046
Tel 91 583.74.00 / 91 583.51.00
http://www.mineco.es
Deputy General Directorate of Foreign Investment Directorate General for Trade and Investment Ministry of
Economy
Paseo de la Castellana, 162
MADRID 28046
Tel: 91.349.36.16 Fax: 91.349.35.62
[email protected]
Central Treasury Delegation in Barcelona
Plaza Doctor Letamendi, 13
08007 BARCELONA
Tel 93 291.12.93
Central Delegation of Finance in Madrid
C /. Guzmán el Bueno, 139 28003 MADRID Tel (91) 582.67.67
8. CHARGES, PAYMENT AND TRANSFERS BETWEEN RESIDENTS BY
REGISTERED ENTITIES
As already discussed above, in principle any acts are free: businesses, transactions and transactions between residents
and non-residents involving the fulfillment or arising external receipts and payments and transfers to or from abroad and
changes in accounts or debtor or creditor financial positions against the outside according to paragraph 2 of Article 1 of
Law 19/2003.
However, such acts, businesses, transactions and operations must be declared by the obligors in the form and time to
be determined in future regulations.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
30
Credit institutions, company investment services, and other financial intermediaries involved in conducting the operations
of collection and / or payment on behalf of its customers shall be obliged to submit to the Ministry of Finance and the
Bank of Spain information related to customer transactions.
8.1. Safeguard clauses
Only will be banned or restricted any movements of capital and its operations receivable and payable under the terms of third
countries in relation to which the Council of the European Union has adopted safeguard measures for a particular state(s)
8.2. Exceptional measures
In some cases exceptional measures may be provided in accordance with Community legislation involving the prohibition
or limitation of movement of capital to third countries.
8.3. Suspension of the liberalization
The regime of freedom established by Law 19/2003 may be suspended by the Government in the case of acts, businesses, transactions or operations of a form or condition may affect related activities exercise of public power, defense,
national or public order, public security, or public health.
8.4. Offenses and administrative penalties
Violations are classified as minor, serious and very serious as the importance of the rule infringed. The penalties provided
for in Law 19/2003 range from the most severe sanction may consist of a fine amounting to both economic substance of
the transaction and may not be less than 30,000, - EUR and public or private reprimand to the Milder penalty which may
consist of a quarter of economic substance of the transaction and not less than $ 3,000 and a private reprimand.
8.5. Addresses of interest
DG Trade and Investment
Paseo de la Castellana, 162
28071 Madrid
Tel: 91 583 55 9194
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
31
General Directorate of the Treasury and Financial Policy
Paseo del Prado, 6
28014 Madrid
Tel: 91 2099500
Ministry of Economy and Finance: Registration of Foreign Investments
Paseo de la Castellana, 162
MADRID 28046
Tel 91 583.74.00 / 91 583.51.00
http://www.mineco.es
Bank of Spain
C / Alcalá, 50
28014 MADRID
Tel: 91 338.50.00
Basic Tax Information 901.33.55.33
9. CONSTITUTION OF COMPANIES, SUBSIDIARIES AND REPRESENTATIVE
OFFICES
9.1. What are the formal aspects that must be observed prior to their constitution?
As for the national constitution it is necessary, in the course of starting new companies, branches and representative offices, the following procedures:
1) Application for negative Certification of company name, certifying that no other entity is registered with the same
name, except in the case of branches and representative offices of the company name will match the name of the
parent company.
2) Three names in order of preference will be requested, by simple request to the Registro Mercantil Central-section of
denominations, with headquarters in Madrid (Principe de Vergara, 94, 28006 MADRID Tel. 563.12.52 91 / http://www.
rmc. s). The request can be made directly at the registry office, by mail or by email by filling the appropriate form. In
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
32
that you must note the three denominations requested, the name and identification of the applicant, and the social
form it will take society.
2. Definition of statutory laws ¿?
3) Opening a bank account in the name of the company, branch or representative office, transfer amounts and certifying
bank transfer and its origin. Evidence must be provided for non-residence and source of funds to be held to higher
amounts compared to 6,010.12 euros by B-1 model import. The account holder must provide the documents within
15 days after opening, if non-resident, every 2 years
4) Power of Attorney. Power will be given to the person so that it can form the company, branch or representative office
on behalf of the investor.
»» Incorporation by legal person: the set of points 1 to 4 and:
a) Certificate of origin. Commercial Register stating on the one hand, the parent company is duly constituted and,
secondly, that the board charges are applicable.
b) A document issued by the Companies Registry, indicating the registration information on the entities that are
shareholders of the Company
»» Establishment of branch or representative office: established in paragraphs 1 to 4 and also:
a) Articles of incorporation of the parent company, and bylaws of the same.
b) Certificate of the board of the parent company by which it was agreed to establish a branch in Spain. Along
with the certificate, it shall accompany the corresponding powers to form and shall include the appointment of
a CEO and the powers granted to him for the performance of their duties.
c) Certificate of origin Commercial Registry determines that parent company is duly constituted and the charge of
the board are in force.
9.2. Limited Company New Business
There is now the possibility of forming a SLNE in accordance with the Law 7/2003 of 1 April, the SLNE amending Law
2/1995 of 23 March. With the approval of the Real Legislative Decree 1/2010 of 2. The procedure for a SLNE is more agile:
1) Obtaining the Single Electronic Document (DUE) obtainable in the single contact of the Chambers of Commerce and
includes all information relating to the new company.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
33
2) Sign of the company name consisting of the name and surname of one of the founding members followed by an
alphanumeric code and the words “New Limited Liability Company” or “SLNE” and issuing the Certificate of the Central Commercial Register (Certificado del Registro Mercantil Central)
3) Deposit of social capital in a bank, and obtain the certificate of deposit in an amount between 3,012 and 120,202
euros.
4) Application in the Inland Revenue Tax Code of Provisional Tax for settlement and subsequent registration in the trade
register.
5) Notary Deed.
6) Social Security.
7) Preparation of final CIF.
Features
• It is a feature of the limited partnership. Therefore your Social Capital is divided into shares and the liability to third
parties is limited to the capital contributed.
• The maximum number of partners is five at the time of the constitution.
• Partners must be individuals.
• The number of members may be increased by the transfer of shares.
• The minimum capital is € 3,012 and the maximum of 120,202 euros.
• The minimum capital must be paid in cash.
• The Social Object is generic (allows more flexibility in the development of various business activities without having to
modify statutes).
• If as a result of the transmission, there are legal persons acquiring shares, they shall be sold to individuals for a period
of three months.
• The social organs are very simple: A board of directors and an individual or multi-member Appellate Body.
• They can continue operations as SL only by resolution of the Board or transformed into another corporate form.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
34
9.3. The European Company
In November 2005 Law 19/2005 of 14 November on the European Limited Company domiciled in Spain entered into
force. This is a new type of company that caters mainly to large corporations, and to be regulated in a new chapter of the
text of the Companies Act in force. Broadly speaking, the characteristics of this type of society are:
• The European Limited Company (“SAE”) domiciled in Spain must have its head office in Spain and if its not the case,
you have 1 year to rectify the situation and re-establish the head office in Spain, by transferring its management offices
or, ultimately dissolving.
In case you resolve to move to another Member State of the European Union, the shareholders voting against the
agreement on change of address or location may be separated from the company. In addition, creditors whose claims
arose prior to the date of publication of the proposed transfer of the registered office to another Member State shall be
entitled to object if wanted.
• To establish it, the procedures are more complex than those needed to be an ordinary corporation, as well as the usual
documents and procedures, a draft constitution shall be deposited in Commercial Register. Furthermore, if it is holding
up a SAE, the procedures are even longer since the draft constitution of this society shall be published in the Official
Bulletin of the Commercial Registry and the Registry will appoint an expert or experts to report on the draft constitution.
• If the SAE was established as a result of a merger of a European company in another Member State, the government
proposal of the Minister of Justice or of the Autonomous Community where the corporation has its registered office,
may object, on grounds of public interest to a Spanish company involved in this operation. In this course you will also
be appointed by the Registry
• The shareholders of the Spanish companies that vote against the merger agreement involving the formation of a SAE
established in another member state may withdraw from the company. The government, on the proposal of the Minister
of Justice or the monitoring authority of the Autonomous Community where the corporation has its registered office,
may also oppose on grounds of public interest.
• When the SAE is established by means of the transformation of a Spanish corporation, its board drafted a transformation project and a report that explaining and justifying the legal and economic aspects of the transformation, and again
will require one or more independent experts appointed by the commercial registrar
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
35
• As regards the management of the company, they will be allowed to choose between the “tier system” and the “dual
system” of “direction” and “management board” that applies in some European countries. If the tier system is chosen,
the company will set out to managers to corporations. In case you opt for a dual administration, there will be an address
and a management board
• The management shall be entrusted, depending on the statutes, to a single director or to several directors acting jointly
or to a board of directors. When management is entrusted jointly to more than two people, they constitute the Board.
• The management board may decide that certain management operations are subject to prior authorization. The lack
of prior authorization will not be effective against third parties unless the company proves that the third party acted in
bad faith or fraud.
• As the deadline for convening the general meeting of the SAE shall be called by at least one month before the date
fixed for the meeting.
Finally, we note that the legislature has used the additional provisions of the law and put an end to the SAE domiciled in
Spain to introduce important modifications in the Companies Act and Limited Liability, and discuss extensively in the next
issue of Notes News. These changes include:
• From now on, the ordinary general meeting of a corporation shall be valid even if called or held later.
• The notice of the meeting shall be given at least one month before the date fixed for the meeting.
• Shareholders representing at least five percent (5%) of the share capital may request a supplement to the notice of a
general meeting of shareholders, including one or more items on the agenda is published.
• The statutes provide for the possibility to attend the meeting by electronic means that duly guarantee the identity of
the subject
• The position of director of a corporation may not exceed six years.
• The agreement of reduction of share capital shall be published in the Official Bulletin of the Commercial Registry and
in a newspaper of wide circulation.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
36
• The simplified merger of wholly owned companies will be directly or indirectly regulated, not including any type and
reference exchange procedure without increasing the capital of the acquiring or directors’ reports and expert on the
merger.
• Administrators who breach the obligation to convene within two months of the general meeting to adopt the solution
will respond to the next occurrence of the legal grounds for dissolving social obligations.
9.4. Law 14/2013: To support entrepreneurs and their internationalization.
This standard aims to support entrepreneurs and businesses in the Spanish territory, both in the initial moments of their
activity, and its later development, growth and internationalization, and to this effect, introduces a number of important
developments in the different areas involved in the creation and implementation of new business ventures.
The entrepreneur with limited liability. Arts. 7-11 and 14 of the Act
Its regulation is included in the first Title of the Act relating to “support entrepreneurial activity,” and therefore is a clear
measure to encourage the growth of an entrepreneurial culture in Spain. It is considered that this will help make sure the
person you decide to start a business with, has the adequate means and knowledge to do so, avoiding to some extent
some of the risks you have as an individual entrepreneur.
Characteristics of the Entrepreneur with Limited Liability (ERL)
Extracted from the precepts of the law we note the following two points:
1st. Physical Person. You will need to be of legal age and have the free disposal of your property, or be duly authorized
to practice the profession in question.
2nd. That performs any business or professional activity. Despite the extent of the law, it is clear that it may not perform activities for which the legislature requires the prior formation of a company, or any other requirements that can not
meet the individual entrepreneur.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
37
Effects of becoming (ERL)
1st. The main effect is partially limiting the liability of ERL, which is established in art. 1911 CC and Art. 6 Ccom. By virtue
of this effect the main residence of the ERL remains exempt form responsibilities, provided their value does not exceed
300,000 Euros or 450,000 in populations over one million.
2nd. There is a clear limit to this limitation of liability as it can not benefit from the ERL acting with fraud or gross negligence in the performance of their duties, provided that such gross negligence or fraud is declared by final judgment.
Liability for debts on public law
The first DA Act is concerned with developing the limitation for the debts of public law the ERL has accrued.
Imported rule, as we shall see, of Law 20/2007 on the Statute of the Autonomous Workers, the subsidiary character of the
residence on these debts is established so that you can only run the embargo of the residence of the ERL, when there are
no other sufficient property to cover the debt.
For your interest we transcribe this DA.
Additional provision. Debts of public law entrepreneur with limited liability.
1. The provisions of Chapter II of Title I of this Act shall not be applicable for the debts of public law of the resulting headline entrepreneurial limited liability for which collection management is applicable to the provisions of Law 58/2003 of 17 December,
General Tax, Law 47/2003, of 26 November, General Budget and Royal Legislative Decree 1/1994, of 20 June, approving the
consolidated text of the Act is approved General Social Security.
2. For debts of public law to which referred in the preceding paragraph, the competent public authority may take such actions
for recovery established in the regulations therein specified, with the specialties covered in the next section.
3. When the seizures between the residence of the entrepreneur with limited liability under the terms of paragraph 2 of Article
8 of this Act is found, execution will be possible when:
a) other assets of the debtor are not known with sufficient aggregate valuation subject to immediate realization in the enforcement procedure.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
38
b) With the notification of the first attachment proceeding of the goods and the material disposession of the same, requires a
minimum period of two years. This period is not interrupted or suspended, in any case, in the event of extensions however originating or where an extension of registry entries.”
Limited partnership of successive formation
It is another major commercial development in the Entrepreneurs Act.
Features
1st. It is a limited company so no minimum capital requirements are needed
2nd. It is necessary that statutes express that this is a society in successive formation subject to the rules of art. 4a of
the LSC.
3rd. No deadline is set so that the company completes its minimum capital amount, but while it does at any stage, there
will be no further issues.
Constraints while the minimum capital is not reached.
1st. The legal reserve is 20% of profit on unlimited amounts. The normal legal reserve established in the art. 274 of the
LSC is 10% and is capped at 20% of share capital. That is, covered this limit, you will not need to allocate any amount
to reserves. Instead the SLFS apart from doubling the percentage allocated to the legal reserve, there is no limit as it is
obvious that this limit, if paltry capital may easily reach losing efficiency standard that aims to have. Besides this book,
having no limit, only be used to offset losses.
2nd. They can only divide dividends, covered the legal reserve and if the voluntary reserves, “if the net asset value or
not, as a result of the deal, does not lead to less than 60% of the minimum legal capital”. This limit does not exist in the
normal limited companies.
3rd. The sum of satisfied partners annual dividends may not exceed 20% of net assets for the year. The art. 4a improperly
speaks of “remuneration” paid to the partners. Logically should refer to dividends as the partner for the mere fact of being
in no case receives remuneration within the meaning of emoluments owed for his work. Now it is possible that if there are
ancillary benefits society partners that conduct may receive remuneration or compensation for those services, in which
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
39
case it seems that these earnings will also be subject to that limit. This limit does not play in the case, as the article says,
for professional services rendered to the society itself.
4th. The same level of 20% is the Directors’ remuneration for the performance of his duties. In this case this limit does
not affect the remuneration he or she might have for other work or jobs. Needless to say that the 20% limit is for everyone
and therefore all possible partners or directors remuneration may not exceed 20% of net assets.
5th. If the company is dissolved, either by voluntary or legal cause, and goes into liquidation, the joint liability of officers
and members to the minimum capital amount is set, if the assets of the company is insufficient to meet their payment
obligations. It is clearly aimed at the protection of society as creditors, but that only comes into action in the event of
liquidation.
Registration obligations
There are two obligations provided in relation to commercial loggers:
1st. Mercantile Registrars should be stated in the notes for release of any registration made in relation to successive
formation of a society. This follows from Article 37.1.1 Half of RRM is saying that the registration certificate shall state the
“nature” of the act or contract that you sign.
2nd. Formal advertising. Should also mention this fact in the certificates issued by the company.
Agreements to reduce capital below the legal minimum.
Continues to govern the standard of the old art. 5 of the LSC on the prohibition of incorporation authorizing modification
or capital below legal minimum. But one point is added to this article which states that in the case of companies with
successive formation apply the provisions of Articles 4 and 4a whose content we already know.
From this we draw the following consequences
a) It is obviously possible to approve articles of incorporation below the minimum capital provided for the successive
formation of societies.
b) It is not possible for a society with a minimum initial or supervening capital to reduce its capital below the legal limit
unless it is in compliance with a legal minimum.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
40
c) That if the successive formation society has not yet reached the minimum capital amount, it can reduce its capital,
provided it is not zero euros.
Home of entrepreneurial activity
Entrepreneur Costumer Service (PAE). (Art. 13).
PAEs are offices belonging to public or private organizations or virtual points of information for Entrepeneurs. That is, be
it physical offices or internet portals where all the processing is done in a non-contact form or telematics. The portal will
be created when the old CIRCE is Regulated SLNE and later also served to establish normal societies.
PAE start the process of creating the Single Electronic Document (DUE) serving to facilitate the creation of new companies
and as points of information, processing of documentation, advice, training and support to business finance for start-ups
The second and third additional provision also address these PAE and especially the use of electronic notarial agenda.
In essence come to establish the following:
1st. Ancient PAIT PAE are renamed.
2nd. The one-stop eugo.es the MH and AAPP will be integrated into SAP.
3rd. May enter into agreements for establishment of PAE between the Ministry of Industry and other general government
or private entities. In the possibility that some of these services are not free, PAE is introduced. Existing agreements currently hold.
4th°. The use of electronic notarial telematics agenda for constitution of limited partnerships and other legal manner provided hereinafter provided.
5th. Will be established by RD punitive measures for non-compliance with the provisions regarding electronic notarial
agenda.
Third Additional Provision
Collaboration with other electronic systems for the incorporation of companies.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
41
1) The Ministries of Justice and of Industry, Energy and Tourism established the use of electronic notarial agenda for telematics constitution LLCs and other legal forms that incorporates the regulations in the Single Electronic Document.
2) Use of electronic notarial agenda will be binding on the notary, so that appointments to be established by the same,
have effects in the calculation of time limits laid down in Articles 15 and 16 of this Act
3) Punitive measures for infringements of the provisions of the preceding paragraphs shall be established. “
Single Electronic Document
To complete this section on the formation of companies we refer to DUE (Documento Unico Electronico), whose regulation is deeply modified to meet all the new forms of incorporation.
Before the DUE was limited to the establishment of the SLNE. Today, after the reform, the DUE serves for the following
purposes:
a) The formation of LLCs.
b) The registration in the trade register of entrepreneurs with limited liability.
c) Compliance with the obligations in taxation and social security associated with the onset of the activity of individual
entrepreneurs and corporations.
d) Conducting any other proceedings before state, regional and local authorities associated with the onset or exercise
activity, including the granting of any licenses, the filing of communications and responsible statements and paperwork
associated with the cessation of activity.
Excluded from the provisions of the preceding paragraph and tax obligations for Social Security during the conduct of
business and the procedures associated with procurement procedures and applying for grants and aid.
The DUE must be approved by the Council of Ministers on the proposal of the Minister of Industry, Energy and Tourism
and will be available in all official languages of the Spanish State
You can also use the PAE during the period of activity for all the formalities related to it with the exception of those on
Social Security, public procurement and applying for grants or aids.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
42
For the cessation of activity Article 22 provides rules, a summary will then to preserve a systematic order.
This Article 22 regulates the services they can provide both PAE and notaries in cases of termination of activities of natural
and legal persons.
These services, all performed electronically, are:
a) The application for registration to the Trade Register of the dissolution, liquidation and dissolution of the company, the
appointment of liquidators, closing branches and, in general, cancellation of the remainder of registry entries.
b) The communication of the extinction of the company or the termination of its activity and termination of the employees
at your service to the Provincial Office of the General Treasury of the Social Security.
c) The declaration of low Census of Entrepreneurs, Professionals and Retainers Statement low in the Business Tax.
d) Communication of the low state, regional and municipal sector Registers which is inscribed the company or its facilities.
e) Communication of termination of activities of state, regional and municipal authorities when this is obligatory.
Of these procedures which affect us most directly is related to the dissolution, liquidation and dissolution of the company
or the ERL. Typically, these procedures are made by notarial PAE in a manner similar to that established for the constitution of the company or by the CIRCE which will carry out the relevant citations to the notary for the purpose of authorizing
the public deed. These performers PAE in the cessation of business should keep in mind that if it’s ERL must also forward
the relevant communication to Land Registry attesting to the property. They should also bear in mind the acting PAE in
these cases, in the case of legal entities or entrepreneurs registered in RM, enrollment in this registry must necessarily
precede all other communication to be made. This means that until the end of the company or ERL enroll, can not communicate downward thereof to other relevant agencies. Ultimately we believe that what is at issue is the ease of transfer
formalities already exists in the formation of companies to stage its liquidation and dissolution extinction.
9.5. Places of interest
Notary Association of Madrid
C / Ruiz de Alarcón, 3-3 ª Plta.
28014 MADRID
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
43
Tel: 91 521.04.09
http://www.cnotarial-madrid.com
Notary Association of Barcelona
Street Notariat, 4
BARCELONA 08001
Tel: 93 317.48.00
http://www.colnotcat.es
9.6. Kind contributions
Foreign investments made by non-monetary contribution should be valued for the purpose, according to the criteria and
the way that the Spanish legislation has provided for non-cash contributions. To this end Article 58 of the Companies Act
provides that. “May only be subject to contribution rights or property assets capable of economic assessment.” It also
determines that the contributions are deemed to be made by way of property, unless otherwise stated. There are different
kinds of non-monetary contribution: generally the furniture, buildings, industries, industrial property, intellectual propylene
age, etc.
Specifically, non-cash contributions are contained in Article 67 of that Act that the legal provision to the establishment of
a corporation through such contributions are evident. In the same terms can be performed to increase capital. However,
for this purpose, please proceed to make an expert report on the goods that will be contributed.
It will be necessary, therefore, whatever the nature of the good that an expert report is drawn up by one or more independent experts appointed by the registrar pursuant to the procedure provided by regulation.
This report shall also contain a description of each of the non-monetary contributions, along with their registry information, if any, adopted assessment criteria, with an indication of whether the securities to which they lead are the number
and value nominal. Report and accompanying annex to the memorandum and a copy must be deposited a certified copy
in the Commercial Register to the deed submitted for registration. That report will not be mandatory in the case of Limited
Liability Companies.
9.7. Social Capital
The minimum share capital required for formation of a Limited Liability Company is 3000 euros capital must be fully subscribed and fully paid. In the event of formation of a limited company, the registered capital shall not be less than 60,000
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
44
euros capital must be fully subscribed and paid up, at least a quarter of the value of each of the actions. The share capital
shall be expressed in euros. In the case of the minimum capital SLNE is 3,012 euros.
9.8. Procedures subsequent to the constitution
1. Settlement Capital Transfer Tax and Stamp Duty in respect of corporate transactions.
The incorporation of companies, the capital increase, the partners made contributions that do not involve capital increase
and the transfer to Spain of the place of effective management or the registered office of a company when neither one
were previously located in a member of the European Union “, will be exempt of the 1% of capital share by way of corporate transactions.
Finally will be presented at the window-counter along with the following documents:
• Original script constitution which will be returned with the appropriate stamp and presentation of evidence of payment
of the tax.
• Copy of the articles of incorporation that will be held by the Administration along with the original copy of the settlement, in order to verify in the general limitation period (4 years) is carried out correctly.
IMPORTANT NOTE The relevant settlement shall be made within a maximum period of 30 working days from the date
of execution of the deed. If not done within 30 days means he marked out of time and shall apply surcharges, interests,
etc.
Addresses of interest
In Barcelona: Generalitat de Catalunya
Fontanella, 6/8
08010 BARCELONA
Tel 93 567.12.00
In Madrid: Ministry-DGT-of Finance
Chamberí Square, 8
28010 MADRID Tel 91 580.33.55
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
45
1) Application CIF (Fiscal Identification Code of society). The application of CIF shall be made with the Tax Office by
the model 036 and 037 duly completed and signed by a representative who will be accompanied by the articles of
association, a copy of it, and photocopy of ID of the applicant, partner, or manager.
This will be awarded at the same time, and will be considered provisional until final identification card is withdrawn
after 6 months. The application deadline is 30 days from the granting of the constitution.
2) Entry in the Commercial Register corresponding to the registered office of the company, branch or representative office. To perform this procedure is required to have completed the relevant settlement, a copy of which will accompany
the original deed, which shall be deposited in the said Registry for the purposes of registration, with the receipt being
held by the presenter with the number of input in it together with a photocopy of the identity card.
At the time of the deposit of the deed at the Mercantile Registry fees shall be satisfied by the publication of the document in the Official Bulletin of the Commercial Registry (Nbr) which is approximately 60.10 euros.
3) In the case of branches, the registrar must verify that the foreign company is duly incorporated under its law. Therefore, the following documents shall be presented duly legalized: partnership deed, current statutes, the management
and the creation of the branch.
Addresses of interest
Commercial Registry of Barcelona
Gran Via de les Corts Catalanes, 184
08004 BARCELONA
Tel 93 332.00.04
http://www.registromercantilbcn.es
Commercial Registry of Madrid
Paseo de la Castellana, 44
28046 Madrid
Tel 91 576.12.00
http://www.registradores.org
4) Declaration of high census. Prior to the start of the activity and having entered in the commercial register, a legal
person should proceed to apply for registration and final CIF, before the Tax Agency in the census of identifying tax
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
46
labels (which are then sent via email). This will be done using the model 036 and the report must contain the following
data: general data, offices, tax obligations, under the IAE and NIF. Such application shall be accompanied by duly
registered deed of incorporation and a copy of it.
In the course of establishment of representative offices must be appointed before the Spanish Treasury representative, whether natural or legal, Spanish or foreign person as it always resides in Spain. In this case the documentation
that must be provided to obtain the card final tax ID is: file Form 036 duly completed, photocopy of identity card or
identity card of the representative powers granted for the representative in Spain. For the procedures of paragraphs
3 and 4, there are useful addresses that are set out below regarding the Central Office for Economy and Finance in
Madrid, the Delegation of Finance in Barcelona and, where appropriate, the delegations corresponding function of
the registered office of the company.
5) Processing discharge in the Economic Activities Tax (IAE). Statutorily prescribed section that best suits the activity to
be developed must be determined. It is also a local tax, which is therefore assigned to the different locations of the
Autonomous Communities and their fees, municipal, provincial or national, will depend on the jurisdiction in which the
activity is to be developed, as the possible application bonuses, and other indices such as sheet, area, population etc.
It must be provided the following documentation: model, which will be different if the fee, is municipal, provincial or
national, which shall contain all data, ID and NIF administrator or manager authorized to do so, copy the CIF and
script incorporation. You must then proceed to the liquidation of the tax.
The registration should occur within 10 working days prior to the start of the activity.
The printed patterns that must be signed and submitted completed are:
»» Model 845, assuming no quota assigned to the municipal council of the municipality.
»» Model 846, in the case of provincial or national quota. This must be accompanied by the corresponding payment
letter: Model 850 to Model 851 provincial quota to the national quota.
»» Given the appropriate council tax: in the event that the tax is transferred to the corresponding council of the municipality or city council.
At the municipal level, according to the ordinances of each municipality.
Addresses of interest
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
47
In Barcelona:
Municipal Fee (Barcelona)
Municipal Institute of Finance
Avinguda Litoral del Mar, 34
08005 BARCELONA
Tel 010 (Information Hall)
Municipal Fee (Other municipalities)
Barcelona Provincial
Lequerica Mejia Street 1
28028 BARCELONA
Tel 93 402.26.89
In the event that the municipality has delegated tax management. Other municipalities: in the municipality of which it
is resident for tax purposes. National and provincial quota.
Delegation of Finance
Plaza Doctor Letamendi, 13
08007 BARCELONA
Tel 901.33.55.33 (Inf Overall)
In Madrid:
National and provincial quota share Central Delegation of Finance in Madrid
C /. Guzmán El Bueno, 139
28003 MADRID
Tel 91.582.67.67.86
The municipal share will be processed in the relevant municipalities of populations that have transferred such tax or
delegations corresponding tax agency with offices. In both cases, it is advisable to consult directly to the delegations
of Madrid and Barcelona to find out whether or not transfer tax and where it should be handled.
6) Registering the company, to the Treasury of the Social Security, the Social Security system will extend the validity of
the existence of the same. A company is assigned a so-called “code contribution account”.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
48
9.9. Municipal Fee
Shall be processed in the relevant municipalities, that have corresponding tax agencies and offices. In both cases, it is
advisable to consult directly to the delegations of Madrid and Barcelona to find out whether or not transfer tax and where
it should be handled.
9.10. Ways to invest in Spain
Can transmit by:
Representative office. A foreign company may open a representative office in Spain. Keep in mind that these offices can
not engage in economic activities, but it is limited to market research and are often the first step of many companies to
make the decision to settle permanently. The representative office has no independent legal personality from its parent. In
principle, the activities of the representative office are limited, they can not engage in economic activities, being essentially coordination, collaboration, etc. The non-resident company is liable for the debts incurred by the representative office.
Foreign company branches. The branch is a gifted secondary establishment of permanent representation and has a degree of autonomy for the development of the activities of the parent company or foreign company.
In general terms, requirements, formal procedures and costs associated with the opening of a branch in Spain of a foreign
company are very similar to the formation of a subsidiary (as a company). Then legal steps and major costs are summarized highlighting the main differences from the incorporation of a subsidiary.
Among the steps to take are the following:
1) The Management of the parent company must adopt an agreement by which they approve the creation of the branch.
This agreement and the articles of association must be translated by jury and subsequently submitted to the Companies Registry.
2) The Spanish Consulate in the foreign country of residence of the company, certify that the parent company is incorporated under the laws of your country
3) Should be paid into any bank capital agreed by the parent company (there is no minimum)
4) Should sign the deed of incorporation with a notary.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
49
5) Should order your CIF (Tax Identification Number) on the Tax Office’s domicile, accompanied, among other documents, the memorandum previously seen and DNI or NIE representative or agent of the company in Spain.
6) Should liquidate the Transfer Tax and Stamp Duty (will pay 1% of the capital of the company indicated). This tax is
paid on the DGT of the Autonomous Community where the company has a domicile.
7) Finally, the branch must be registered in the trade register that corresponds to the registered office within the month
following the execution of the deed.
Once established, the foreign parent company is required to deposit in the trade register in which the branch has its annual accounts.
The Taxation of the branch depends on the provisions of Double Taxation Conventions applicable to the particular case.
Subsidiaries. Apart from the above two options, there is also the creation of a subsidiary. This new company is established, with separate legal personality of the parent company. Although subsidiaries are companies formed with foreign
capital, they are considered “residents” for all purposes.
Therefore, the procedures for setting up a subsidiary are similar to the constitution of a new Spanish company, with some
differences you see below:
1) Management of the parent company must adopt an agreement by which they approve the creation of the subsidiary.
This agreement and the articles of association must be translated by jury and subsequently submitted to the Companies Registry in Spain translator.
2) The Spanish Consulate in the country of residence of the company, certify that the parent company is incorporated
under the laws of your country
3) Must request certificate of company name in the Central Commercial Registry to give name to the new company.
4) Should be paid into any bank capital agreed by the parent company (3006 euros if a Limited Company is established.)
5) Those statutes should be developed and signed the deed of incorporation before a notary.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
50
6) Should order your provisional CIF (Tax Identification Number) on the Tax Office’s domicile, accompanied, among other
documents, the articles of association, and the DNI or NIE representative or agent in Spain.
7) Should liquidate the Transfer Tax and Stamp Duty (will pay 1% of the share capital of above). This tax is paid on the
DGT of the Autonomous Community where the company has a domicile.
8) Finally, the branch is registered in the Commercial Registry corresponding to the registered office within two months
following the execution of the deed.
9) Moreover, the constitution must be declared by the subsidiary in the Register of Foreign Investment under the Ministry
of Economy
10) The final CIF will be requested.
The Taxation of the branch depends on the provisions of Double Taxation Conventions applicable to the particular case.
Finally remember that these modalities are just some examples on how to operate in Spain. There are others such as the
signing of distribution agreements and cooperation with Spanish firms (joint ventures, EIG) transactions through agents
or brokers, franchises, etc.
9.11. Branch versus subsidiary
From the legal point of view, the most important differences between a branch and a subsidiary are as follows:
• Minimum capital: An SA must have a minimum capital of 60,000 euros, 3,000 euros DSLs, 60,102 euros partnership
limited by shares, while the general partnership does not require a minimum capital. A branch does not require any
minimum allocation.
• A subsidiary is a separate legal entity, while the branch has no legal personality, but it is the same legal entity as parent
home.
• The liability of shareholders of a subsidiary incorporated as a corporation (or SL) for the subsidiary’s debts is limited to
the amount of capital contributions
• In the case of a branch, there is no limit to the liability of the parent company.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
51
NOTE
The repatriation of profits of a branch or the distribution of dividends from a subsidiary to its parent company not belonging to the EU is taxed in Spain,to a rate of 19% (for the years 2012 and 2013, and 21% for the year 2014). While if the
parent company is resident in the EU, the return / dividend is usually exempt from taxation.
The first type of permanent establishment is a fixed place of business. It is a place through which an enterprise is wholly
or partly carried on. In general, exist for both a fixed place of business if the following requirements are satisfied:
• Using an installation, facility or site from which develops the activity.
• Fixity or linking facilities at a given place or space, with some degree of temporary stay.
• Need for the activity to be productive and contribute to the overall benefit of the company.
Interest on loans granted by a foreign parent company to its Spanish branch, are tax deductible to the branch. However,
interest on loans from shareholders of a subsidiary is normally deductible for the subsidiary, provided the transaction is
valued at market prices.
With the entry into force of Law 16/2013, of 29 October, by which certain measures in environmental taxation and other
tax and financial measures adopted has established the abolition of the deductibility of losses portfolio deterioration.
These changes are very relevant because they imply that they may not be deducted in the income tax losses for impairment of investments in group companies, joint ventures, and associates as well as shares classified as available for sale.
This measure will affect holdings in resident and non-resident entities are or unlisted entities.
Also, a transitional regime which applies to impairment losses tax deductible values, generated in tax periods beginning
before January 1, 2013, in order to regulate what year came the reversal. For these purposes, it should be noted that the
reversal will not occur only in the year in which an increase in the equity of the investee occurs, but may also occur in case
of dividend distribution or profit-sharing to the extent that they are considered countable income.
9.12. Representative Offices
In addition to using a corporation or a branch, among other options, the foreign investor can also operate in Spain through
a representative office.
In the absence of specific regulation of this figure, a definition of it can be found in the Treaties to Avoid Double Taxation
signed by the Spanish State to third countries: the term representative office is a fixed place of business established by a
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
52
company nonresident, merely developing publicity and information on trade, financial and economic issues, but not carry
out effective work functions.
This form of property in Spain is considered very useful for potential investors, as it allows all kinds of information as the
basis for the decision to invest, without having to carry too many legal formalities. Thus, are the ideal way to engage in
market survey, study the degree of competition in the sector which is projected to make the investment, make financial
projections and forecasting benefits of such investment or negotiate the acquisition of companies by way of purchase of
shares or assets and liabilities.
Among its most important features the following should be highlighted:
• The representative office has no independent legal personality of its parent.
• The non-resident company is liable for the debts incurred by the representative office in full.
• You can not conduct business itself.
• The opening of the representative office is not registered in the Commercial Register.
9.13. The Corporations Unlisted Investment in the Real Estate Market (SOCIMI)
Listed Companies Investment Real Estate Market (hereandafter REIT in Spanish SOCIMI)is an investment vehicle in
the real estate market, created by Law 11/2009 in order to boost the rental market in Spain and facilitate citizen access
investment in real estate of urban nature to rent.
TRADE REGIME OF REIT
Corporate form
The REIT must be listed corporations. They should have a minimum share capital of EUR 5 million, may only have one
class of shares and shall include in its name the words “Listed Investment Company in the Real Estate Market, Sociedad
Anonima” or its abbreviation, “SOCIMI, SA “.
Their actions must be admitted to trading on a regulated market, which now permit a new feature in a multilateral trading
system trading Spanish (like MAB-Alternative Investment Market) of any other Member State of the European Union or the
European Economic or any other country with which there is effective exchange of tax information (without interruption
throughout the tax period).
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
53
However, it should be noted that not only SOCIMI can access the special tax regime, but, as was the case with the previous regime, may also do societies known as SOCIMI unlisted (despite the contradiction contained in the expression itself).
This is the case of resident companies wholly owned by Spain REIT REIT or foreign (ie non-resident companies listed
on European markets with the same social object SOCIMIs and similar rules regarding the mandatory legal or statutory
policy, distribution of benefits).
The new system adds the requirement that all actions have SOCIMI named references, and extends this requirement to
non-residents participating in REIT “unlisted REIT.” In practice, this should mean that the REIT can identify their shareholders at any time.
The non-cash contributions of property for the constitution or capital shall be appraised by one of the companies under
the laws of the mortgage market and will be carried out in accordance with the provisions of corporate law. This requirement affects both the contributions made to the REIT as unlisted entities involving the latter.
Purpose
Its goal shall be for the acquisition and development of real estate of urban nature for lease, either directly or through
entities that, in turn, should meet certain requirements.
The REIT may carry out the following activities:
• Acquire and promote urban real estate for leasing, including the rehabilitation of buildings.
• Participate in other REIT or other nonresident REIT.
• Participate in SOCIMI unlisted or non-resident non-listed companies, provided that one and the other have corporate
purpose is the acquisition of urban real estate for leasing, with a similar distribution policy benefits and are wholly owned by REIT or REIT nonresidents.
• Investing in shares or units of Collective Investment Trusts (mutual funds and REITs), regulated by Law 35/2003 on
Collective Investment.
Distribution of dividends
Like the REIT of our entourage, the REIT must consistently deliver a high percentage of the benefit to be obtained. More
specifically, the REIT must agree on the distribution of dividends from the profits obtained in the year within six months
after the closing (and paid within the month following the distribution agreement), as follows:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
54
• 100% of income from dividends and profit shares in companies that qualify as suitable investments for the regime.
• 50% of the benefits arising from the transfer of real estate and equity, and must reinvest the rest in qualifying assets
within its transmission after three years. Reinvestment not occur, the remaining 50% will be distributed in the year in
which the term for the same end (the standard makes no reference to liquidate appropriate default interest on the tax
that satisfies three years later).
• The remaining 80% of the profits.
It also states that when a dividend is made against reserves from profits of a year in which the application has been special tax regime, the distribution must necessarily be taken with the agreement of the dividend distribution made pursuant
the system of mandatory distribution of dividends from REIT.
Finally, it is established that the legal reserve of the REIT may not exceed 20% of share capital or bylaws may establish
other restricted reserves.
INVESTMENT REQUIREMENTS OF SOCIMI/REIT
Requirement in volume of assets:
The REIT must have invested at least 80% of the asset value in the following:
• Properties for lease urban nature intended.
• Land for the promotion of such property in which the promotion is commenced within three years after purchase.
• Shares in the capital or equity of the entities mentioned in the previous section (ie: nonresident REIT or REIT, REIT unlisted entities not resident unlisted wholly owned by REIT or REIT, or IIIC).
In calculating this minimum level of investment are taken into accountfollowing criteria:
• The 80% is calculated on the consolidated balance sheet (if the REIT is the parent of a group of companies), it may opt
to replace the company’s book value by the market value for the purposes of making this calculation.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
55
• The acquired property must be owned, admitting the resulting surface rights owned are enrolled in the Registry of Property, as well as held by the partnership under finance leases for the purposes of income tax.
• Not eligible for the purposes of this calculation, the goods of special features governed by Article 8 of the Law of Infrastructures (highways, ports, airports, etc.) Nor those whose use is sold to third parties under finance lease. Nor qualify
properties for this purpose exploited under concession.
• In the case of property located abroad, they must be similar to those in Spanish territory and nature, and must exist
effective exchange of tax information with the country or territory in which they are situated.
Finally, note that the new regime has eliminated the requirement of existing diversification in the previous regime.
TAXATION OF SOCIMI/REIT
The specialties of this scheme is basically focused on the following aspects:
• The REIT will be taxed, in general, in the income tax to 0% in relation to income derived in the development of its corporate purpose, situating the taxation of income earned by the REIT in its shareholder headquarters.
• The REIT will be subject to a special tax (19%) of the amount of dividends distributed to the shareholders whose share
capital of the company is equal to or greater than 5%, provided that such dividends are exempted or taxed for the
partner to a tax rate lower than 10%.
• It remains, in terms of indirect taxation, the special scheme introduced by Law 11/2009, consisting of a 95% rebate in
the form of Transfer Tax from Capital Transfer Tax and Stamp Duty on the purchase of housing intended leasing and
land for the development of housing for lease, subject to compliance with the requirement of maintenance of the asset.
Tax withholdings on dividends paid by the SOCIMI/REIT
Dividends distributed by the REIT will be subject to the general tax regime applicable, with certain exceptions. For this
purpose:
• Dividends distributed to the partners that are tax-residents in Spain, or non-resident shareholders with a permanent
establishment in Spain are subject to a withholding tax rate of 21%.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
56
• Dividends paid to non-resident shareholders in Spain are subject to the general rules that are applicable on retention
according to Spanish domestic legislation and / or enforcement of agreements to avoid double taxation or EU Directives may be applicable. Not be subject to withholding dividends are distributed to non-residents in Spain whose origin
REIT taxable income is 0% in SOCIMI headquarters.
10. OTHER WAYS TO OPERATE IN SPAIN
One of the most common forms of business cooperation is the joint venture. The Spanish law provides for different types
of joint ventures that allow operations from one or more parts:
Joint ventures (joint ventures)
This association is very common in large engineering and construction companies, which does not mean that it can not
be used in other business sectors.
Legal status: The joint ventures are not corporations and do not have legal personality.
Taxation of transparency: Although they have no legal personality, to qualify for the tax regime provided for UTE (Temporary Union of Companys) fiscal transparency, should be formalized in a public deed and registered in the Special Register
of UTEs, complying with applicable accounting requirements and tenure books, similar to those required for Spanish
companies. In addition, they may enroll in the Commercial Register. The procedures for filing are similar to those of a
company or branch, with the specialties of this figure.
Regulation: The legal regulation is contained in Law 18/1982 on Taxation of Partnerships and Joint Ventures and the Regional Industrial Development Corporation, as amended, among others, by Law 12/1991, Law 43/1995 and Law 62/2003.
Economic Interest Grouping (EIG)
Concept / Purpose: The constitution of EIAs is to facilitate the development and improve the results of the activity of its
partners. The EIAs can not act on behalf of its members and replace them in their operations. Therefore, EIAs are routinely
used for the provision of ancillary services such as centralized purchases or sales, centralized information management
or administrative services, etc., Within the context of a broader or a group of companies association.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
57
Legal status: It is important to note that one of the main differences between the joint ventures and EIAs is that the latter
themselves are commercial entities with legal personality.
Requirements constitution: The Spanish legislation establishes certain requirements for the creation of EIAs:
• May not interfere in decisions regarding personal, financial or investment by their partners, and allowed to manage or
control the activities of its members.
• Not hold, directly or indirectly, interests in companies that are themselves their own partners, except where the acquisition of shares is necessary to achieve its purpose. In this case, the shares shall be immediately transferred to its
members.
• Should be formalized in a public deed and registered with the competent Commercial Register.
Liability of partners: The partners of EIG joint liability for the debts together from that. The liability of the partners is a
subsidiary of the IEA’s main obligation of the partners is to contribute to the capital of the IEA as agreed and participate
in their spending.
Governing bodies:
• The meeting of members; and
• Administrators, who are jointly liable for the tax liability and damage to the group, unless they can prove they acted
with due diligence.
Regulation: Fundamentally, the Law 12/1991 of 29 April on Economic Interest Groups.
European Economic Interest Grouping (EEIG) also has legal personality, enjoying regulated by EC Regulation 2137/85
features, which contains the basic rules applicable to the EEIG
Joint ventures through corporations or limited liability
A significant number of joint ventures are used as vehicle corporations and limited liability companies, therefore, reference
should be made in other sections of the constitution relating to, basic characteristics and features of the governing bodies
of corporations and limited partnerships.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
B) NON RESIDENT TAXATION
AND FOREIGN INVESTMENT IN
SPAIN
LEGAL CONTROL Abogados & Consultores de Empresas
59
1. INTRODUCTION
When someone aims to invest in another country one of the most important aspects to consider are the tax consequences that may result from such investment. Therefore, through this study we have tried to give an overview of the current
taxation system that must taken into account by all investors who wish to invest in Spain.
One of the first things to consider is the tax residence of the investor, and the way in which an individual or entity must
pay taxes in Spain
2. FISCAL RESIDENCE IN SPAIN
2.1. The residence of individuals
An individual is ordinarily resident in Spain when it meets any of the following circumstances:
• Has stayed for more than 183 days during the calendar year, in Spanish territory. To determine this period in Spanish
territory, sporadic absences are counted, unless the taxpayer proves its tax residence in another country. In the case
of countries or territories considered tax havens, the tax authorities may require prove the permanence of 183 days
in the calendar year. To determine the period of stay at the previous paragraph, temporary stays in Spain arising from
obligations or agreements for cultural humanitarian cooperation, free of charge, with the Spanish public administrations
are not counted.
CONVENTION AND DOUBLE RESIDENCE
In agreements to avoid double taxation signed by Spain, to define a person as a resident of a State, referral to the domestic law of each State is made.
In these cases, the agreements provide, in general, the following criteria to prevent a person being considered resident
in the two states:
1) Be a resident of the State in which he/she has a permanent home available to him.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
60
2) If he has a permanent home available to him in both States, he/she shall be considered a resident of the State with
which his personal and closer economic relations take place (center of vital interests).
3) If it could not be determined, he or she will be a resident of the state where you regularly live.
4) If, finally, he or she is native of both States or of neither, the competent authorities shall settle the question by mutual
agreement.
ACCREDITATION OF FISCAL RESIDENCE
Tax residence is evidenced by a certificate issued by the competent tax authority of the country concerned. The validity
of these certificates is one year.
A person may have a residence permit or administrative residence in one state and not be considered tax resident in it.
2.2. The residence of legal persons or companies
An entity is considered resident in Spain when either of the following criteria:
• It was incorporated under Spanish law.
• It has its registered office in Spanish territory.
• It has its place of effective management in Spanish territory.
CONVENTION AND DOUBLE RESIDENCE
In case of agreement, where an entity is a resident of both States, the agreements provide, in general, to be a resident
only of the State in which its place of effective management is situated.
ACCREDITATION OF RESIDENCE FISCAL
A legal person credited tax resident in a country with certificate issued by the Tax Authority. The validity of these certificates is one year. The validity will be indefinite if a taxpayer is a foreign state, any of its political or administrative subdivisions or local authorities.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
61
OTHER PERSONAL ITEMS
In addition to the taxpayer, in the field of non-residents are of particular importance the following personal items:
• The representative
• The jointly liable
The representative
The non-resident taxpayer is obliged to appoint a natural or legal person resident in Spain to represent you before the tax
authorities on the following assumptions:
• When operating through a permanent establishment (PE).
• In the case of an entity in the allocation of income made abroad with “presence in Spanish territory.”
• When making supplies of services, technical assistance, or installation works derived from engineering contracts and,
in general, economic activities or operations in Spain through a permanent establishment, the taxable amount is the
difference between gross income and expenses staff, procurement of materials and supplies.
• Where required by the tax authorities.
• In the case of residents in countries or territories with which there is no effective exchange of tax information, who hold
assets located or rights are fulfilled or exercised in Spanish territory, excluding officers traded in secondary markets.
However, taxpayers may appoint a voluntary basis, a representative resident in Spain to serve them as means of communication with the tax authorities.
Representatives of non-resident taxpayers operating in Spain through a permanent establishment and the entities under
the income allocation established abroad with “presence in Spanish territory”
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
62
The jointly liable
Shall be jointly and severally liable for the debts income yields that have satisfied from the property or rights or whose
management
• The payer of the income accrued without mediation EP
• The depositary or manager of the property or rights not subject to a PE
For payers yields and in the case of the depositary or manager of property or rights belonging to residents in countries or
territories considered tax havens, the actions of the tax authorities may deal directly with the person responsible, without
requiring prior act of derivation of responsibility.
However, there will be no joint liability is applicable when the withholding obligation.
Representatives of non-resident taxpayers operating in Spain through a permanent establishment and the entities under
the income allocation established abroad with “presence in Spanish territory” jointly and severally liable for the income
tax liabilities related thereto.
3. MOST COMMON INCOME TAX FOR NON-RESIDENT TAXPAYERS
Individuals and non-resident entities will be considered IRNR taxpayers as that earn revenue in Spanish territory.
In the event that the taxpayer is resident in a country with which Spain has signed an agreement to avoid double taxation,
you will have to follow those guidelines, because, in some cases, the tax is lower, or in other certain cases, the earning
or revenue cannot be taxed in Spain.
In those cases in which the income can not be taxed in Spain (exempt by agreement) or imposing a tax limit, the nonresident taxpayer must demonstrate that he or she is resident in a country with which Spain has signed the Convention,
by the certificate of residence issued by the tax authorities in your country, which shall expressly the state in which the
taxpayer is resident.
The following are, for the most significant types of income, the criteria by which such income is understood to be obtained
in Spanish territory, and taxation under Spanish domestic legislation, as well as agreements to avoid double taxation.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
63
Income from economic activities:
Such performances can be obtained through a permanent establishment in the same or unmediated Spanish territory.
3.1. Earned income obtained through a permanent establishment (Permanent Establishment)
INTERNAL RULES
According to Spanish domestic legislation, it is considered that an individual or entity operates by EP when he or she has
available in Spanish territory:
• Locations Direction
• Branches
• Offices
• Factories
• Workshops
• Storage, shops or other establishments
• The mines
• The oil or gas
• The Quarry
• Agricultural, forestry, livestock or other place of exploration or extraction of natural resources
• The construction, installation or assembly project which exists for more than six months
CONVENTION
Where applicable an agreement to avoid double taxation it should take into account the definition of permanent establishment which contains the agreement, which will usually be narrower than the internal regulations.
Also, as a general rule, agreements confirm the power to levy State EP situation, providing that corporate profits, if obtained through a PE situated in Spain, or income from professional activities, if obtained by or through a fixed base, may
be taxed in Spain, in which case it is taxed under the domestic Spanish Law.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
64
TAXATION
Under domestic law, non-residents who obtain income through EP in Spain, are taxed on all income attributable to such
an establishment, whatever the place of their production.
Hereditary assets are functionally linked to the development of the activity to which it relates. Inheritance is considered
after the reversal of the three tax periods.
The assets of equity participation in an entity affects only be considered assets when the EP is a company registered in
the Mercantile Registry branch, these assets are reflected in the financial statements of the EP.
The tax rate will be for 30%, whereas the activity of research and exploitation of hydrocarbons 35%.
Regarding the deductions and credits, the EP will be applied to your total tax liability, under the same conditions for income tax (IS) applicable to companies resident in Spain.
The tax year coincides with the fiscal year to declare, but may not exceed twelve months. The tax is due on the last day
of the tax period. The SOEs are obliged to comply with the same obligations of accounting, registration, or formal nature
that are required of the counterparties.
When the EP of non-resident entities (not individuals) transfer income abroad, it will be required a supplementary tax of
19% (21% from 1 January 2012 until 31 December 2014 inclusive) on amounts transferred.
However, this tax does not apply to those whose headquarters EP resident for tax purposes in another EU country, except
in the case of a country or territory considered as a tax haven, or in a State which has signed an agreement with Spain to
avoid double taxation, which is not otherwise expressly provided, whenever there is reciprocal treatment.
The additional tax is entered using the model 210, in the first twenty days of April, July, October and January, according
to the date of transfer abroad of income falls within the previous calendar quarter.
The EP must submit the tax declaration in the same models and the same deadlines as those subject to income tax
resident entities. The presentation will be made either electronically or via Internet models generated paper return only
by using the print service developed by the Tax Office. Electronic filing is mandatory if the EP is assigned to the Central
Office for Large Taxpayers Unit or Large Business Management.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
65
• Term: 25 following the six months after the end of the tax period calendar days.
• Model: 200
• Place of submission:
If filing on paper exclusively generated by using the print service developed by the Tax Office, the place of presentation
varies depending on the result of the statement
3.2. Earned income obtained through a permanent establishment
INTERNAL RULES
According to the internal rules profits deriving from economic activities obtained in Spanish territory through a permanent
establishment, are considered in the following cases:
• When economic activities are performed in Spanish territory. However, profits are not considered Spanish territory in
the income derived from the installation or assembly of machinery or equipment from abroad where such operations
are performed by the supplier and the amount does not exceed 20 per 100 of the purchase price; nor, satisfied because
of international sales of goods, including accessories mediation fees and expenses.
• In the case of supply of services used in Spanish territory. When such benefits services serve partly economic activities
in Spanish territory, be deemed obtained in Spain only by the party serving the activity in Spain.
• When arising, directly or indirectly, of personal performance in Spanish territory of artists and athletes even when they
are received by other individual or entity.
TAXATION
When under domestic legislation and, where appropriate, to the Convention, the income from economic activities through
a permanent establishment may be taxed in Spain on a tax rate of 24 per 100 overall (24.75 per 100 from 1 January 2012
to 31 December 2014 inclusive).
In general, the taxable amount is the difference between gross income and expenses of personnel.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
66
In the case of taxpayers resident in another Member State of the European Union, for the determination of taxable income
are deductible expenses under the Law of Income Tax for Individuals, provided the taxpayer proves that they relate directly with the profits in Spain and have a direct and inseparable link with economic activity in Spain.
3 3. Other income
3 3.1. Income from work
INTERNAL RULES
According to internal regulations, employment income is are considered obtained in SPanih territory in the following
cases:
• In general, when arising, directly or indirectly, from a personal activity in Spanish territory.
• Public remuneration paid by the Spanish government, unless the work is performed wholly abroad and such income is
subject to personal income tax abroad.
• The remuneration of employees of ships and aircraft in international traffic, except the work which is performed wholly
abroad and such income is subject to personal income tax abroad.
According to the internal regulations, certain type’s income is exempt:
• Public grants and scholarships granted by non-profit entities to which the special regime regulated under Title II of
Law 49/2002 of 23 December on the taxation of non-profit organizations and tax incentives for patronage is applied
to pursue formal studies, both in Spain and abroad, at all levels and stages of the education system. Likewise, public
grants and aid granted by non-profit entities mentioned above for research in the field described by the Royal Decree
63/2006 of 27 January, the Statute of research trainees is approved and the ratings for research those officials and other
personnel working for the public authorities and the teaching and research universities.
• Scholarships and other amounts received by individuals, paid by the government, under international agreements and
conventions of cultural, educational and scientific cooperation or under Annual Plan for International Cooperation approved by the Cabinet.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
67
CONVENTION
For residents of countries with which Spain has signed an agreement to avoid double taxation, generally income earned
by an employment exercised in Spain can be taxed by the Spanish State, unless all obtain these three circumstances:
that they do not remain resident in Spain for more than 183 days in the fiscal year concerned, that remuneration is paid
by a nonresident employer, and that such remuneration is not supported for PE or a fixed base which the employer has
in Spain.
TAXATION
Income obtained without EP should be taxed separately for each total or partial accrual of income subject to tax forms.
However, in the case of taxpayers resident in another Member State of the European Union, for the determination of the
tax base may deduct the expenses under the Income Tax Act, provided evidence that they are directly related to yields in
Spain and which have a direct and inseparable link with economic activity in Spain. When expenses are deducted, a tax
certificate shall be attached to the tax return.
When under domestic legislation and, where appropriate, to the Convention, employment income can be subjected to tax
in Spain, taxed at tax rate of 24 per 100 overall (24.75 per 100 since January 1, 2012 until December 31, 2014, inclusive).
3 3.2. Pension
INTERNAL RULES
According to the internal rules, pensions and other similar benefits are considered Spanish territory obtained in the following cases:
• When they are on a paid job in Spanish territory.
• When they are paid by a person or entity resident in Spanish territory or by a permanent establishment situated therein.
CONVENTION
If applicable an agreement to avoid double taxation, keep in mind that pensions, defined as earnings that are caused by
an employment exercised in the past, are different depending whether public or private. For public pension that which is
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
68
perceived is meant by reason of a prior public employment; ie one that is received in respect of services rendered to a
State, a political subdivision or a local authority. For private pension is any other type of pension received by reason of a
previous private employment, as opposed to what has been identified as public employment.
• In private pensions, most of the conventions set the exclusive right to tax to the State of residence of the taxpayer.
However, for the specific situation, you must consult each specific Convention.
TAXATION
When under domestic legislation and, where appropriate, the applicable Convention, the pension is subject to Spanish
tax, taxed in accordance with the following assessment scale:
Importe anual pensión
Hasta euros
Cuota
euros
Resto pensión
Hasta euros
Tipo aplicable
Porcentaje
0
0
12.000
8%
12.000
960
6.700
30%
18.700
2.970
En adelante
40%
• Deductions for donations in the terms foreseen in the Law on Personal Income Tax Act and the taxation of non-profit
entities and tax incentives for patronage.
• The deductions that would be made on the income.
3 3.3. Remuneration of directors
INTERNAL RULES
Under domestic law, the remuneration of directors and members of the Boards of Directors, Boards of performing their
duties or representative bodies of an entity are considered in Spanish territory when paid or obtained by an entity resident
in Spanish territory.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
69
CONVENTION
In general, the agreements to avoid double taxation provides that Directors’ fees and other similar payments derived by
the taxpayer for as a result of being a member of a Board of Directors of a company resident in Spain, can be subjected
to taxation by the Spanish state.
TAXATION
These payments are taxed at the general tax rate of 24% (24.75% from January 1, 2012 until December 31, 2014,
inclusive).
Deductions: A tax liability can only be deduced:
• Deductions for donations in the terms foreseen in the Law on Personal Income Tax Act and the taxation of non-profit
entities and tax incentives for patronage.
• The deductions that would be made on the income.
3 3.4. Income from capital (dividends, interest, royalties)
INTERNAL RULES
According to the internal rules, are considered in Spanish territory when obtained in the following yields:
• Dividends and other income from equity participation of residents in Spain entities.
• Interest and other income from the sale to third parties of own capital or paid by people resident in Spanish territory
or through a permanent establishment situated therein or benefits that reward capital entities used in Spanish territory.
• Fees paid by individuals or Spanish residents, entities or permanent establishments situated therein, or used in Spanish
territory.
Under this type of performance domestic legislation provides multiple cases of exemption.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
70
For example, in the case of interests, are exempt:
• Those obtained by residents of a country of the European Union, provided that it is obtained through a tax haven.
• The income derived from the Public Debt.
• The yields of non-resident accounts.
With respect to dividends, are exempt (except when they are obtained through tax havens):
• Dividends and shares in profits received by individuals resident in another Member State of the European Union or in
countries or territories with which there is an effective exchange of tax information, with a limit of 1,500 euros, which
will be applicable on all the income received during the calendar year.
• Distributed by subsidiary companies resident in Spain to their parent companies resident in another Member State of
the EU or the EP of the latter in other Member, or parent residing in the United States members of the European Economic Area or the EP latter located in other participating States, provided they have signed an agreement with Spain to
avoid double taxation or an exchange of information in tax matters, and provided that certain conditions are met. For
the purposes of this exemption requires that the parent company does not have his residence or the EP located in a
country or territory classified as a tax haven.
• Dividends and profit participations earned by pension funds equivalent to those regulated in the Law on Pension Plans
and Funds, resident in another Member State of the European Union or by permanent establishments of such institutions located in another Member State of the EU or residents in the participating States of the European Economic Area
provided that they have signed an agreement with Spain to avoid double taxation with information exchange clause or
an agreement to exchange tax information.
• Dividends and shares in profits made by collective investment institutions covered by Directive 2009/65/EC of the European Parliament and the Council; or residents of the participating States of the European Economic Area provided
that they have signed an agreement with Spain to avoid double taxation with provision for exchange of information or
an agreement to exchange information in tax matters.
As for the charges, with effect from July 1, 2011, will be exempt in the case of royalties between associated companies,
paid to a company resident in a Member State of the EU or a permanent establishment of that company in another
State member of the EU, provided that certain conditions are met.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
71
CONVENTION
Where applicable an Agreement in respect of dividends, interest and royalties, which will specifically reference. In general,
the taxation regime shared between Spain and the state where the taxpayer is still living; Spain would have the right to
tax such income, but a tax limit stipulated in the respective Convention.
TAXATION
Income obtained without EP should be taxed separately for each total or partial accrual of income subject to tax forms.
In general, the tax base will consist of the full amount, ie without deduction of any expenses.
However, in the case of taxpayers resident in another Member State of the European Union, for the determination of the
tax base may deduct the expenses under the Income Tax Act, provided evidence that they are directly related to yields in
Spain and which have a direct and inseparable link with economic activity in Spain. When expenses are deducted, they
shall be attached to a certificate of tax residence in the state that is issued by the tax authorities of that State.
The tax rate applicable to dividends and interest is 19 100 (21 100 from 1 January 2012 until 31 December 2014 inclusive).
The tax rate applicable to royalties is generally 24 100 (24.75 per 100 since January 1, 2012 until December 31, 2014,
inclusive).
Special case: In the case of royalty payments between associated companies, paid to a company resident in a Member
State of the EU or a permanent establishment of that company in another Member State of the EU until June 30, 2011
society 10 100, provided that certain conditions are met (from July 1, 2011 would be exempt).
Deductions: from the tax can only be deducted:
• Deductions for donations in the terms foreseen in the Law on Personal Income Tax Act and the taxation of non-profit
entities and tax incentives for patronage.
• The deductions that would be made on the income.
Reduction by convention: if a Convention is applicable to fixed dividends, interest or royalties is a limit of taxation, the
taxpayer may consider practicing this limit a reduction in the fee.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
72
3.4. Income from land and buildings
INTERNAL RULES
According to the internal rules, are considered income earned in Spanish territory income derived directly or indirectly
from immovable property situated in Spanish territory or rights relating thereto.
CONVENTION
The agreements signed by Spain ascribe power to tax the income of property to the state where they are located. According to the Conventions, the income from immovable property may be taxed in the State in the same situation, whether
derived from the direct use or as the lease or any other form of exploitation of the same enjoyment. Therefore, the income
from immovable property situated in Spain may be taxed under Spanish Law.
TAXATION
Income obtained without EP should be taxed separately for each total or partial accrual of income subject to tax forms.
In general, the tax base will consist of the full amount, ie without deduction of any expenses.
In the case of leased property, it shall be counted as income the full amount that, for all items received from the tenant,
including, where appropriate, corresponding to all property transferred with the property and excluding value added tax.
If the leased property is only part of the year, you must determine the yield as in the previous paragraph for the months
during which it leases, and for the rest, find the proportion of imputed rent (1.1% or, if 2% of assessed value).
However, in the case of taxpayers resident in another Member State of the European Union, for the determination of the
tax base may deduct the expenses under the Income Tax Act, provided evidence that they are directly related to yields in
Spain and which have a direct and inseparable link with economic activity in Spain. When expenses are deducted, it shall
be attached to the tax return a certificate of tax residence in the state that is issued by the tax authorities of that State.
The tax rate applicable is the general, 24 100 (24.75 per 100 since January 1, 2012 until December 31, 2014, inclusive).
Deductions: from the tax can only be deducted:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
73
• Deductions for donations in the terms foreseen in the Law on Personal Income Tax Act and the taxation of non-profit
entities and tax incentives for patronage.
• The deductions that would be made on the income.
3.5. Imputed income from urban real estate
INTERNAL RULES
According to the internal rules, non-resident taxpayers who are individuals, owners of urban property situated in Spanish
territory, used for their own use not subject to empty economic activities, or are subject to tax nonresident income by
imputed income related to these properties.
CONVENTION
According to the agreements to avoid double taxation, income derived from immovable property may be taxed in the
state of situation of the property, whether arising from the use or enjoyment as a direct lease or any other form of exploitation of same.
TAXATION
The taxable amount of the imputed income of urban real estate located in Spanish territory is determined in accordance
with income tax regulations. For these purposes, it should be counted as income to 1.1% of the assessed value of the
property (2% if the assessed value had not been revised or amended with effect from 1 January 1994).
The tax rate is 24% (24.75 per 100 since January 1, 2012 until December 31, 2014, inclusive).
Deductions: from the tax can only be deducted:
• Deductions for donations in the terms foreseen in the Law on Personal Income Tax Act and the taxation of non-profit
entities and tax incentives for patronage.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
74
3.6. Capital gains
3.6.1. Capital gains on sale of properties
INTERNAL RULES
According to the internal rules, are considered income derived from capital gains on Spanish territory when derived from
immovable property situated in Spanish territory.
CONVENTION
According to the agreements signed by Spain, gains from the alienation of immovable property situated in Spanish territory may be taxed in Spain.
TAXATION
Income obtained without EP should be taxed separately for each total or partial accrual of income subject to tax forms.
Taxation should be operation by operation, so there is not the tradeoff between gains and losses.
The taxable amount of capital gains are determined by applying generally to any asset impairment, income tax rules. Winnings are calculated by difference between the values of transmission and acquisition.
The purchase price will consist of the actual amount for which the property, to the amount of expenses and taxes inherent
to the acquisition will add is acquired, excluding interest, now satisfied by the transferor. Depending on the year of acquisition, this value is corrected by applying coefficients update fixing an annual basis, the Law on State Budget (see Annex
III). The amount so determined will be reduced, where appropriate, by the amount of depreciation charged regulation. In
turn, these repayments will be updated taking into account the year to which they relate.
The difference between the transfer value and the acquisition value so determined will be the gain that is subject to
taxation.
Withholding tax
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
75
The person who acquires the property, whether or not resident, is required to withhold and pay to the Treasury 3% of the
agreed consideration. This retention is for the seller as payment on the account that corresponds to the gain arising from
the transfer tax.
The purchaser will enter the retention by the model 211, within one month from the date of transfer, and deliver to the
nonresident seller a copy of Form 211, so that the latter may deduct withholding tax liability resulting from reporting the
gain. If retention is higher than the tax rate, may obtain a refund of the excess.
3.6.2. Other capital gains
INTERNAL RULES
According to the internal rules, capital gains Spanish territories are considered in the following cases:
• When derived from securities issued by resident individuals or entities.
• When deriving from other personal property located in Spanish territory or rights to be fulfilled in that territory.
• When part of the estate of the taxpayer property situated in Spanish territory or rights that must be fulfilled or exercised
in that territory, even when derived from a previous transmission.
In the internal rules there are several cases of exemption. Some example are:
• Capital gains derived from personal property obtained by residents in another Member State of the European Union
(except those obtained through a tax haven, or in the case of gains arising from the transfer of shares or other rights
in a company whose assets consist principally of immovable property situated in Spain, or in the case of gains from
the transfer of shares or other rights in an entity and the taxpayer, at any time during the 12 month period prior to the
transfer, has participated directly or indirectly at least 25% of the capital or assets of such entity).
• Capital gains derived from securities issued by non-residents in Spain.
• The income derived from the transfer of securities or redemption of units in investment funds held in official secondary
markets in Spain, obtained by individuals or entities resident in a country with which Spain has signed agreement with
exchange of information clause, except to be obtained through a tax haven.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
76
CONVENTION
According to the conventions normally the power to tax on these earnings is solely for the State, being exempt in Spain.
However, there are exceptions in many conventions when derived from shares or shares in companies with real estate
substrate, which enables the assessment of each situation in the State property. You shall consult each Convention.
TAXATION
Income obtained without EP should be taxed separately for each total or partial accrual of income subject to tax forms.
Taxation should be operation by operation, so there is not the tradeoff between gains and losses.
In the case of capital gains (derived from rights or shares in an entity whose assets are mainly represented by immovable
property situated in Spanish territory or attribute to the holder the right to enjoyment of immovable property situated in
Spanish territory), those from the transmission rights or interests in resident in countries or territories with which there is
no effective exchange of tax information, the transfer value shall reflect proportionately the market value at the time of the
transfer of immovable property situated in Spanish territory.
The tax rate applicable is 19% (21% from 1 January 2012 until 31 December 2014 inclusive) if derived from the transfer of
an asset. Otherwise, it will be 24 100 (24.75% since January 1, 2012 until December 31, 2014, inclusive).
Deductions: from the tax can only be deducted:
• Deductions for donations in the terms foreseen in the Law on Personal Income Tax Act and the taxation of non-profit
entities and tax incentives for patronage.
• The deductions that would be made on income.
4. DEDUCTIONS FROM INCOME OBTAINED WITHOUT PERMANENT
ESTABLISHMENT
4.1. Required to retain
They are required to withhold or to pay in respect of income subject to IRNR that meet or added, including:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
77
• The resident in Spain (also the entities under an attribution).
• Natural persons resident in Spain performing economic activities.
• Taxpayers IRNR EP.
• Taxpayers without EP IRNR respect of employment income that meet constituting deductible for obtaining income
spending.
• Entities in income allocation established abroad, with a presence in Spanish territory
• The representative acting on behalf of the insurance company operating under the freedom to provide services
They are also required to retain those set retention rules relating to financial assets and other investments.
4.2. Amount withheld
Retention should be an amount equal to the tax liability arising from the provisions of the Tax Property or established in
an agreement.
However, the holder shall not take into account the following expenses or deductions (which are applicable to calculate
the tax) deductible expenses, the amount of the special levy on real estate of non-resident entities and the deduction for
charitable contributions.
4.3. Obligation to declare by required to retain
In general, the holder must file a return and make, if necessary, your deposit through the Model 216.
In cases excepted from the requirement to retain the retainer exceptions, shall furnish negative clearance through the 216
model.
Also, you are required to submit an annual summary model 296.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
78
However, corresponding to the income derived from the transfer and redemption of shares or shares representing the
capital or assets of collective investment institutions (eg investment funds); deductions shall be paid by the model 117,
and included in the statement annual information 187.
5. STATEMENT OF INCOME OBTAINED BY NON RESIDENTS WITHOUT
PERMANENT ESTABLISHMENT
5.1. Obligation to file
Taxpayers are not required to file the appropriate income statement for which they had practiced tax withholding, or concerning those income subject to withholding but exempted under the provisions of the Tax Act or a Convention applicable
double taxation.
In particular, the obligation to file in the following cases of obtaining income:
• Income subject to tax by the Income Tax Nonresident but exempted from the obligation to withhold and account. These
include, for example, capital gains from the sale of shares.
• Imputed income from urban real estate (individuals only).
• Yields satisfied by persons not having the status of retainer. For example, income earned from the leasing of property
when the tenant is an individual and such income meets outside the scope of economic activity
• Income obtained by the transfer of real estate.
• To request a refund of excess withholding in relation to the amount of tax.
5.2. Model and deadline
Model: the case of income earned from January 1, 2011, it should be used the model 210, both to declare income, such
as capital gains or income earned property.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
79
Grouping of income: Except in cases of imputed rents and property income from real estate transfers, in other cases
may be grouped income derived by the same taxpayer in a given period, provided they correspond to the same type of
income come from the same payer, applies the same tax rate and, if they come from an asset or right, come from the
same property or right.
The group will be quarterly period in the case of self-assessments resulting in payments, or yearly, if the result is zero or
return fee.
Special case: In the case of transfers of property, when the property being transferred is jointly owned by a married couple
in which both spouses are nonresidents may make a unique statement.
Deadline for submission of Form 210: Depending on the types of income are:
• Revenue from the transfer of real estate: within three months after the period of one month has passed since the date
of transfer of the property.
• Imputed income from urban real estate: the next calendar year accrual date (December 31 of each year). In case of
electronic filing, you can settle the payment of the tax due from 1 January to 23 December.
• Other income:
»» Self-assessments resulting to pay: the deadline and entry will be the first twenty calendar days of the months of
April, July, October and January in relation to income which vesting date falls within the previous calendar quarter.
In case of electronic filing, you can settle the payment of the tax debt from 1 to 15 April, July, October and January,
respectively.
»» Self-assessments of zero quota: the deadline will be 1 to 20 January following the accrual of the declared income
year.
»» Self-assessments with refund: may be submitted from 1 February following the accrual of the income declared and
within four years from the end of the reporting period and income year retention. This period will be applicable to
all self-assessments, regardless of whether the return derived from the internal standard or an agreement to avoid
double taxation, even in those cases in which an Order implementing the Convention set a shorter period. It will be
understood after the deadline for submission of the tax return at the time of submission.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
80
5.3. Documentation
Introducing the reverse, where indicated, the following documents must be attached:
Certification of residence
• Internal exemptions
If exemptions apply Spanish domestic law by reason of the taxpayer’s residence, a residence certificate issued by the
tax authorities of the country of residence, to justify these rights will be attached.
However, when the exemptions are applied in Article 14.1.k) and 14.1.l) of the Law on Income Tax for Non-Residents,
pension funds or collective investment subject to a specific regime of monitoring or administrative record, the right to
justify the exemption, instead of the certificate of residence, as follows:
a) In the case of the exemption in Article 14.1.k) shall include a declaration made by the representative of the pension
fund in compliance with legal requirements appears, set down in Annex VI of the Order approving the Form 210.
b) In the case of the exemption in Article 14.1.l), attach a certificate from the competent authority of the home Member
State of the institution in which it is seen that it fulfills the conditions laid down in Directive 2009/65 / EC of the European Parliament and of the Council of 13 July 2009 laying down the laws, regulations and administrative provisions
relating to undertakings for collective investment in transferable securities (UCITS) are coordinated. The competent
authority shall be designated pursuant to the provisions of Article 97 of that Directive.
• Exemptions or tax limit by Convention
If exemptions or reduced fee limit imposition of a Convention apply, a certificate of tax residence issued by the tax authority justifying such rights, which shall state was annexed expressly that the taxpayer is resident in the meaning of the
Convention. However, if the fee reduction applies for taxation limit laid down in an agreement developed by an Order in
which the use of a specific form is established, it must be provided in lieu of the certificate.
• Deductible expenses for EU taxpayers
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
81
When expenses for determining taxable income are deducted, since it is taxpayers resident in another Member State
of the European Union, a certificate of tax residence will be attached in the state that is issued by the tax authority of
that State.
In the course of self-assessments conducted jointly liable for securities depositories that are sufficient to keep them
available to the tax authorities of residence certificates, forms or statements in the period of limitations.
Certificates of residence and the above statement will be valid for one year from the date of issue. However, residence
certificates shall be valid indefinitely if a taxpayer is a foreign state, any of its political or administrative subdivisions or
local authorities.
Proof of deductions
When deductions are deducted from the income or advance payments, supporting documents will be attached.
Certificate proving the account devolution
If requested refund, an accredited identification and proof of ownership of the account is attached.
Refunds will be made by transfer to the bank account specified in the entry document / return and whose ownership can
be one of the following:
• The person doing the reverse. However, in the event that the self-assessment is made by the representative of the taxpayer may only hold back the bank account if it is legally authorized representative of the taxpayer.
• The taxpayer himself.
If the holder of the bank account of return was one of the people doing the reverse, as well as jointly liable, as well as withholding or legally authorized representative, the bank account must be opened in Spain. However, if the account holder
of the taxpayer’s return, the account can be opened at a bank in Spain, from March 1, 2012, abroad.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
82
Proof of representation
When the refund is requested on an account whose owner is the legal representative of the contributor, will be necessary
to attach the document evidencing representation, which should contain a provision authorizing the said legal representative for the payment to the account name taxpayer.
5.4. Filing of model 210
The filing can be made electronically or on paper.
FILING VIA INTERNET
The presentation can be done either online with an electronic signature certificate accepted by the Tax Agency. To do this,
you must complete the forms available in the electronic office of the Tax Authoritiies.
If the filing is resulting in a payment you should provide and electronic wire transfer, when this option is available, or work
with your Bank to proceed with the payment indicating the complete reference number of the Tax filing.
Social Collaboration: persons or entities authorized to submit statements electronically on behalf of third parties can
make use of that power in respect of the models 210 electronic certificate will be required of the social partner..
Third party legal representatioin: through the delivery by the grantor of a power in the offices of the Inland Revenue, you
can empower a person or entity for the electronic filing of declaration models to this paragraph. This presentation will
require the use of e-certificate proxy.
Self-assessments of 210 forms resulting in payments with income debit to a bank account: With the exception of those
relating to income derived from the transfer of real property, if electronic filing self-assessment may be domiciled payments should occcur by the following deadlines:
• In general: from 1st to 15th April, July, October or January
• In the case of imputed income of urban property, income type 02: from January 1 to December 23.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
83
PAPER PRESENTATION FORMAT
By printing the completed form generated in the Internet portal of the Inland Revenue (www.agenciatributaria.es).
A copy of the self-assessment model, as well as the copies of the payment / return will be obtained.
(1) Presentation from Spain
Depending on the result payment or devolution the appropriate documentation and attach documents, will be presented
in the following locations:
• With result to payment: The presentation and admission will be made on any partner entity in collection management
(Bank, Savings and Credit Cooperative) situated in Spanish territory.
• With result to return or zero fee: Presentation is personally or by certified mail, at the Delegation of the competent tax
office in August, government or dependent thereof, or the Central Office or Large Taxpayers Units Management Large
Companies related in terms of those made by attaching to the same taxpayers.
If you perform the reverse the taxpayer and for that he had assigned an identification code to complete the form on the
Internet portal of the Inland Revenue, shall be submitted in person or by certified mail, at the National Tax Office (Tax
Office.. Department of Tax Management National Tax Office IRNR model 210 C / Infanta Mercedes, 49,.. 28020-Madrid).
(2) Presentation from abroad
Depending on the result of the filing, the submission may be made from abroad as follows:
• 210 self-assessment model, to return or zero quota. Form and place of filing:
The presentation can be made by mailing certified the document entry / return generated by completing the form on the
Internet portal of the Inland Revenue, as well as documentation to proceed in a regular envelope, on which they enter
the format data on officially approved, led the delegation competent unit (see note at bottom of page above).
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
84
If it is a self-assessment by a taxpayer who is allocated an identification code to complete the form, the envelope shall
be addressed to the National Tax Office (Tax Office. Department of Tax Management. National Tax Office. IRNR model
210 C / Infanta Mercedes, 49,. 28020-Madrid).
• Special procedure for filing from abroad, resulting in self-assessments 210 resulting in payments, made by the taxpayer,
not electronic certificate:
»» From March 1, 2011, may submit the self-assessment, and enter the resulting tax liability by a transfer made from
abroad, according to the following procedure:
The Internet portal www.agenciatributaria.es State Tax Agency will access the form to the model set 210, then you
should complete the content as appropriate and proceeding to print the registration form and entry document with
your receipt number.
Then pay the tax liability resulting from the filing will be made by bank transfer in euros, by the amount of that debt
from a financial institution abroad.
The transfer will be directed to the bank account opened in the Bank of Spain to be entered in the e-mail address of
the State Tax Agency to complete the form.
When the transfer is prerequisite stating as “Recipient” in the same number of proof of income document obtained
by printing the reverse, followed by the words, “AEAT” is made.
(Beneficiary: 250NNNNNNNNNN-AEAT)
Also in the “specification” field shall include the following, without spaces concatenated in this order (in brackets the
length of each indicated, the number is padded with leading zeros if necessary):
-- NIF (9), Model (3) Exercise (2) Anagram (4) Period (2)
NIF Where are the 9 digit Tax Identification Number assigned to have the taxpayer in Spain or, if you did not possess it to complete the form, the identification code, which will be issued at that time and will be valid for the sole
purpose the method of presentation of the model. The NIF assigned in Spain or, failing that, the assigned identification code shall be used in future presentations. The Model 210 will always be. Exercise will be the last 2 digits of
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
85
the fiscal year. The Anagram is used only to natural persons, legal persons will be filled with the word “JURI”. The
instructions are obtained by the print service the specific content of the field “concept” is indicated.
(Example of Concept: XXXXXXXXX21011JURI0A)
Once checked and data relating to the transfer received by the receipt number will be associated with the corresponding reverse.
The documentation that, if necessary, proceed to attach be sent along with the copy for collaborative / Administration
document income / return entity in a regular envelope addressed to the National Tax Office. In this envelope will contain
the reverse model number (model 210), and the name and address of that body (Inland Revenue Department Tax Management National Tax Office IRNR model 210 C / Infanta Mercedes, 49,.... 28020-Madrid).
6. SPECIAL TAX ON REAL ESTATE FOR ENTITIES NON RESIDENT
Calculation
a) Special Tax accrued until December 31, 2012.
In general, non-resident entities that own or hold in Spain, for any reason, real property or real rights of enjoyment or
enjoyment thereof, are subject to taxation under the Income Tax Nonresident by a Special Tax.
However, the Special Tax shall not be required to:
1) States and foreign public institutions and international organizations (in this case, are exempt from declaration
submitted by the Special Assessment).
2) Entities entitled to the application of an agreement to avoid double taxation clause containing exchange of information, on the terms and with the requirements of Article 42 of the Consolidated Law on Income Tax for NonResidents.
3) Entities that develop in Spain, of continuously or habitually, economic operations other than merely owning or leasing property within the meaning of Article 20.2 of the Regulations of Income Tax Non-Resident.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
86
4) Companies traded on secondary markets officially recognized. This course will also apply if the property is held
indirectly through an entity entitled to the application of an agreement to avoid double taxation with exchange of
information clause.
5) Entities nonprofit charitable or cultural character, within the meaning of Article 42 of the Consolidated Law on Income Tax for Non-Residents.
b) Special Assessment accrued from January 1, 2013.
Entities resident in a country or territory which may be considered a tax haven, owning or holding assets in Spain, such
real state property or rights of enjoyment, they will be subject to tax by a special charge.
However, the special levy shall not be required to:
1) States and foreign public institutions and international organizations.
2) Entities that developed in Spain, continuous or habitual way distinguishable economic holdings simple possession
or lease of the property.
3) The company listed on secondary markets officially recognized.
Tax base: The tax base will normally be the assessed value of real property.
Tax rateis: 3%.
Deductibility of tax: Special Assessment fee will be considered as deductible expense for purposes of determining
taxable IRNR.
Model: the model 213 should used.
Deadline: The deadline for submission is January following the date of accrual of the Special Tax, which is December
31 of each year.
In case of electronic filing by internet-enter a self-assessment, may debit payment of tax due from day 1 to 25 January.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
87
Forms of presentation: the presentation can be made online, with electronic signature certificate accepted by the
Inland Revenue, or support evidence generated when printing the form previously completed in the Internet portal of
the tax office.
The format paper, you get to print the form previously completed in the Internet portal of the tax. Will the copy for collaborative / Document Management entity income / return which is used to perform the presentation, along with the
documentation concerned.
Where to submit the model 213 on paper:
»» The presentation and admission will be made on any partner entity in collection management (Bank, Savings and
Credit Cooperative) situated in Spanish territory.
»» Zero quota. In these cases, the statement shall be submitted to the Delegation of the tax office in whose jurisdiction
the property is located, by personal delivery or by certified mail.
7. SPECIAL TAX ON CERTAIN LOTTERY AWARDS AND BETTING
Context
Since January 1, 2013, are subject to income tax the non-resident through a special lottery prizes, Autonomous Communities, National Organization for the Blind and Spanish Red Cross organisation.
No awards will be subject to taxes before January 1, 2013.
In any event, be exempt from taxes awards with full amount equal to or less than 2,500 euros.
The awards whose full amount exceeding 2,500 euros will be subject to tax in respect of the part thereof in excess of that
amount.
In the event that the amount of the tenth fraction or lottery ticket or bet made, is less than 0.50, the maximum amount
exempted shall be reduced proportionately.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
88
In the event that the prize was jointly owned, the exempt amount is divided among the co-owners according to their corresponding share.
Taxable income
The tax base will consist of the prize money in excess of the exempt amount.
In the event that the prize was shared ownership, the taxable amount shall be apportioned among the joint owners according to their corresponding share.
Accrual
The tax is payable at the time that meets or pay the prize.
Withholding or payment on account
Prizes subject to excise tax, but is exempt under the provisions of an agreement to avoid double taxation as applicable,
shall be subject to withholding tax or account.
The retention base is determined by the amount of taxable income from the special levy.
The rate of withholding tax will be 20 percent.
The deductions shall be paid by the model 230, and included in the annual statement model 270.
Statement by the special assessment
Taxpayers of this tax shall be required to submit a statement (model 136) for this special assessment.
However, there will be no obligation to make the quoted statement when the prize would have been exempt is less than
the amount in connection with the same retention or payment referred to in the preceding paragraph.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
89
When they had entered the Treasury amounts for this special assessment in higher amounts than those resulting from the
application of an agreement to avoid double taxation, it may request the application and the subsequent reimbursement
by submitting the model 210 in the devolution form.
In the field of Income Tax Nonresident awards won by taxpayers without a permanent establishment may be taxed only
by the special tax regime.
8. SCHEME OPTIONAL
8.1. Workers from abroad moving into Spanish territory
Individuals who become tax resident in Spain as a result of moving to Spanish territory, may choose to be taxed under
the Income Tax Nonresident maintaining the condition of contributing to the Income Tax of Individuals (income tax) during
the tax period in which the change of residence is made and for the next five tax years, if the following conditions are met:
• Who have not been resident in Spain for 10 years prior to their transfer to Spanish territory.
• The assignment to Spanish territory occurs as a result of an employment contract.
• The work must be carried out in Spain.
• The work must be performed for a company or resident in Spain or for a permanent establishment in Spain of a nonSpanish resident entity.
• That employment income arising from the employment relationship are not exempt from taxation by the Income Tax
Non-Resident.
• That predictable remuneration under the contract of work in each of the tax periods in which this regime applies does
not exceed the amount of 600,000 euros (this condition applies only to taxpayers moved to Spanish territory since
January 1, 2010).
Taxpayers who choose this option are not considered residents for purposes of the application of a Double Taxation
Agreement to be taxed only on the income they receive from sources in Spain.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
90
The option, withdrawal or special arrangements are made using the model:
149. A communication option must be included with the documentation provided for in Article 119.1 of the Income Tax
Regulations.
Taxpayers who choose the special regime must file a special tax declaration in the model 150.
8. Two. Taxpayers resident in other member states of the European Union (EU).
Taxpayers Tax Nonresident Income (IRNR)
• Who are individuals.
• That proof of residence in another EU Member State (Annex VI) except residents of countries or classified as tax havens
(Annex V) territories.
• Proving that at least 75% of their entire income in the tax period is constituted by the sum of labor income and economic activities obtained during the same in Spanish territory,
• When these rents have actually IRNR.
May request the application of this optional scheme, which is that the effective taxation in Spain is calculated according
to the rules of the Income Tax of Individuals (income tax), but without losing their status as taxpayers IRNR.
The Order of 12 July 2000 (BOE of 14 July) approves the application form for applying the optional regime and determine
the place, time and form of presentation.
Made the request and demonstrated compliance with the conditions that determine their application, the tax authorities,
taking into account all income derived by the taxpayer during the tax period and their personal and family circumstances,
and following the liquidation of the income tax scheme,will determine the average tax rate.
The resulting average of the tax rate is applied on the portion attributable to the income obtained in Spanish territory.
If the above result shows below the amounts paid during the tax period by the non-resident taxpayer in respect of income
derived on IRNR in Spanish territory, shall it claim the devolution of the excess.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
91
9. SPECIAL PROCEDURES FOR DETERMINING THE DEDUCTIONS FROM
INCOME WORK IF CHANGE OF RESIDENCE
It is a voluntary procedure that can be used by employed persons, whose purpose is to anticipate the deductions from
salary income effected by a relocation.
Payers must be resident or permanent establishment in Spain.
9.1. Workers moving to Spanish territory
The employed persons other than taxpayers for Income Tax of Individuals, but which are to acquire that status as a result
of moving to Spanish territory may notify the tax authorities such circumstances, through communication model 147.
The Tax Office will issue workers a document for delivery to the payer of the income from work, so that this practice are
withholding under the Income Tax regulations, from the date specified therein.
To apply this procedure must evidence a stay exceeding 183 days in Spanish territory had occur during the calendar year
in question.
This is attached to the standard media a supporting document from the payer of the income from work that expresses
the recognition of the employment relationship with the employee, the date of commencement of the provision of work in
Spanish territory, the workplace and address thereof, the duration of the contract and the intention of paying the worker
gives his work in Spanish territory, at least for a period exceeding 183 days during the calendar year in which the date
of commencement of the provision of falls work in Spanish territory, or, alternatively, that the minimum period of stay will
result in the following calendar year.
Place of submission: On the Administration or delegation in whose territory is situated in Spanish territory home at the
time of presentation. If this can not be determined, it will serve to place the workplace situation. Failing this criterion, he
will attend the official address of the payer of income.
Deadline: From 30 days prior to the date of entry into Spanish territory and that has been communicated to the 183 days
of the time of moving, or until 30 June of the following year, when the minimum required period of residence should occur
this year.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
92
9.2. Workers who move abroad
The employed persons which are not taxpayers for income tax nonresident, go to acquire that status as a result of moving
abroad by their employer may notify the tax authorities, using the communication model 247.
The Tax Office will issue workers a document for delivery to the employer, in order that this practice deductions for nonresidents, from the date specified therein.
The document extend its effects with regard to the practice of withholding under Income Tax Non-Resident, a maximum
of two calendar years.
The use of this procedure does not relieve the employee of proof of their new tax residence in front of the tax authorities.
To use this procedure is necessary to prove the existence of objective data on employment as a result of the provision of
work elsewhere, and the continuing employment exceeds 183 days during the calendar year in which occurs the move
or, failing that, in the next.
The proof shall be by a supporting document from the payer of the income from work that expresses the recognition of
the employment relationship with the worker, the country or territory of travel, length of contract, date of commencement
of the provision of work in another country and the duration of the shift, indicating the expected date of completion.
Place of submission: On the Administration or for your offices prior to displacement Delegation.
Deadline: From 30 days prior to the departure of the Spanish territory that has been communicated and, at most, until the
end of term due to the effects of the documents issued by the Inland Tax Revenue Services.
10. THE HOLDING COMPANY IN SPAIN
The revised text of the Corporate Tax Law, approved by Legislative Royal Decree 4/2004, of 5 March, regulated in Articles
116 to 119 special tax regime Entities Holding Foreign Securities (hereinafter, ETVE).
The special regime for the taxation of ETVE to various regulatory provisions, fixed in the income tax the phenomenon of
double taxation, more present each day in an economic environment t of the Spanish companies is growing. Through this
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
93
special regime the taxation of profits from foreign activities are reduced when they are obtained through the ownership of
shares in foreign companies that meet certain requirements, and manifests itself in two ways:
• Dividends from companies can access a tax exemption if distributed from its corporate profits. The same holds true
with respect to income derived from the transfer of shares.
• The repatriation of the profit generated by the ETVE by its non-resident shareholders are exempt from tax in Spain,
whether such return is produced by dividend distribution, transmission, participation, partner separation or settlement,
provided that the partners are not resident in a tax haven.
10.1. Access to the scheme and objects of the ETVE
Under Spanish law, they can qualify for the special status entities holding foreign securities (ETVE) or Spanish Holding
Companies entities that meet the following criteria:
• Having a consistent corporate purpose in the management and administration of securities representing the equity of
non-resident entities.
• Representative values of the shares in the capital of such entities must be nominative.
• Does not require a minimun percentage of the equity of non-resident entities. However, to qualify for the exemption
must be at least 5% of the equity of foreign entities or a value of more than 6 million euros.
• Dispose of material and human resources for the management and administration of shares in non-resident entities.
The use of the benefits of this special tax regime is conditional meeting the conditions for its application under the terms
set forth below, which shall be tested by the company at the request of the tax authorities. If in any tax period the conditions are not met, you can not benefit from tax exemption for dividends and capital gains from the ownership of nonresident entities.
They may not invoke the application of the special tax regime the following entities:
• Groupings, Spanish and European interest.
• Joint ventures.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
94
• Companies whose main business is the management of a property or real estate on the terms provided in Article
4.Ocho.Dos of Law 19/1991 of 6 June on Wealth Tax, provided that at the same time of at least 90 days of the fiscal
year more than 50% of the share capital is owned, directly or indirectly, to 10 or fewer partners or family group, deemed
for the purposes that it is made by the spouse and other people connected by links relationship, direct or collateral,
except that all partners are legal entities which, in turn, do not meet the above conditions or a legal person of public
law is owns more than 50% of the capital, and when the representative values of the participation of the entity were
listed on any of the official secondary markets under Law 24/1988 of 28 July on the Market Values. With this limitation
is excluded from the possibility of being taxed as a ETVE the old “holding companies”.
10.2. Treatment of income derived by the ETVE from investments and dividends
to non-resident entities
Companies that decide to make this system of taxation shall be subject, as a rule, the general rules for calculating the
tax base and the general tax rate of income tax (currently 30%), without prejudice to the income from shares in foreign
subsidiaries “qualified” from taxation by that tax.
Dividends or shares in profits of non-resident entities in Spanish territory, and income derived from the transfer of participation will enjoy the exemption to avoid international double taxation under the conditions laid down by Article 21 of the
CIT Law.
These conditions are:
• The application of the aforementioned method is that the interest in the entity is not a resident of at least 5%. For the
purposes of the application of the exemption contained in this system of ETVE, is considered to meet this requirement,
ie, participation may be less than 5% if the acquisition value is more than six million.
• Participation must be continuously for the year preceding the day on which such sums profit distributed or, alternatively,
must possess later during the time required to complete that term.
• The non-resident entity should be taxed by a tax of identical or similar to Spanish corporate income tax in the year in
which they have obtained the benefits and may not be resident in a tax haven nature. This requirement is met if the
investee is resident in a country with which Spain has an agreement to avoid double taxation with an exchange of information clause. In no case shall apply where the investee entity resident in a tax haven.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
95
• The benefits are shared or in which part should come from conducting business activities abroad. This requirement is
satisfied when at least 85% of revenue for the year, generically, corresponding to active business income from activities
obtained abroad or dividends and profit shares of other non-resident companies which in turn meet the requirements
of Article 21 of the CIT Law.
10.3. Treatment of income distributed by the ETVE
If the recipient of these benefits is an entity subject to Spanish corporate income tax or a permanent establishment of a
nonresident located in Spanish territory, the benefits entitle the deduction for domestic double taxation.
In the event that the recipient is a person subject to Spanish income tax, the profit distributed shall be considered general
revenue and may apply the deduction for taxes paid abroad on the terms set out in the regulations governing the income
tax itself, in respect of foreign taxes paid by the entity holding securities which fall into the exempted income that contributed to the formation of perceived benefits.
Finally, if the recipient is a person or entity not resident in Spanish territory, it is understood that the distributed profit has
not been obtained in Spanish territory, considering these effects distributed the first benefit comes from exempt income.
Specifically, the distribution of the premium should be given the same treatment as the distribution of benefits.
10.4. Treatment of capital gains on the transfer of shares in ETVE
The corresponding tax regime to such rents depends on the nature of the partner who receives them. Specifically:
Where the recipient is a corporation tax resident in Spain or a permanent establishment of a nonresident located in Spanish territory and meet certain requirements, you can apply 100% deduction for domestic double taxation with respect to
income obtained on the transfer of participation, partners or separation settlement ETVE. You can also apply the exemption to avoid international double taxation, provided that the requirements are met to apply the same, to that part of the
income obtained corresponding to value differences attributable to participations in non-resident entities in relation to
ETVE which apply the exemption discussed.
Any specialty to individual shareholders resident in Spanish territory is not set, so the income earned on these assumptions, in general, be subject to personal income tax.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
96
When the perceiver is not resident in Spanish territory, not income obtained in Spanish territory on the part thereof that
corresponds to reserves equipped with a charge shall be the exempt income in ETVE, or differences attributable value to
shares in non-resident entities that meet the requirements for application of the exemption to avoid international double
taxation of foreign source income
11. LOANS FROM INTER-RELATED COMPANIES
The basic principle to keep in mind is that all operations between inter- related parties must be valued at market value.
Related Entities
Will consider related persons or entities as follows:
a) A company and it shareholders.
b) An entity and its directors or administrators.
c) An entity and the spouses or persons related by kinship, direct or collateral consanguinity or affinity to the third degree
of the partners or shareholders, directors or managers.
d) Two entities belonging to the same group.
e) An entity and the members or participants of another entity where both entities belong to the same group.
f) An entity and the board members or directors of another entity where both entities belong to the same group.
g) An entity and the spouses or persons related by kinship, direct or collateral consanguinity or affinity to the third degree
of the partners or of another company if both companies belong to the same group.
h) An entity and another entity in which the first indirectly, at least 25 100 of capital stock or equity.
i) Two entities in which the participating members themselves or their spouses, or persons related by kinship, direct or
collateral consanguinity or affinity to the third degree, participate directly or indirectly in, at least 25 100 equity or equity.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
97
j) An entity resident in Spanish territory and its permanent establishments abroad.
k) An entity not resident in Spanish territory and its permanent establishments in that territory.
l) Two entities that are part of the same group taxed under the regime for groups of cooperative societies.
In cases in which the relation is defined in terms of the relationship partners or participants-entity participation must be
equal to or greater than 5% or 1% in the case of securities admitted to trading on a regulated market. Mention administrators include those of law and fact. A group exists when several companies constitute a decision unit based on criteria
established in Article 42 of the Commercial Code, regardless of their residence and the obligation to prepare consolidated
financial statements.
Determining the market value of the related operations
The first of the aforementioned aspects, is the key issue on which rests the whole system, because the valuation of transactions between related parties must be made, for its fair market value, regardless of the results to fiscal matters. Indeed,
and consistently with the accounting rules, the taxpayer (not the Tax Administration) connected transactions valued for its
fair market value, it is unnecessary to consider whether the agreed assessment is reduced or deferred.
To determine the fair market value any of the following methods could be applied:
a) Comparable free market price method, whereby the price of the good or service is compared in a transaction between
persons or entities related to the price of a good or identical or similar services in a transaction between independent
persons or entities in comparable circumstances.
b) Cost plus method, by which is added to the purchase price or production cost of the good or service the usual margin
in identical or similar transactions with persons or independent entities.
c) Resale price method, by which is subtracted from the sale price of a good or service margin own reseller applying
identical or similar transactions with persons or independent entities.
. 2 When due to the complexity or information relating to transactions not be suitably to apply any of the above methods,
you may use the following methods to determine the market value of the transaction:
a) The method of distribution of income, which is allocated by each person or entity connected together to perform one
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
98
or more of the common operations the result derived from the operation or operations, according to a criterion that
adequately reflects the conditions that have signed independent persons or entities in similar circumstances.
b) Method net margin of operations, which is attributed to transactions with a person or entity related net income, calculated on costs, sales or the magnitude is most appropriate based on the characteristics of the operations that the
taxpayer or, where appropriate, third parties have been obtained in identical or similar transactions between unrelated
parties.
Documentation Requirement
As noted above, other aspects of the the regime of related party transactions is determined by the obligation to document
these transactions. In this regard, and notwithstanding anything stated so far in 2009 is perhaps the first tax period in
which the new system of linked transactions will deploy all its effects. Indeed, the November 19, 2008 entered into force
by Royal Decree 1793/2008, amending the Corporate Income Tax Regulation, which came to specify the content of the
documentation requirements identified by the art. 16.2 of the Tax Act and the date on which such documentation must be
available to the tax authorities: February 19, 2009.
In this regard, the Directorate General of Taxes has recently elaborated a Binding number 1567-09 of 30 June 2009 relating to the obligation to document transactions between related companies in the terms required by art. 16.2 and 18 and
following of the Corporation Tax Act and Income Tax Regulations, respectively.
The above consultation is to clarify the temporal scope of the obligation to document the related transactions introduced
by Law 36/2006; in particular regarding which operations must be documentation in the terms indicated by the Royal
Decree 1793/2008 are.
First, it is absolutely necessary to reiterate that the obligation to assess the operations related to its market value in force
since January 1, 2007. Therefore all the transactions between related entities within the meaning of art parties. 16.3 of the
Income Tax Act shall be valued at their fair market value from the date mentioned, that is, from January 1, 2007.
Notwithstanding the foregoing, with respect to the system of documentation, transactions made prior to February 19,
2009 shall not be documented in the terms introduced by Royal Decree 1793/2008; similarly, these transactions will not
result in application of the sanctions regime foreseen in art. 16.10 of the Tax Act.
Of course, in accordance with the criteria of the Tax Administration, as outlined in the Internal Report AEAT, dated April
24, 2008, the foregoing is without prejudice to the need for the taxpayer to prove the valuation applied to related party
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
99
transactions made prior to February 19, 2009 due to the principle of free competition required by art. 16 of the Tax Law.
Also, transactions prior to the date indicated will be applicable to them, where appropriate, the general penalty regime
resulting from the Law 58/2003 Tax General.
A related party transactions made after that date scheme of valuation,it should present the documentation and understand the penalties contained in art. 16 of the Tax Law. In regards to the sanctions regime, it can be fully applicable
whether or not administrative adjustment in the amount of tax. In this sense, the failure to document the related transactions is becoming a decisive factor for sanctions.
Therefore, the preparation and holding of the documentation required by the regulation will prevent the imposition of any
tax penalty.
In light of the above, first, it should specify the information required by the Income Tax Regulations. To this end, the Regulation provides for the preparation of two different blocks of documentation:
Group Literature (Master file): comprehensive documentation of all entities and persons belonging to the group. Its foundation it is to provide an overview of the activity.
Documentation taxpayer: corresponding to a particular society, in which the operations performed by that company with
the various related entities are included block.
To prepare the above documentation will be necessary to take into account the following aspects:
A. Scope of the obligation
The obligation to document the related transactions is to make available the above related documents to the Tax Administration, so it will not be necessary to refer it, for example, the statement of income tax of the entity in question, without
prejudice to the obligations to provide some specific information on the tax return.
The documentation must be available to the Administration from the end of the voluntary reporting period (generally, 25
July).
The regulation also states that the documentation should be prepared taking into account the complexity and volume of
transactions, so that the Administration can verify that the value applied is the market value.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
100
The documentation must include a reference to the operations made in the tax period. If the documentation made from
a particular exercise is valid for the following, simply make corrections or adjustments that may be necessary, without it
being necessary to re-prepare all the required documentation.
The requirement to document these transactions should be without prejudice to the right of the Administration to request
any additional documentation or information that it deems necessary.
B. Retention of documents
The parent company may choose to prepare and retain documentation relating to the whole group. When this entity not
resident in Spain you must designate an entity resident in Spanish territory to maintain documentation.
This should be without prejudice to the duty of any of the entities belonging to a group to provide, at the request of the
Administration, all documents relating to that group.
C. Groups and entities of small size
Those groups that meet the requirements of Art. 108 (special scheme for small size entities) shall be exempt from the
preparation of the documentation block taxpayer group.
Also, in connection with the required documentation to taxpayer, the Tax Act provides for a number of shortcuts requirements applicable to entities that meet the requirements of art documentation. 108 of the Tax Act, and will vary depending
on the persons or entities involved in the operation and the type of transaction carried out.
For example, in the case of a society of small size make a real estate transaction with its unique partner individual, will
only be necessary to document the operation as follows: identification of persons involved in the operation; description of
the valuation method chosen for the transaction as well as the reasons for its implementation; and any other factor that
the taxpayer considers relevant in determining the market value of the transmission.
D. Waivers required to document
In addition to the above in the immediately preceding paragraph, the Corporation Tax Act sets out exemptions from
the obligation to document the operations carried out between related entities. These exemptions are specified in the
following:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
101
Transactions between entities in a group taxed under the tax consolidation regime Corporation Tax.
Those made with its members by Economic Interest Groups, Temporary Business and Development Companies registered in the Special Register of the Ministry of Economy and Finance Unions.
Those made in the field of Public Offerings and Takeover of values.
Regarding the impact of the current regulations related to the groups who have opted for the application of the income tax
consolidation of operations include, however, that these groups find it equally applicable obligation to assess the material
operations for its fair market value.
However, according to the aforementioned exemption, it may be appropriate to assess the benefits that can offer this
special scheme in an environment in which we find ourselves in front of a group in which a large number of internal operations is made, given the simplification that could lead in the administration thereof.
In this sense, this analysis must be carried out in any case during the previous year to which it intends to apply the
scheme, since the adoption of the relevant agreements should be conducted prior to the start of the tax period in which
the scheme takes effect. For example, if the application of the group for the year beginning January 1, 2010 is intended,
you should decide to apply this scheme and notify the Tax Agency in 2009.
E. Information to be included in the statement of income tax
The new model of corporate income tax declaration contains a specific section of information transactions with related entities. The statement should cover all information regarding operations conducted from February 19, 2009 when
amounts at market value exceeding € 100,000.
The information to be included in the declaration is as follows:
• Identification of the related entity with which the operation is performed.
• Type of binding relationship, as defined in art. 16.3.
• Type of operation performed and whether it is income or expense.
• Valuation method used, as defined in art. 16.4.
• Amount of the transaction.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
102
F. Deductibility of services provided by entities related
The Corporation Tax Act sets out specific requirements for deductibility of services received from related entities. Basically, these requirements are specified in the services received produce or may produce real benefits to the host society.
To verify this fact, we ask ourselves, among other things, whether the beneficiary had acquired the services of a non
related entity and whether such services received are somehow related to their business.
G. Cost-sharing arrangements
• The deduction of expenditure incurred under a cost sharing agreement is conditional upon the following requirements:
• Persons or entities involved in the agreement should be owners of assets or have rights that have similar economic
consequences.
• The contribution of each person or entity must provide the benefit or utility expect to get.
• The agreement must stipulate changes in their circumstances or persons or entities, establishing the necessary adjustments and compensatory payments.
• The agreement must meet the following requirements:
• Identification of the participating entities.
• Activities and projects covered by the agreements.
• Duration of the agreement.
• Criteria for quantifying the expected distribution of benefits among stakeholders.
• Calculation of the respective contributions.
• Specification of tasks and responsibilities assumed by the participants.
• Consequences of membership or withdrawal of shareholders, and any other provision for adapting the terms of the
agreement subject to any change in the economic circumstances of the agreement.
H. Transactions with tax havens
It should be noted that the income tax regulation imposes specific obligations to transactions with tax havens, in cases
where there is no binding relationship between the parties.
No duty shall be payable in respect of the above services and international sales, including commissions mediation when:
• There are valid economic reasons to operate with tax havens.
• It shows that the agreed value is comparable to transactions with persons or entities not resident in tax havens.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
103
I. Processing of pricing agreements
In cases in which the valuation of transactions between related parties offer a special difficulty, for example, for lack of
affordable operations, it can be assessed the possibility of submitting a request to the Administration to get an opinion.
With this, it will get give greater legal certainty for the related party transactions undertaken.
Generally, the tax law provides that advance pricing agreements have effects on the operations performed after the date
it is approved and will extend the tax periods specified in the agreement itself, to a maximum of four. However, the tax law
provides that agreements also likely to affect the operations of the current and previous tax period, if it had not expired
settlement period.
Documentation Group
According to the regulations, this block should include the following information:
• Overview of the organizational, legal and operational structure of the group. Dataset.
• Identification of the different entities that form part of the group, perform related operations that affect, directly or indirectly, to the taxpayer. The information corresponding to each of the persons or entities specified will be considered.
• General description of the nature, amounts and flows of transactions between group entities to the extent that they
affect, directly or indirectly, to the taxpayer. Dataset.
• Overview of the functions performed and risks assumed by the different entities of the group to the extent that they
affect, directly or indirectly, the operations performed by the taxpayer. Dataset.
• List of ownership of patents, trademarks, trade names and other intangible assets to the extent that they affect, directly
or indirectly, to the taxpayer and its related operations and considerations of its use. The information corresponding to
each of the persons, entities and amounts of data will be considered.
• Description of group policy on transfer pricing method that includes pricing adopted by the group and explain its relevance to the principle of free competition. Dataset.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
104
• Relationship of cost sharing agreements and contracts for services between group entities when they affect, directly or
indirectly, to the taxpayer. Each cost sharing agreements and contracts for the provision of services shall be considered
data.
• Relationship of advance pricing agreements or friendly concluded or ongoing procedures relating to group entities
when they affect, directly or indirectly, to the taxpayer. Each of the advance pricing agreements and mutual agreement
procedures will be considered a fact.
• Report of the group or, failing that, an equivalent annual report. Dataset.
Documentation taxpayer
According to the regulations, this block should include the following information:
• Name or company name or full name, legal address and tax identification number of the taxpayer and persons or entities with which the operation is conducted, as well as detailed description of the nature, characteristics and amount.
The information corresponding to each of the persons or entities specified will be considered.
• Comparability analysis in terms of art. 16.2 of the Regulation for determining the market value. Dataset.
• Comparability between operations will be determined, to the extent that they are relevant for the following circumstances:
• characteristics of the goods or services concerned.
• The duties undertaken by the parties involved in the operation, identifying the risks assumed and assets used considering.
• The contractual terms agreed in the operations envisaged: responsibilities, risks and benefits assumed by each party.
• The characteristics of the markets in which the goods are delivered or services are rendered, and such other economic
factors that may be relevant.
• Any other relevant circumstances, such as business strategies.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
105
• Valuation method chosen, and as applicable, and the specification of the value or range of values derived thereof.
Dataset.
• Criteria sharing services together for several people or entities, as well as the relevant agreements, if any, and cost
sharing agreements. Dataset.
• Any other relevant information that the taxpayer has been ordered to determine the valuation of its related operations
and the undersigned shareholder agreements with other partners. Dataset.
12. DOUBLE TAXATION CONVENTIONS
In the event that the taxpayer is resident in a country with which Spain has signed agreement to avoid double taxation,
it should be understood what is available on it, because, in some cases, the tax is lower, and if certain circumstances,
can not be taxed in Spain. In those cases in which the income is not taxed in Spain or are taxed at a lower rate, the nonresident taxpayer must demonstrate that it is resident in a country with which Spain has signed the Convention on the
corresponding certificate issued by the tax authorities in the country of residency.
12.1. Countries with double taxation agreement with Spain on Income Tax and
Wealth Tax
European Union
Country
Date
BOE
• Antiguo Convenio
05-12-1966
08-04-1968
• Nuevo Convenio (21)
03-02-2011
30-07-2012
Austria (1)
20-12-1966
06-01-1968
Bélgica
14-06-1995
04-07-2003
06-03-1990
12-07-1991
08-05-1980
14-07-1981
19-05-2005
23-05-2006
Alemania:
(10)
Bulgaria (12)
República Checa
(11)
Croacia (13)
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
106
European Union
Country
Date
BOE
03-07-1972
28-01-1974
08-05-1980
14-07-1981
Eslovenia (11)
23-05-2001
28-06-2002
Estonia
03-09-2003
03-02-2005
Finlandia (2)
15-11-1967
11-12-1968
Francia
10-10-1995
12-06-1997
Grecia
04-12-2000
02-10-2002
Hungría (11)
09-07-1984
24-11-1987
Irlanda
10-02-1994
27-12-1994
08-09-1977
22-12-1980
04-09-2003
10-01-2005
22-07-2003
02-02-2004
03-06-1986
04-08-1987
Malta (3) (11)
08-11-2005
07-09-2006
Países Bajos
16-06-1971
16-10-1972
Polonia (11)
15-11-1979
15-06-1982
26-10-1993
07-11-1995
21-10-1975
18-11-1976
Rumania (12)
24-05-1979
02-10-1980
Suecia
16-06-1976
22-01-1977
Dinamarca (6) (15)
República Eslovaca
(11)
(11)
(3)
Italia
Letonia
(11)
Lituania (11)
Luxemburgo
(16)
Portugal
Reino Unido
(4)
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
107
RESTO EUROPA
País
Fecha
BOE
Albania (19)
02-07-2010
15-03-2011
Bosnia y Herzegovina
05-02-2008
05-11-2010
Georgia (19)
07-06-2010
01-06-2011
Islandia
22-01-2002
18-10-2002
Kazajistán
02-07-2009
03-06-2011
Macedonia
20-06-2005
03-01-2006
Moldavia (17)
08-10-2007
11-04-2009
Noruega (7)
06-10-1999
10-01-2001
Federación Rusa
16-12-1998
06-07-2000
Serbia
09-03-2009
25-01-2010
Suiza
26-04-1966
03-03-1967
05-07-2002
19-01-2004
01-03-1985
22-09-1986
(14)
Turquía
Antigua URSS
(5)
AMÉRICA
País
Fecha
BOE
• Antiguo Convenio (22)
21-07-1992
09-09-1994
• Nuevo Convenio (23)
11-03-2013
14-01-2014
Barbados
01-12-2010
14-09-2011
Bolivia
30-06-1997
10-12-1998
Brasil (9)
14-11-1974
31-12-1975
Canadá
23-11-1976
06-02-1981
Argentina:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
108
AMÉRICA
País
Fecha
BOE
Chile
07-07-2003
02-02-2004
Colombia
31-03-2005
28-10-2008
Costa Rica
04-03-2004
01-01-2011
Cuba
03-02-1999
10-01-2001
Ecuador
20-05-1991
05-05-1993
Estados Unidos (3) (18)
22-02-1990
22-12-1990
Jamaica
08-07-2008
12-05-2009
México
24-07-1992
27-10-1994
Panamá
07-10-2010
04-07-2011
Salvador, El
07-07-2008
05-06-2009
Trinidad y Tobago
17-02-2009
08-12-2009
Uruguay
09-10-2009
12-04-2011
Venezuela
08-04-2003
15-06-2004
(8)
ASIA
País
Fecha
BOE
Arabia Saudí
19-06-2007
14-07-2008
Armenia
16-12-2010
17-04-2012
China
22-11-1990
25-06-1992
17-01-1994
15-12-1994
Emiratos Árabes
05-03-2006
23-01-2007
Filipinas (3)
14-03-1989
15-12-1994
Hong Kong
01-03-2011
14-04-2012
Corea
(3)
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
109
ASIA
País
Fecha
BOE
08-02-1993
07-02-1995
30-05-1995
14-01-2000
Irán
19-07-2003
02-10-2006
Israel
30-11-1999
10-01-2001
Japón
13-02-1974
02-12-1974
Malasia
24-05-2006
13-02-2008
Pakistán
02-06-2010
16-05-2011
Singapur
13-04-2011
11-01-2012
Tailandia
14-10-1997
09-10-1998
Vietnam (3)
07-03-2005
10-01-2006
India
Indonesia
(20)
ÁFRICA
País
Fecha
BOE
Argelia
07-10-2002
22-07-2005
Egipto (13)
10-06-2005
11-07-2006
Marruecos
10-07-1978
22-05-1985
Sudáfrica
23-06-2006
15-02-2008
Túnez
02-07-1982
03-03-1987
(1) This Agreement is modified in Articles 2, 3, 11 and 24 by the Protocol signed on 24-02-1995, published in the Official Gazette on
October 2, 1995.
(2)
Amended by exchange of notes of 18 and 24 August 1970 (BOE of February 2, 1974); of February 22, 1973 (BOE of 24 April 1974)
and 27/04/90 (BOE of 28 July 1992).
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
110
(3)
Not applicable to wealth tax.
(4)
Amended by the Exchange of Notes 13-12-1993 and 17-06-1994 (BOE of 25 May 1995).
(5) Applicable to Ukraine, Belarus, Moldova, Georgia, Armenia, Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan and
Kyrgyzstan. By exchange of letters between Spain and the countries listed below, the agreement to avoid double taxation between
Spain and the USSR, March 1, 1985 ceases to have effect from the dates shown below:
Country
Date
B.O.E.
Armenia
10-10-2007
23-06-2010
Azerbaiyán
28-01-2008
23-06-2010
Georgia
10-10-2007
23-06-2010
Moldavia
01-10-2007
23-06-2010
kazajstán
08-07-2008
23-06-2010
Uzbekistán
21-07-2010
11-10-2010
(6)
This agreement is modified in Articles 2, 3, 9, 10, 14, 17, 19, 22, 24 and 25 and Article 29 has been deleted by the Protocol signed
on 17-03-1999, published in the BOE 17-05-2000.
(7)
The provisions apply from 01-01-2001 and from this date shall cease to apply the agreement signed on 04.25.1963.
(8)
Amended by exchange of notes 09-11-1999 and 30-12-1999 (BOE 10-01-2001).
(9)
See Resolution 22-09-2003 (BOE 02-10-2003) on different points of interpretation of the Convention.
(10) Its provisions apply from 01-01-2004 (Additional Act of 22 June 2000 amending the Convention and the Protocol of 14 June 1995)
and from this date shall cease to apply to the Convention signed on 24 -09 to 1970.
(11) From May 1, 2004 these countries join the European Union (EU).
(12) EU member state since January 1, 2007.
(13) The provisions apply from 01-01-2007.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
111
(14) This Agreement is modified by the Protocol of 29 June 2006 (BOE 27-03-2007).
(15) This Agreement and the Amending Protocol has been denounced by Note Verbale of 10 June 2008 the Embassy of Denmark (BOE
19-11-2008). As a result, the Convention and its amending Protocol makes this into force on January 1, 2009.
(16) Amended by Protocol 10-11-2009 (BOE 31-05-2010), comes into force on 16-07-2010.
(17) Its provisions apply from 01-01-2010.
(18) See Amicable agreement on the treatment of limited liability companies (LLC), U.S. type S Corporations (S Corporations) and other
business entities considered partnerships (partnerships) or entities not subject to U.S. tax on companies (BOE 13-08-2009).
(19) Corrigendum (BOE 26-05-2011).
(20) Applicable to East Timor.
(21) Its provisions apply from 01-01-2013.
(22) On June 29, 2012 Argentina denounced the agreement to avoid double taxation. Under this complaint and in accordance with
Article 29 of the Convention shall cease to have effect from 1 January 2013.
(23) Its provisions apply from 01-01-2013.
13. TAX HAVENS
In Spanish law there is a wide range of penalizing rules intended to discourage the use of tax havens. So, unlike anything ever seen before, where the taxpayer resides or operates in or from a territory that is fiscally tax haven tax status
deteriorates.
Thus, the operations performed by legal and natural persons or residents with offshore entities persons are valued at the
price agreed in normal market conditions between independent parties.
Also not be deductible in heritage taxes costs, unless the expenditure in question meets an operation performed by valid
economic reasons.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
112
Similar to the scheme related transactions, there are cost consequences when conducting business with persons resident
in countries or territories considered tax havens. For these cases, the following documentation requirements is requested:
a) Name or trade name or full name, legal address and tax identification number of the taxpayer and persons or entities
with which the operation is conducted, as well as detailed description of the nature, characteristics and amount. It
should also identify people who, on behalf of such persons or entities, involved in the operation.
b) Analysis of comparability.
c) An explanation regarding the selection of the valuation method chosen, including a description of the rationale behind
the choice of the same, and as applicable, and the specification of the value or range of values derived thereof.
d) Criteria for allocating expenses for services provided jointly in favor of more persons or entities resident in tax havens,
as well as the relevant agreements, if any, and cost sharing agreements.
e) Any other information that the taxpayer has been ordered to determine the valuation of its operations.
These obligations are not enforceable documentation services and international sales of goods, including mediation commissions them, as well as accessories and related expenses, if the following conditions are met:
a) Economic Reason: The taxpayer must prove that the conduct of the operation through a country or territory considered
as a tax haven responds to the existence of valid economic reasons.
b) Value agreed to comparable transactions: The taxpayer performs comparable transactions with persons or entities not
resident in countries or territories considered tax havens, must show that the agreed value of the transaction corresponds to the agreed value in these comparable transactions.
The countries listed are given a very strict regime, subject to administrative procedure for investments to and / or from the
same without the right to invoke the double taxation agreement. These countries are:
1. Principado de Andorra (10)
17. República de Dominica
33. Islas Turks y Caicos
2. Antillas Neerlandesas (4) (11)
18. Granada
34. República de Vanuatu
3. Aruba (5)
19. Fiji
35. Islas Vírgenes Británicas
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
113
4. Emirato del Estado de Bahrein
20. Islas de Guernesey y de Jersey
(Islas del Canal)
36. Islas Vírgenes de Estados Unidos de América
5. Sultanato de Brunei
21. Jamaica (6) (7)
37. Reino Hachemita de Jordania
6. República de Chipre
22. República de Malta (3)
38. República Libanesa
7. Emiratos Árabes Unidos (2)
23. Islas Malvinas
39. República de Liberia
8. Gibraltar
24. Isla de Man
40. Principado de Liechtenstein
9. Hong-Kong (17)
25. Islas Marianas
41. Gran Ducado de Luxemburgo, por lo que respecta a las
rentas percibidas por las Sociedades a que se refiere el
párrafo 1 del Protocolo anexo al Convenio, para evitar la
doble imposición, de 3 de junio de 1986 (8)
10. Anguilla
26. Mauricio
42. Macao
11. Antigua y Barbuda
27. Montserrat
43. Principado de Mónaco
12. Las Bahamas (15)
28. República de Naurú
44. Sultanato de Omán
13. Barbados (16)
29. Islas Salomón
45. República de Panamá (13)
14. Bermuda
30. San Vicente y las Granadinas
46. República de San Marino (12)
15. Islas Caimanes
31. Santa Lucía
47. República de Seychelles
16. Islas Cook
32. República de Trinidad y Tobago (9)
48. República de Singapur (14)
(1)
Shall be considered tax haven countries or territories specified in the regulations. Until they are identified, consideration shall be
given countries or territories referred to in Article 1 of Royal Decree 1080/1991 of 5 July, by which countries or territories referred
to in Articles 2 shall be determined, paragraph 3 No. 4, of Law 17/1991 of May 27, on Urgent Fiscal, and 62 of Law 31/1990 of 27
December on the State Budget for 1991 (Second Transitory Provision Act 36/2006).
They cease to qualify as a tax haven countries or territories should have signed an agreement with Spain to avoid double taxation
with provision for exchange of information or an agreement to exchange information on tax matters in which expressly states that
no longer have such consideration, from the time these agreements or agreements apply.
Countries or territories to which the preceding paragraph again be regarded as a tax haven from the time that such agreements or
arrangements no longer apply (First Additional Provision Law 36/2006 of November 29, 2006, from measures to prevent tax fraud).
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
114
(2)
The Convention between Spain and the United Arab Emirates to avoid double taxation came into force on 2/04/2007 (see Annex I).
(3)
The Convention between Spain and Malta to avoid double taxation came into force on 12/09/2006 (see Annex I).
(4)
From 27-01-2010 (date of entry into force of the Agreement on Exchange of Information on Tax Matters - BOE 24-11-2009 -) ceases
to qualify as a tax haven.
(5)
From 27-01-2010 (date of entry into force of the Agreement on Exchange of Information on Tax Matters - BOE 23-11-2009 -) ceases
to qualify as a tax haven.
(6)
The Convention between Spain and Jamaica to avoid double taxation came into force on 16.05.2009 (see Annex I).
(7)
The companies referred to in paragraph A paragraph of Protocol V of the Convention are excluded from it and the effects of the
implementation of the first additional Law 36/2006 on measures for the prevention of tax fraud provision.
(8)
From 16-07-2010 (date of entry into force of the Protocol amending the Convention-BOE 3105-2010 -) ceases to qualify as a tax
haven.
(9)
The Convention between Spain and Trinidad and Tobago to avoid double taxation came into force from 2812 to 2009 (see Annex
I).
(10) From 10-02-2011 (date of entry into force of the Agreement on exchange of information in tax matters-BOE 23-11-2010 -) ceases
to qualify as a tax haven.
(11) Since October 10, 2010 (date of dissolution of the Netherlands Antilles) Curaçao and St. Maarten became autonomous states of
the Kingdom of the Netherlands. The remaining islands (Bonaire, Saba and St. Eustatius) became special municipalities of the
Kingdom.
(12) From 02-08-2011 (date of entry into force of the Agreement on exchange of information in tax matters-BOE 06-06-2011 -) ceases
to qualify as a tax haven.
(13) The Convention between Spain and Panama to avoid double taxation came into force on 25-07-2011 (see Annex I).
(14) From 01-01-2013 (date of implementation of the Convention-BOE 11-01-2012 -) ceases to qualify as a tax haven.
(15) From 17-08-2011 (date of entry into force of the Agreement on exchange of information in tax matters-BOE 15-07-2011 -) ceases
to qualify as a tax haven.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
115
(16) From 14-10-2011 (date of entry into force of the Convention for the avoidance of double taxation between Spain and BarbadosBOE 14-09-2011 -) ceases to qualify as a tax haven.
(17) From 01-04-2013 (date of implementation of the Convention-BOE 14-04-2012 -) ceases to qualify as a tax haven.
14. ECONOMIC AND FISCAL REGIME OF CANARIES
Canary has historically enjoyed an economic and tax differentiation in order to compensate the effect of insularity. Spain’s
accession to the EU has been a modernization of the economic singularity, reflected in the new bases of economic and
tax system, which keeps the islands in exceptional conditions for the promotion of trade and conversion.
14.1. Fiscal Incentives in the REF
14.1.1. The Canary Islands Investment Reserve (RIC)
Tax incentive that allows a reduction in income tax of up to 90% of retained earnings through the provision of a Special
Investment Reserve (RIC). The distributed profit must not come from establishments located in Canary without, in any
case, the application can that determine the reduction of the tax base is negative. This investment must meet a number
of requirements:
1) Materialize booking in any of the following investments:
»» Purchase of fixed assets.
»» Subscription of securities or entries Canaries Public Debt securities.
»» Subscription of shares in the capital of companies that invest in the Canaries and Job Creation.
2) The deadline for this embodiment is 3 years starting from the date of accrual of the tax year of the allocation.
3) Fixed assets must remain in the company for 5 years or for the life of the item. The remaining investments must remain
in the company for 5 years.
They are eligible for this tax incentive companies and other legal entities subject to corporate income tax in relation
to their establishments in the Canary Islands.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
116
Similarly, individuals subject to Income Tax of Individuals relating to business and professional activities performed by
establishments in the Canary Islands, provided that their net income determined by direct estimation.
4) Entities that are principally engaged in the provision of financial services or the provision of services to entities belonging to the same group of companies within the meaning of paragraph 3 of Article 16 of the Consolidated Text of the
Corporate Income Tax Law (CIT Law) They may only make transfers to the RIC when materialize in any of the initial
investment to which reference will be made later.
For this purpose the following points are established:
»» Will be considered whose main activity is the provision of financial services, credit institutions, companies investment services, insurance companies, corporations and mutual funds, financial or non-financial, pension funds,
mutual funds securitization, the management companies of collective investment institutions, pension fund or
securitization funds, companies and venture capital funds and management companies of venture capital entities,
entities whose principal activity is the holding of shares or shares issued by financial institutions, mutual guarantee
companies and foreign entities, whatever their name or status, which, according to the rules applicable to them,
engaged in the typical activities of the above.
5) Conditions of investments for the enjoyment of tax incentives
a) Investments in aircraft that improve connections in the Canary Islands
In accordance with the provisions of the Regulation, the RIC aircraft materializes help improve the connections of
the Canary Islands where more than 50% of its flights are aimed to provide transport services between the Canary
Islands or between them, and other territories during the holding period of the investment referred to in Article 27.8
of Law 19/1994
b) Transmission “mortis causa” of economic operations
The regulation states that in cases of transmission “mortis causa” of all or part of the assets related to economic
exploitation or an industry, person or acquiring institution is subrogated to the position of the transferring person
and assume the fulfillment of the requirements for consolidating the tax benefit enjoyed by the latter. In the event
that the RIC was not realized at the time of the transfer, the transferee shall comply with the obligations of the
transferor realization within you subtract the latter to fulfill that obligation.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
117
c) Date of realization of the amounts allocated to the reserve for investments in equity underwriting
Regulation establishes that in cases of materialization of the RIC through the subscription of shares in companies
that develop their activity in the Canary Islands, in ZEC entities or shares issued by companies and venture capital
funds or funds (numbers 1, 2 and 3 of Article 27.4 of Law 19/1994) shall be deemed to have occurred materializing
from the date that the issuer thereof puts into operation the acquired assets.
d) Conditions for letting of property
As established by Law 19/1994, in Article 25.4 f) (relating to indirect tax exemption on the purchase of investment
goods) and Article 27.8 (RIC) can only apply these tax incentives in the acquisition of property for lease if these
affect any of the following activities:
»» Tourist activities referred to Law 7/1995 of 6 April, on Tourism of the Canary Islands, regardless of where the
property be located.
»» The development of industrial activities within divisions 1-4 of the first section of tax rates (IAE), approved by
Royal Decree 1175/1990.
»» The development of commercial activities in areas located in areas where tourism is in decline.
e) Definition of commercial and tourist areas whose areas is declining
Shopping areas (referred to in the cases of land acquisition and leasing of properties) are considered centers, commercial galleries or local business individually, including parking areas, common areas and equipment, who are
staying in an area located which tourism is in decline.
14.1.2. Deduction for Investment in Canary
This deduction is a deduction from the tax payable after the application of deductions for double taxation and possible
bonuses. The amount of the deduction is in each case, calculated by applying the percentage of deduction legally stipulated for each type of investment on the total amount of investments. Special arrangements for deduction shall be eligible
for investments Canary Islands:
• Companies and other legal entities subject to corporate income tax with tax residence in the Canary Islands, in relation
to investments made and remain in the Canaries.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
118
• Companies and other legal entities not having their tax residence in the Canary Islands, for establishments permanent
located in the Canary Islands, where the investments are made and remain in the islands.
• Individuals engaged in professional activities and the Canary Islands, provided they meet the restrictions and conditions imposed by the Income Tax regulations.
Other exemptions:
The REF recognizes exemptions Transfer Tax and Stamp Duty for companies resident in the Canary Islands. These
exemptions apply to newly created companies, or already formed within 3 years from its establishment or extension,
provided that investment goods are located in the Canary Islands, decide: increases in capital, or modernize, expand or
relocate their facilities.
14.2. ZEC
The ZEC is a low tax regime, which is created under the Economic and Fiscal Regime of the Canary Islands with the aim
of promoting economic and social development of the archipelago and diversify its production structure.
The ZEC was authorized by the European Commission in January 2000 and extended in December 2006, proceeding, by
the Spanish Government, the adaptation of legislation Economic and Fiscal Regime of the Canary Islands with regard to
the ZEC, under the terms of such licenses (Title V of Law 19/1994 (as amended by Royal Decree-Law 12/2006)).
The enjoyment of the benefits of ZEC initially remain in force until 31 December 2019. Authorizing the registration in the
Official Register of ZEC (ROEZEC) will initially be limited in time to 31 December 2013.
14.2.1. Taxation
Corporation Tax
ZEC entities are subject to income tax in force in Spain at a rate of 4% Societies. The tax rate is set in Spain, from the
year 2008, at a rate ranging between 25% and 30%. The special rate of 4% will apply to a maximum amount of taxable
income, depending on the number of jobs created and the type of activity carried out by the ZEC Entity.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
119
Tax scale
The special rate applies only to the portion of the tax base to match the lesser of the following amounts:
a) The amount calculated by applying the tax base by the percentage in the previous rule.
b) The amount, based on job creation and activity, resulting in the following table:
IndustrialActivities
Euros
Services
Euros
Between 3- 8
1.800.000
1.500.000
Between 8 - 12
2.400.000
2.000.000
Between 12 - 20
3.600.000
3.000.000
Between 20 -50
9.200.000
8.000.000
21.600.000
18.000.000
120.000.000
100.000.000
Job creation
Between 50 - 100
More than 100 workers
Transfer Tax
ZEC entities are exempt from taxation by this tax in the following cases:
• The acquisition of property and rights for the development of the activity of the ZEC Entity in the geographical area of
the ZEC.
• The corporate transactions by ZEC entities, except its dissolution.
• The legal instruments related to the operations of these entities in the geographical area of the ZEC.
IGIC
The IGIC is the canary indirect tax on final consumption, replacing the payment of Value Added Community (VAT). The
nature of IGIC is similar to VAT, but with important differences, such as lower tax rates, with the CIIGT rate of 5%. In the
regime of the ZEC shall be exempt from taxation by the IGIC the supply of goods and services effected by ZEC each other,
as well as imports of goods by the same.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
120
Double Taxation Conventions, Parent-Subsidiary Directive and Income Tax for Non-Residents
The Canary Islands are part of the Spanish and Community. Accordingly:
• ZEC Entities eligible for the agreements to avoid double taxation, signed by Spain.
• ZEC Entities eligible for the Parent-Subsidiary Directive of the European Union, so that dividends paid by subsidiaries
ZEC to their parent companies resident in another EU country, be exempt from withholding.
• The ZEC legislation provides that the exemptions described below also apply to income derived by residents of states
not members of the EU when such income may be paid by a ZEC Entity and come from transactions physically and
effectively in the field Geographic ZEC.
Individuals: interest and other income earned by the transfer to third parties of own capital as well as capital gains from
movable property, obtained through a permanent establishment.
Legal persons: the profits distributed by subsidiaries resident in Spanish territory to their parent companies.
These exemptions will not apply where the income is obtained through havens or territories with which there is no effective exchange of tax information or where the parent company has its tax residence in one of these countries or territories.
15. TAXATION OF THE BASQUE COUNTRY AND NAVARRE
15.1. The Basque Country
Key Features
Taxation and financing of the Basque Country, based on the historical rights of Provincial Territories has its own characteristics. Its uniqueness is recognized in the First Additional Provision of the Constitution, is collected in the Autonomy
Statute which provides that tax and financial relations between the State and the Basque Country order shall be governed
by the traditional provincial Economic Agreements.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
121
The Economic Agreement current (Law 12/2002 of May 23, BOE 24/05/2002), Chapter I stated in the relevant respects to
the tributary relations, devoting Chapter II financial relationships. In September 2008, the Court of Luxembourg has ratified the full force of the Basque Economic Agreement and the ability of it to set taxes in Euskadi, although different from
those established in the rest of Spain.
The Basque Tax System
The system determines that the Basque Economic Agreement have its own tax system with regulations and management
capacity that usually hold the tax administrations of the States. This does not prevent the concert from including relevant
tax harmonization standards that ensure the harmonious development of the different tax systems, the Basque Country
and the rest of the Spanish state.
Tax competition Basque Institutions lies in its three provinces, Alava, Bizkaia and Gipuzkoa. However, it is the Basque
Government to approve the rules on coordination, harmonization and fiscal cooperation. In exercise of these powers, the
Basque Parliament approved the Law 3/1989, where these principles are developed and where the Appellate Tax Coordination Euskadi is created, with representation from the Provincial Councils and the Basque Government, which seeks
to promote the principles of coordination, collaboration and harmonization of the tax system of the three provinces of the
Basque Country.
All taxes that make the tax system is administered and collected by local finance in terms of sharing content requirements
and regulations Concert
From a regulatory point of view, and in regard to direct taxation, the Basque Country has its own Income Tax of Individuals, their own income tax and their own Tax and Wealth Tax inheritance and Donations.
Also, the Economic Agreement provides local finance competition for levy of income tax nonresident, must apply the
same rules of the State, except in the case of non-residents with a permanent establishment in the Basque Country, in
which case have regulatory capacity and apply the same rules established in the Income Tax.
Regarding indirect taxation, the degree of harmonization in the two major taxes, Value Added Tax and Excise, is almost
complete, derived from the very nature of these taxes have been harmonized throughout the whole European Union. Thus
the powers of the Provincial Treasury are restricted to specific aspects of the administration tax. By contrast, the third
figure of indirect taxation by their revenue potential, the transfer tax and stamp duty, can be regulated independently by
Basque institutions.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
122
The relevance that set taxes have called on the set of fiscal policy can be the amount collected.
The Financing System of the Basque Country
The main feature of the system of financing the Basque Country is its ability to collect almost all of the taxes that make
up its own tax system, helping to finance state expenditures on those matters for which competence has not been transferred to the institutions of the Basque Country.
Chapter II of the Economic Agreement regulates Financial Relations with the Government, that the following general
principles governing:
1)
2)
3)
4)
5)
Fiscal and financial autonomy of the institutions of the Basque Country.
Respect of solidarity.
Coordination and collaboration with the State’s fiscal stability.
Contribution of the Basque Country to State burdens not assumed by the Autonomous Community.
Financial tutelage of Local Authorities. For the institutions of the Basque Country.
Regarding the calculation of the quota, the Economic Agreement provides that every five years, by law, to determine the
appropriate methodology for signaling.
Thus, Law 13/2002 of 23 May, approved the methodology for determining the quota for the period 2002-2006.
15.1.1. Corporation Tax
The Basque tax regulations that apply to entities whose tax domicile is in the Basque Country: If the total volume of operations of the entity in the previous year exceeds 6 million per year, will be that the entity operates in the Basque Country,
in the terms specified in the Economic Agreement, over 25% of its operations. This normative Tax connection obviously
implies that an entity may be subject only to regulations, statutory or common.
The Agreement also includes a connection point on the tax levy. The tax levy corresponds in its entirety to the Provincial
Treasury when the offices are in the Basque Country and its total turnover in the previous year does not exceed EUR 6
million, whatever the place where they operate.
This tax, like the value added tax, the possibility that an entity applying a single policy, allocated among various tax authorities the results of its liquidation, to the extent that the taxable event is set encumbered, has occurred in more than
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
123
one territory. This situation occurs when an entity operates in both territories and the trading volume exceeding 6 million.
In this case, payments will be made in proportion to the volume of operations performed in each territory during exercise.
Features Corporate Tax
Without prejudice to access more detailed information through the regulations Corporation Tax itself in each of the Provinces, the main features that, in general, contain these standards are:
1) Taxable
The taxable event to obtain the taxable income, whatever their source.
2) Taxable
The tax base is calculated from the accounting result and is corrected with adjustments under minus Norma Foral
and, where appropriate, by offsetting tax losses from prior years.
15.1.2. Income Tax for Individuals
Features of Income Tax for Individuals
This tax has been significantly modified in 2007, entering into force of new rules from 1st January. The reform has
achieved a high degree of harmonization between taxes on income of natural of each of the Provinces of the Basque
Country People.
One of the most innovative aspects of the new tax is to eliminate the differences so far in the taxation of income from
savings. Thus, given the same tax treatment are all levied the same tax rate.
For the purposes of determining the tax base, income is classified into general income and savings income, the latter
integrating the rental income from houses, most income from capital, plus capital gains realized in the transfer of assets.
The rest comes from general revenue.
Calculation of the general tax base and the savings will be obtained by the quantification of the full returns and for each
source of income deductible expenses, together with the application of specific treatments (bonuses to salary income,
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
124
number of years that were generated, update the value of acquisition, reinvestment in residence,...), and later, after the
completion of the integration and off between different types of income as they belong to one or other type of income
(general or savings).
Once the general tax base overall tax base resulting from applying reductions for the payment of alimony and annuities
food, inputs and contributions to social security systems, as well as joint taxation is obtained. For its part, the savings tax
base is obtained by reducing the taxable savings in the surplus, if any, of the reduction for payment of spousal support
and maintenance payments.
A general tax base is applied to the tax scale for the whole amount, while the savings tax base is applied to the single tax
rate of 20%.
The tax table contains five sections ranging from 23% minimum marginal rate and 49% of maximum for the highest marginal income.
Calculated the total tax deductions to which they are entitled are practiced: general deduction, personal and family
deductions (for dependent descendants, for the payment of annuities food to children, ascendants who live with the
taxpayer, disability, age), deductions for contributions made to protected heritage disabled person, deduction for investment and financing of the purchase of the residence, rental deduction for the residence, deductions for the promotion of
economic activities (investment and other activities, for employee participation in the company and deposits with credit
institutions for investment in starting an economic activity), deductions for charitable contributions and other deductions
(double taxation and union dues).
Two important new aspects of deductions are, first the creation of the general deduction to be practiced by every reverse,
and second, that the application of the deduction for purchase of residence is made individually by each taxpayer, rather
of each dwelling.
The amount resulting from reducing the overall share of the amount of deductions that apply is the net tax, ie, the amount
to be paid by the taxpayer.
Finally, the result of the calculation will be equal to the difference between the net tax and the amounts paid on account
thereof.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
125
15.2. Navarre
Navarra has the power to maintain, establish and regulate its own tax regime under its statutory scheme. Such power has
historically been exercised by the Autonomous Community and in the current law is expressly laid down in Article 45 of
the Organic Law of Reintegration and Improvement of Navarra Foral Regime.
15.2.1. Corporation Tax
a) Deductions for investments in new tangible fixed assets and investment properties.
Long as they are pertaining to the operation, except land, may give the right to a deduction of the liquid 10% share of
the amount of such investments, provided that the requirements of Article 64 of the Tax Act are met.
Exceptionally, the deduction shall be 15% for previous investments made until the start of activity, companies created
before March 26, 2002, regardless of whether such investments are made after that date.
b) Deductions for conducting scientific research and technological innovation.
Conducting research and development given the right to a deduction from net tax of 40% of new fixed assets and
costs incurred in the tax period for this item.
In addition to the deduction that the above concerns, an additional deduction of 10 shall be effected by 100 the amount
of the following expenses for the period:
a) Staff costs relating to the qualified researchers assigned exclusively to research and development entity.
b) Expenditures for research and development contract with universities, public research or innovation and technology centers located in Spain or any member of the European Union or the European Economic Area.
Achieving technological innovation activities not included in the previous section will give the right to a deduction from
the tax payable 10 100 of expenses incurred in the tax period under the conditions set forth in this paragraph.
The basis of the deduction shall be the amount of expenditure in the period in technological innovation activities that
correspond to the following:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
126
a) Activities aimed at the identification, definition and orientation of advanced technology solutions, regardless of
results culminating in diagnostic technology.
b) Industrial design and engineering of production processes, which include the design and preparation of plans,
drawings and media define descriptive elements, technical specifications and performance characteristics necessary for the manufacture, testing, installation and use of a product as well as the development of textile samples of
the footwear industry, tanning, leather goods, toys, furniture and wood.
c) Acquisition of advanced technology in the form of patents, licenses, “know-how” and designs. Will not be entitled
to deduct the amounts paid to persons or entities related to the taxpayer. The concept corresponding to this basis
shall not exceed the amount of one million euros per year.
d) Obtain a certificate of compliance to quality assurance ISO 9000, GMP or similar series, not including the expenses
associated with establishing these standards.
e) Procurement third of Knowledge Intensive Services (KIS). For the definition of these services is taken as reference
the rules established for the purpose by the Government of Navarre in the context of calls for grants to improve
competitiveness, developed by the Department of Innovation, Enterprise and Employment.
Taxpayers seeking to qualify for this deduction must, in addition to the declaration for tax, present the project to the
previous point, together with an explanatory memorandum thereof, which shall state, in detail, the budget affects the
project cost and the periods in which they will be charged.
c) Deduction for the promotion of information technology and communication.
Dan entitled to a deduction for the full quota of 15 100 investments and expenses related to the period to improve
the accessibility and information management commercial transactions over the Internet as well as improving internal
processes through the use of information technologies and communication, as specified below:
a) Internet Access
b) Internet Presence
c) E-commerce
d) Incorporation of information technology and communications to business processes.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
127
d) Deduction for export activities.
This deduction has been repealed with effect for tax years beginning on or after January 1, 2011, with the sum of 3%
deduction for tax years beginning on or after January 1, 2010.
e) Deduction for training.
Conducting training activities give the right to a deduction from net tax of 15% of the costs incurred during the tax
period.
For the purposes of the provisions of the preceding paragraph shall be deemed professional training, all training activities developed by a company, directly or through third parties, led to the update, training or retraining of staff and
required by the development of their activities or by the characteristics of the jobs. In no event shall be construed as
professional training expenses which, according to the provisions of the Provincial Consolidated Law on Income Tax
of Individuals, considered to be income from employment
The tax credit also applies to those costs incurred by the entity for the purpose of training employees in the use of new
technologies. Included among these expenses are incurred to provide, facilitate, or finance your Internet connection,
as well as derivatives of the free delivery, or discounted prices, or the granting of loans and financial assistance for
the purchase of necessary equipment and terminals for access it with their software and associated peripherals, even
when the use thereof by employees can make off-site and working hours. The expenses referred to this number will be
treated, for tax purposes, the cost of training staff and determined not obtaining performance of work for the employee.
f) Deduction for corporate pension plans employment or mutual provident societies act as an instrument of corporate
welfare contributions.
The taxpayer may deduct from the net tax payable 10 100 imputed employer contributions for those workers who
remunerated with less than 27,000 euros gross annual remuneration, provided that such contributions are made to
pension plans of employment, corporate welfare plans, pension plans regulated by Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational
retirement provision, or mutual social security act as an instrument of social welfare, which is promoting the taxpayer.
Also entitle to deduct corporate contributions for coverage similar to pension plans covered by the Revised Text of the
Law Regulating Plans and Pension Funds, approved by Royal Legislative Decree 1/2002 of contingencies November
29, including those of pensions, provided it is in accordance instrumentalisation Consolidated said.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
128
In the case of workers at or above 27,000 euros gross annual remuneration, the deduction will apply to the share of
corporate contributions that correspond to the amount mentioned in the preceding paragraph.
g) Deduction for conservation activities and improving the environment.
Will be entitled to a deduction from net tax payable 15 100 investment in elements of tangible fixed assets used directly
to reduce and correct polluting impact of the company’s business, provided that such investments were made to improve the requirements of environmental regulations.
h) Deduction for investment in the activity book publishing, film production and a Cultural Goods.
Investments in book publishing that allow the production of a physical medium, prior to mass industrial production,
will be entitled to a deduction from net tax of 5%. Investments in Spanish cinematographic or audiovisual productions
that allow the production of a physical medium, prior to mass industrial production, will be entitled to a deduction from
net tax of 20%. Investments in Cultural Interest give the right to a deduction from net tax of 10% of the investments
actually made in explicit and individualized goods declared of Cultural Interest under the provisions of Foral Decree
217/1986 of 3 October, as well as properties on the General Register of Cultural Interest, or goods included in the inventory referred to General Law 16/1985 of 25 June, the Spanish Historical Heritage.
i) In production for job creation.
Applying a deduction of 4,207.08 euros per share person-year increase in average staff with permanent contract experienced during the year, compared to the average template of the year previous to that arrangement.
In the event that, keeping the average of the total workforce of the previous year, an increase of average template with
permanent contract that exceeds the increase in the average of the total workforce of the entity occurs, the difference
between increases both a deduction of 1,502.53 euros per person-year is applied.
When reducing the average of the total workforce of the previous year an increase of the average template with permanent contract occurs, the deduction provided for in the preceding paragraph shall be effected on the positive difference, if any, of the increase occurring pointed and reducing the average of the total workforce.
The above deductions will be 6,000 Euros and 2,705 Euros, respectively, in the case of disabled workers.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
129
However, for tax periods beginning in 2012 and 2013, the amounts of the above deductions will be increased by 30%
for taxpayers with consideration of small business in accordance with the provisions of Article 50.1. b) of Provincial
Tax Act.
j) Tax credit for reinvestment in the transmission of values.
Be deducted from the gross tax 9 100 the amount of income obtained on the transfer for consideration of values and
integrated into the tax base subject to tax rate of 30 per 100, provided that the amount of these transmissions are
reinvested in the terms and with the requirements of this article.
This deduction shall be 7 per 100, 4 100 and 2 100 when the built-in taxable income taxed at rates of 28, 25 and 23
100 respectively.
In the event that is taxed at the rate of 27 per 100 deduction will be the same as for the rate of 28 per 100.
In the event that is taxed at the rate of 20 per 100 deduction will be the same as for the rate of 23 per 100.
Regional Law states that are considered suitable for the purposes of the deduction, as the transmission elements
entitling it and as elements that can be reinvested, the values that correspond to entities with no assets for economic
activities, according to the balance Finally closed in a percentage higher than 15 percent of active exercise, apply the
deduction (or understood materialized reinvestment) on the part of the income obtained on the transfer (or the realized
value), which corresponds to the percentage attributable assets assigned to the economic activities.
For the purposes of computation, it will take into account the consolidated balance sheet when the values transmitted
(or acquired) are those of the parent company of a group according to the criteria of Article 42 of the Commercial Code.
This percentage can be determined according to market values.
Intangible assets not considered shares, direct or indirect, in the following entities and assets constituting the assets
in them:
»» Values that do not confer an interest in the capital stock or equity.
»» Representative values of participation in the share capital or the equity of entities not resident in Spanish territory
whose incomes do not qualify for exemption under Article 62 of Provincial Law IS.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
130
»» Representative values of collective financial investment.
»» Representative values of entities whose main activity is the management of a property or real estate on the terms
provided in Article 33.1.B) of Provincial Law 13/1992, of 19 November, the wealth tax.
These exclusions are already incorporated by the Regional Law 18/2006 of 27 December and is now maintained with
the sole exception of the aforementioned removal of this category of securities representing states where more than
half of its active compound is not mainly by tangible assets, intangible values or unfit for the purposes of the deduction,
so the scope of this deduction is extended.
Integrated in the case of the tax base of the tax periods starting between January 1, 2007 and December 31, 2008
income, the deduction for reinvestment shall be governed by the provisions of this article in the version in force on
December 31, 2008, whatever the period in which the deduction is practiced
k) Deduction for corporate pension plans employment or mutual provident societies act as a tool for business or social
security contributions to protected assets of persons with disabilities contributions.
The taxpayer may deduct from the net tax payable 10 100 imputed employer contributions for those workers who
remunerated with less than 27,000 euros gross annual remuneration, provided that such contributions are made to
pension plans of employment, corporate welfare plans, pension plans regulated by Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational
retirement provision, or mutual social security act as an instrument of social welfare, which is promoting the taxpayer.
Also entitle to deduct corporate contributions for coverage similar to pension plans covered by the Revised Text of the
Law Regulating Plans and Pension Funds, approved by Royal Legislative Decree 1/2002 of contingencies November
29, including those of pensions, provided it is in accordance instrumentalisation Consolidated said.
Also, the taxpayer may deduct from the net tax payable 10 100 contributions made for protected workers with lower
salaries 27,000 per year, or relatives in direct line unlimited degree or collateral assets to the third degree, their spouses
or persons who, under guardianship, the placement governed by Articles 172 and following of the Civil Code or the
prohijamiento governed by Laws 73 and 74 of the Civil Law Compilation Foral de Navarra or other institutions of similar
nature covered by civil law of another region, they are in charge of those employees; and this deduction will be found
under the following rules:
1) Contributions may not exceed 8,000 per year for each worker or disabled.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
131
2) The excesses that occur on the ceiling under the previous paragraph give the right to the deduction in the following
four tax periods up to, where appropriate, in each corresponding deduction ceiling.
l) Deduction for certain investments on behalf of disabled people.
Will be entitled to a deduction for the full quota of 15 100 investment in access platforms for disabled or anchors fixing
wheelchairs, which are incorporated into vehicles of public transport passengers.
Tax rate
The tax rate is the percentage multiplied by the tax base allows for the full fee.
The rates applicable are:
• General tax rate: 30%
• Tax rate for small business: 28% (27 % conditional on the maintenance or creation of employment in the tax periods
that begin during the years 2010,2011,2012 and 2013).
• Tax rate for small companies (turnover <or = 1 M): 23% (20 % conditional on the maintenance or creation of employment in the tax periods that begin during the years 2010, 2011, 2012 and 2013).
• Tax rate mutual general insurance, social welfare institutions, mutual accident and occupational disease Social Security, Mutual guarantee, counter-guarantee companies, Credit Unions and Societies Rural Banks, Professional, business
associations, Official Chambers, labor unions, organizations and non-profit institutions, Employment Promotion Funds,
Unions, federations and confederations of cooperatives: 25%.
• Tax rate of Cooperative Societies fiscally protected, labor companies: 18% (17 % conditional on the maintenance or
creation of employment in the tax periods that begin during the years 2010, 2011, 2012 and 2013).
• Tax rate of the entities subject to the tax regime Foundations: 10%.
• Corporate tax rate of capital investment, Investment Funds financial, corporate and real estate investment funds: 1%.
• Tax rate of pension funds: 0%.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
132
16. VALUE ADDED TAX
The Value Added Tax is the central figure of the Spanish indirect taxation. The tax is levied, in general, at the time the
provision that the purchaser is performed or where taxable transactions are provided. Similarly, the tax base is the total
amount of the consideration for the transactions subject, from the recipient or third persons (including taxes and charges).
The general tax rate is 21%, with a reduced rate of 10% for housing, veterinary drugs, medical supplies or mopeds,
among others, and a guy I knew r reduced 4% including food, books, medicine, housing protection officer, disabled
vehicles, etc.
16.1. Returns to persons not established in the field of space tax
The current rules governing VAT in art. 119 special professional system returns to certain employers or not established in
the territory of application of the tax. This regime is common to both entrepreneurs and professionals who are established
in the Community, the Canary Islands, Ceuta or Melilla, and other third territories; without prejudice of some specialties
that can be established in the Community.
The new elements introduced in the new refund system, which affects only businessmen or professionals established
in the Community, whose main objective is to improve a refund procedure to be used in a more intensive way. However,
for entrepreneurs or professionals established in third territories or third countries have no relevant developments; the
return system passes regulated in the new art. 119a presenting the same features currently in force, ie, need to appoint
representative and the principle of reciprocity in the state of residence not established.
Returning to the innovations introduced for entrepreneurs and professionals established in the Community, the new refund procedure is based on a single window system in which applicants must submit applications for refund of input tax in
a Member State other than that in which they are established electronically; for this, they will use the full amount of staying
in your state website listing models. Specifically for Spain, through the website of the State Tax Administration the new
art. 117a provides applications for refund of entrepreneurs or professionals established in the territory corresponding to
the application of tax paid on transactions in the Community with the exception of those in that territory tax.
Tax Regulations on Value Added incorporating into national law the provisions of Directives 2008/8/EC and 2008/9/EC is
amended in the part relating to the Income Tax Regulations, as well as almost all of Directive 2008 / 117/CE. This concludes the transposition of the so-called “VAT package” in part due to come into force in 2010, 2011 and 2013.
Directives of two major reforms of the Income Tax Regulations are derived:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
133
• Returns not set: relative to the new single window system, so that entrepreneurs or professionals not established in the
territory of application of the tax refund request of the taxes charged on the same.
• Model 349: corresponding to the revision of the content and deadlines for submission of the summary statement of
intra-Community transactions.
A. Transfer to not established
Regarding the return not established, new arts develop. 117a, 119 and 119a of the Income Tax Act. In particular, pass
such legal precepts correspond to the arts. 30b, 31 and 31 bis of the Rules, respectively:
Procedure for SET in the IAT: s. 30b of RIVA provides one of the most innovative aspects of the new system, how entrepreneurs or professionals established in the territory of application of the tax request, through the forms provided on the
website of the State Tax Administration quotas for return located in other States of the Community operations.
Specifically, the electronic application, received by that agency, shall be promptly forwarded to the State of refund but
must first performed a check of certain aspects of its content, especially the applicant makes generating operations deductibility. The application of this Article shall be, therefore, for businesses or professionals established in the territory of
application of the tax in Spain.
Procedure for NO ESTABLISHED residents in the Community Art. RIVA 31 (development of art. LVAT 119) refers to cases
in which Spain is the State of return and therefore its content lies with those not being established in the territory of application of the tax, bore fees for transactions made on it.
Of that provision should be highlighted issues such as greater accuracy in the content of the request through a form
virtually identical among all Member States, the original invoices not request unless a procedure is open checking or
requesting additional information and further it is deemed necessary, the ability to submit requests quarterly or annually
with revised thresholds or substantial reduction of deadlines to meet, setting in four months generally or up to eight years
if the above test should be performed. After these periods, the Tax Law provides, as was the case in Spain but not in all
Member States, the automatic accrual of default interest accrued under the new mandatory scheme.
Procedure for NO ESTABLISHED residents in third countries: developments in the art. 31a (development of art. 119 bis
of the VAT Law), are much smaller and are only intended to update its content and accommodate certain quantitative,
temporal and formal requirements that are introduced into the art. 31, keeping in any case the specific requirements for
appointment of representative and existence of reciprocity, distinctive elements of this system back.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
134
B. Model 349
The summary statement of intra-Community transactions, best known for the statement through which model is presented, the model 349; constitutes the core of the information exchange system (VIES) between Member States in relation
to intra-Community traffic of goods. From 1 January 2010 the following new features:
Intra Services: the model 349, plus ‘deliveries and intra-Community acquisitions of goods’ and ‘subsequent deliveries’ to
triangular operations in other Member States, such as novelty should also collect information on so-called ‘intra-Community supply of services’ and ‘acquisitions of services’ operations are located and taxed in the State where the recipient is
established thereof.
Deadlines: a general monthly deadline is set, although to the extent that the threshold is not exceeded 100 € 000 during
2010 and 2011 (€ 50,000.00 since 2012) compared to the volume of supply of goods. and services for intra-Community
nature, the presentation will be quarterly.
According to the tenth paragraph of the resolution of the D GT 23-12-2009, presenting the summary statement of intraCommunity transactions (Form 349) is performed through a form that must meet the requirements and technical specifications determined by AEAT to be found hosted on your Web page.
Intra-Community supplies of services the supply of services where the following requirements (Directive 2006/112/EC
art.262.c) are considered:
• That, pursuant to the rules applicable to the same location, understand not borrowed in the TAI.
• That is effectively subject to tax in another Member State.
• Let your recipient is a trader or professional acting as such and file in that Member State established his economic
activity, or have the same permanent establishment or, failing that, the place of domicile or habitual residence, or that
recipient is a legal entity that does not act as an entrepreneur or professional but be assigned an identification number
for tax purposes provided by that Member State.
• The taxpayer is that recipient.
The reporting period and deadlines for submission of the summary statement are as follows (Dir. 2006/112/EC art.263,
RIVA, Article 81):
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
135
In general, the summary statement must be submitted for each calendar month during the first twenty calendar days immediately following month, except for July, which may occur during August and early September twenty calendar days.
Where neither during the reference quarter or each of the four previous calendar quarters the total amount of supplies of
goods and services to be entered in the summative STATEMENTS ion exceeds € 100,000 excluding VAT, the summary
statement must be submitted during the first twenty calendar days of the month immediately following the relevant quarterly period. If at the end of any of the months s that make up each quarter the prescribed amount is exceeded, a summary statement for the month or the months since the beginning of the calendar quarter during the first twenty calendar
days immediately following must be submitted.
The corresponding period in the last summary statement must be filed during the first thirty calendar days of January.
The Minister of Finance may authorize the summary statement refers to the calendar year in respect of those businessmen or professionals where the following two circumstances:
• The total value of the supplies of goods and services, excluding VAT, during the previous calendar year does not exceed
€ 35,000.
• That the total amount of the supply of goods, other than new means of transport, exempt from tax under the VAT Act
(art.25.uno three), during the preceding calendar year does not exceed € 15,000.
• The latter incorporating new forecast resolution DGT simply adheres to recognize annually the presentation model 349
when incorporated into the same performance and intra-Community acquisitions of service.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
C) BUSINESS TO BE
CONSIDERED FOR THE
DISCHARGE OF A COMPANY
IN SPAIN ISSUES FOR FOREIGN
INVESTOR
LEGAL CONTROL Abogados & Consultores de Empresas
137
1. INTRODUCTION
Any foreign investor who will create a company in Spain, must know basic labor principles imposed by our labor laws.
First, if the foreign investor intends to stay or work in Spain, either to intervene personally in the proceedings of opening
either to work in our country, you should take into account the provisions of the Aliens Act, in terms of input, permanence
and exercise activity in Spain.
Moreover, after obtaining the permit or authorization, the investor must know what are the steps for opening a work center
in Spain, and what are the main obligations imposed on companies by the Spanish labor law for the development of an
activity.
To this end, we develop several paragraphs basic labor things you should know any entrepreneur to exercise an activity
in Spain, such as: what should be the documentation that must necessarily have the business, what are the procedures
to follow for the registration of workers and enterprises in Social Security, what types of contracts may enter into with
workers hired for the exercise of that activity, what bonuses to existing contracts currently are, what are the amounts of
fees to be paid to Social Security, when and how are settled, amount, form and terms for payment of wages to contract
workers, what is the applicable law on health and safety, etc.
In general, we refer to the rules applicable to employed persons, we excluded, therefore, the self-employed, who are
governed by the Special Scheme for Self-Employed, where specialties exist as to contributions and benefits, although,
we make a brief reference in a final section of the exhibition.
We do not develop here the Social Security benefits (health care, temporary disability, permanent disability, unemployment, maternity, pensions, etc.), Which require an individualized study.
2. BUSINESS BASICS OF FOREIGN LAW 4/2000
2.1. Entry and stay in Spain
A foreigner who wants to enter Spain must make your posts provided for this purpose, provided passport or travel document proving your identity, and prove sufficient means for the time you intend to stay in Spain.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
138
It must be provided with a visa issued by the diplomatic missions and consular offices of Spain abroad, except in Spain
and be eligible to obtain a residence permit. Situations of foreigners in Spain:
1) Stay for a period not exceeding 90 days. After this time, to stay in Spain must obtain or be an extension of stay or a
residence permit.
2) Temporary Residence, allowed to stay in Spain between 90 days and five years. The lower authorizations may be
extended to 5 years.
3) Long-term residence, permission to stay in Spain indefinitely and work under the same conditions as Spanish. Is
obtained after a period of continuous residence time of 5 years.
4) Special cases: stateless and refugee children, family reunification, etc.
2.2. Access to employment
Foreigners are able to use one of the following ways:
• Quota system established by the Government.
• System repositories upon individual request.
• Singular continuous regularization process.
• Granting of residence permits on humanitarian grounds, exceptional circumstances or situation rooting.
• Family reunification.
• Bilateral agreements between countries.
When they meet the requirements under the Act are entitled to paid or self-employed activities, as well as access to Social
Security System. Residents in Spain can access on equal terms as nationals of the member states of the EU to serve as
the government workforce.
2.3. Permits to work in Spain
Administrative authority: It will be necessary to carry out economic activities as self-employed merchant, industrial, etc.,
Meeting the same requirements as the legislation requires nationals for the opening and operation of the planned activity.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
139
Work Permit: Authorization to perform gainful activities in Spain employed. It will have a duration of less than five years
and may be limited to a territory, sector or activity. It may be renewed, and from its first grant, permissions are granted
without any limitation of geographical area, sector or activity.
After 5 years from the grant of the first license and permit renewals becomes permanent.
The types of permits have limited effect, widens the term and activity to develop, to practice professions and geographic
scope:
• Initial release Residence: Maximum duration of one year.
• Renovated Residence Authorization: Duration of two years.
• Authorization for Permanent Residence: Indefinite and grants from the five years of legal residence, or in special cases
such as recipient of public benefits in Spain, having been born in Spain, being Spanish origin among others.
The Act provides for special arrangements, stay and residence for students, seasonal workers and cross-border workers.
There are exceptions to the obligation to obtain a work permit, both personal circumstances and the type of activity performed, and special authorizations to work for professional practices, stateless refugees enrolled in Spanish vessels, etc.
No need to obtain a work permit foreigners who are in a situation of permanent residence, EU citizens and citizens of Austria, Finland, Iceland, Norway, Sweden and Liechtenstein. Employers who hire a foreign worker must request and obtain
approval of the Ministry of Labour and Social Affairs.
He who wishes to work in Spain, if you practice a profession for which certain specific qualifications or licensing is required, must obtain the approval of their qualifications and / or licensing.
2.4. Rights and freedoms
The Aliens Act provides generally that foreigners enjoy in Spain, the rights and freedoms recognized in the Constitution in
the terms of international treaties in the L 4/2000 as amended by Organic Law 8/2000 Organic Law 2 / 2009, and the laws
governing the exercise of each of them.
The right to organize freely, or join a professional organization under the same conditions as Spanish workers is limited to
obtaining authorization or residence in Spain, and the right to strike is limited to obtaining work authorization. Foreigners
who meet the requirements of specific regulations are entitled to access to the Social Security system:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
140
• Health care: public health care to all aliens who are in Spain if they contract serious diseases or suffer accidents, foreign
pregnant women are in Spain, and under 18 registered in the municipality in which they reside.
• Social Security and Social Services: Whatever the administrative status of the alien shall have access to basic social
services and benefits. If you are a resident may also access specific services.
• Non-contributory: entitled to disability pension and child allowance under the same conditions as Spaniards if they are
legally resident in Spanish territory for a minimum of years established for each case.
2.5. Violations
The use of foreigners without first obtaining a work permit or its renewal, and exercise in Spain of any gainful activity, selfemployed foreigners without having obtained or renewed work permit, can constitute very serious infringements in the
social, punishable by a fine of 3,005.07 to 90,151.82 euros, increased by the amount resulting from the calculation which
would have corresponded to sign social security contributions, from the beginning of the provision of work of the foreign
worker until last day of such service provision is found, or in the second case, the expulsion of the foreigner.
3. OCCUPATIONAL PROCEDURES FOR OPENING OR REOPEN A
WORKPLACE
3.1. Communication to the labor authority
After making arrangements for civil, commercial, tax, financial, proceeds to inform the competent Labour Authority opening a workplace or resumed activity after alterations, additions, or changes of importance, in order to health and safety at
work fulfilling social legislation in general.
If that is not made or consigned inaccurate data qualify as minor breach, and companies considered as dangerous,
unhealthy or harmful by the elements, processes or substances being handled, will be considered as a serious offense.
DEADLINE: 30 days from the commencement or resumption.
METHOD: Of quadruplicate copy in official form indicating: identification of the company, location, type of center and
staff, production data or storage... if the activity to be performed is unhealthy, uncomfortable, harmful or dangerous must
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
141
accompany technical project and specification of the characteristics of the activity. In cases of construction sites is presented Plan Safety and Health at Work.
3.2. Registration of the company in the Social Security
Must be performed before the start of your activity all natural or legal, public or private activity but not to make a profit,
people on whose work included in the scope of the general system of social security in the official models established.
It will be held at the Provincial Office of the General Treasury of the Social Security (Social Security Fund) or the same
government in whose boundaries the domicile of the employer.
A code to each employer contribution account is assigned.
Shall specify who cover professional contingencies and temporary disability (IT) due to common contingencies. The data
changes must be reported within 6 calendar days from occurring. If changes affect undertakings covering professional
risks or economic benefit derived from common IT contingency period is 10 days in advance.
3.3. Affiliation of workers to the SS
All workers included in the scope of the General or Special Conditions that have not done before in the system of the SS,
prior to the initiation of services must join, but in no case can be made before 60 calendar days prior to the scheduled
start.
Preference is paid into the Social Security Fund or competent authority of the province where the company is domiciled.
SS card holder for a membership number will be the same for all his working life and the whole system will sound. The fee
the employer or otherwise the worker directly, can also be performed from the Social Security Fund office.
3.4. Formalizing protection for occupational contingencies staff at your service,
as well as the economic benefit derived from common IT contingency
You can choose between the INSS or Mutual Accident and Occupational Diseases. In this case the Mutual formalize the
partnership document.
Health care, IT and recuperative benefits can also be insured through the company.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
142
3.5. Acquisition and legalization of the Books Registration and Visit
Registration Book
From January 1, 2002, was abolished business requirement to keep a book of registration of company personnel or
employment.
Guest Book
In every workplace, there shall be duly filled out a guest book of the Labour Inspectorate and SS, including self-employed
and owners of establishments or centers having not account for employees.
It will be enabled by the Chief Labour Inspectorate and SS where you file the workplace and will be available to labor
inspectors and sub-inspectors of Employment.
They must be kept for five years after the last diligence.
3.6. Supervised the SS administrators, senior management and worker members
of capitalist corporations
Employees, partners and managers capitalist corporations should fit in:
1) The scope of the General Scheme of the SS working partners capitalist corporations, even if they are members of the
board, if you do not perform functions of leadership and management and possess effective control of the company
as well as directors or managers of capitalist corporations, which have no effective control, if performing functions of
leadership and management are paid for it or for being a worker, although the latter are excluded from unemployment
benefits and wage guarantee fund.
2) The scope of the RETA (Special Scheme for Self-Employed): those who hold leadership and management that involves holding the position of director or manager, or provide other services for a capitalist corporation for profit and so
habitual, personal and direct, provided that in both cases, have actual control of the company directly or indirectly.
It is understood that, in any case, has effective control that has at least half of the share capital. And presumably has the
cash when check:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
143
• At least half of the capital of the company is distributed among partners who live together and be united by marriage
bond or relationship by blood, adoption or affinity to the second degree.
• The participation of social capital is not less than one third.
• That is not less than a quarter, if you have assigned leadership roles and management.
4. WORKERS COMPENSATION. SALARY
4.1. Wage
Salary compensation are all economic perceptions of workers in cash or in kind for the professional provision of labor
services for others, and rewards effective work, whatever the form of remuneration, and rest periods accounted for as
working.
All wage compensation items listed on the SS to be included in the contribution base.
Nonwage compensation which are excluded from the contribution base are considered, and therefore excluded from
contributions to Social Security, as appropriate, up to an amount that is legally fixed, being marketable amounts in excess
thereof.
Remuneration fringe:
a) Per diems and travel allowances, costs of transport and Urban Transportation Plus and Distance.
b) Compensation for death, transfers, suspensions and dismissals.
c) Destruction of currency, equipment and tools wear and acquisition and maintenance work clothes.
d) Goods in kind granted voluntarily by the company.
e) Perceptions marriage: Exempted by the amount.
f) Social Security benefits and improvements.
g) Welfare assignments.
4.2. Composition of Wages
The structure of wages set by collective or otherwise in individual contract negotiations. It should contain:
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
144
• Base Salary (remuneration per unit of time or work).
• Wage Supplements (fixed remuneration depending on the personal circumstances of the employee, the work done or
the situation and results of the company).
They are subject to covenant antiquity, profit sharing, plus distance and transport, workplace complement, raw production by quantity or quality of work, food, accommodation, etc.
Bonuses
There must be at least two of an amount agreed in the Collective Agreement or private agreement. Will become effective
as at Christmas and other CC or private agreement. It can be fixed in CC to be apportioned monthly.
4.3. Obligations of the employer with respect to wages
• Shall pay it in time and place established by receipt of wages shall follow the official model, or established by the collective agreement or by agreement between the employer and employee representatives maintaining clear and separating
the different perceptions of the worker and deductions that are legally due.
• The payslip will refer to calendar months. If you subscribe for shorter periods fertilizers should document such as advance payments of liquidation.
• The receipt shall be signed by the employee when the employer would pay in legal tender or by bank draft or check. In
the case of payment by bank transfer proof of payment of the bank employee’s signature replaced.
• The signature of receipt attesting to the receipt without involving pursuant thereto.
• The employer made so empowered to deduct tax burdens and SS that are legally due on the remuneration of workers.
The minimum wage is computed both remuneration in cash and in kind, and refer to the legal working day in each
activity (must be prorated if less time is done), not being included in the daily wages proportionate share of Sundays
and holidays.
• In case of delays in wage employers must pay 10% statutory interest for late payment.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
145
Income Tax: The employer will withhold and pay each worker in Hacienda percentages of their wages which are calculated based on the total remuneration received and status, family, and called withholding tax Personal Income physical,
and that for 2008 is estimated to whole number.
5. CONTRACT WORK. RULES OF ENGAGEMENT
The employment contract is a bilateral legal business, through which two subjects - employer and employee - enter into
a covenant, in which a continuous exchange between the provision of dependent employment and paid employment and
undertake a wage benefit. They may be performed:
• Verbally.
• Writing: Required for the Practice and Training, made for the completion of a project or service Determined from Temporary replacement, Part-Time, Fixed-Batch Job, Relay, a residence, contracts Employment Promotion, Spain workers
engaged in the service of Spanish companies abroad, and integration contracts where required by statute, and contracts lasting longer than 4 weeks.
If not made in writing shall be presumed, unless proven otherwise, which is permanent and fulltime.
Either party may require that the contract be made in writing, even during the course of employment.
5.1. Information for workers
Where employment is more than four weeks the employer must inform the employee in writing, on the essential elements
of the contract and main terms of execution of the work done, if not contained in the written contract. Well as any changes
in the factors and conditions initially established.
The general information must be provided within 2 months from the start of the employment relationship and changes in
working conditions within 1 month.
In any case before the date of termination of the contract.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
146
5.2. Information for employee representatives
The employer shall provide the legal representation of workers a basic copy of all contracts to be concluded in writing,
except for special employment contracts of senior management on which the duty to notify is set to legal representation
workers.
Within 10 days must be given a copy of the contracts entered into in writing, known as the basic copy, extensions and
allegations made, unless special senior management, representatives of workers.
Settlement documents: together with the notice of termination or notice of cessation or termination of the contract, the
employer must accompany a proposed settlement of amounts owed to the affected worker.
The employee may request the presence of a representative of the workers in the act of signing the settlement.
5.3. Probation
It allows you to set trial periods which may not exceed six months for graduates and two months in the remaining cases
technicians. In companies with fewer than 25 employees, the probationary period may not exceed three months for workers who are not qualified technicians.
Royal Decree 3/2012 has introduced a new type of contract called employment contract for an indefinite period of support
to entrepreneurs in governing a maximum test period of twelve months in any case.
5.4. Communication to the INEM
The employer is obliged to communicate in the public employment office (INEM) purchases made in the company as well
as its extensions within 10 days of its conclusion, the content of employment contracts entered into or the extensions
thereof, must be in writing or not.
6. RULES OF ENGAGEMENT
With the approval of Royal Decree-Law 16/2013 of 20 December, on measures to promote stable employment and improve employability in 2014 has reached the final implementation of a new typology of employment contracts, making
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
147
a remodeling and models from 42 to 4: indefinite, temporary, training and practice. It has carried out the unification of
the standard contract. So that now there is only one form that we fill different pages depending on the type of contract
chosen.
6.1. The terms and contract types
The four MODES s established are: permanent, temporary, contract for training and learning and, finally, in practice
contracts.
Within each of these methods we can find different types, each with its particular characteristics and conditions. For example, are included in the category of permanent contracts the following:
Undefined ordinary.
• People with disabilities.
• People with disabilities in special employment centers.
• People with disabilities from employment enclaves.
• Support to entrepreneurs.
• From a young micro and self-employed entrepreneurs.
• Again draft young entrepreneurship.
• A part-time training link.
• Workers in social exclusion; victims
• violence, or victims of domestic terrorism.
• Excluded from integration companies.
• From the age of 52 recipients of unemployment benefits.
• Young from first use of TTE.
• From a contract for training and learning ETT.
• From an internship of ETT.
• Of domestic servants.
• Conversion of temporary contracts into permanent.
• In the form of temporary employment we can choose the following arrangement:
• Contract work or service.
• Eventually by production circumstances.
• Interim contracts.
• First youth employment.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
148
• Contract workers at social exclusion; victims of domestic violence, or a victim of domestic terrorism.
• Workers social exclusion integration enterprise.
• Workers over 52 recipients of unemployment benefits.
• Of partial retirement.
• Relay.
• A part-time training link.
• Of social work / building agricultural employment interest.
• Workers of domestic servants.
• People with disabilities.
• People with disabilities in special employment centers.
• Researchers.
• Workers prisoners in correctional institutions.
• Of children and youth in juvenile facilities.
• The types of contracts for training and learning can be:
• Regular training and learning.
• Workers in social exclusion, domestic violence victims, or victim of domestic terrorism.
• People with disabilities in special employment centers.
• Of social work / building agricultural employment interest.
• The fourth mode, the placement contracts include:
• Regular practices.
• Workers in social exclusion, domestic violence victims, or victim of domestic terrorism.
• Of older workers aged 52 recipients of unemployment benefits.
• People with disabilities in special employment centers.
• Of social work / building agricultural employment interest.
As you can see, the vast majority of the types of contracts that have hitherto been kept in force, so it has no such
reduction.
6.2. Termination of Employment Contracts
Layoffs
An employment contract may be terminated for certain reasons which normally do not cause a conflict, such as mutual
agreement expiry of the contractual term, death or retirement of the employee or employer, etc.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
149
• The Act also regulates three principal grounds for dismissal of the worker:
• Collective dismissal.
• Objective causes.
• Disciplinary action.
As a novelty, it is noteworthy that according to the wording given by Royal Decree-Law 3/2012, to proceed with collective
redundancies is not required to obtain prior administrative authorization. The following summary table the main causes
and characteristics of different types of dismissal:
• Dismissal.
• Legal causes.
• Observations.
Collective
Affected outplacement plan through authorized relocation companies for a minimum period of 6 months, and must include measures of training and guidance professional, personal attention and search active employment.
• The statutory severance consists of 20 days of salary per year of service, with a maximum of 12 months, or more if so
agreed.
In certain cases, when you dismiss employees aged 50 or more, you should make a financial contribution to the Treasury.
Objective
• Ineptitude of known worker or supervening after its effective placement in the company.
• Lack of adaptation of workers to amendments made in his post -work prior to dismissal, employer must provide the
worker a course aimed at adaptation to changes in office. There can dismissal proceed until you allow a minimum two
months since the amendment was introduced and the training period is completed.
• Need objectively accredited amortize jobs for reasons economic, technical, organizational or production.
• Absences, but even justified intermittent, that reaches 20% of the working days in two consecutive months or 25% in
four months discontinuous within a period of twelve months.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
150
• In open-ended contracts entered into directly by the government or nonprofit entities for the implementation of plans
and programs for the inadequacy of the appropriation for the maintenance of the employment contract in question.
• Notice to the employee at least 15 days written notice is required.
• The notice may be substituted for the payment of wages for the said period.
• It should be made available to the employee compensation (20 days salary per year of service, up to a limit of 12
months) simultaneous delivery of written notice of dismissal.
Disciplinary
Serious and willful breach of worker:
• Fouls repeated and unjustified assistance.
• Misconduct or disobedience. physical or verbal to Offenses entrepreneur.
• Breach of contractual good faith and breach of trust.
• Decreased performance of voluntary work.
• Habitual drunkenness or drug addiction if affect the work.
• Harassment on grounds of racial or ethnicity, religion or belief, disability, age or sexual orientation and sexual gender or
the employer or the people who work in the company harassment.
• The disciplinary dismissal must be communicated in writing, stating the reasons and effective date.
• In case of dismissal of an employee representative or shop steward shall proceed to process a mixed record. Similarly,
if the worker was a union member, you should be hearing the union delegates. These guarantees may be extended by
collective agreement.
• Failure to comply with the formalities indicated, it may make a new dismissal within twenty days and paying the employee the wages, which will be the effective date of the new media.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
151
7. QUOTES TO GENERAL REGIME. BASES AND TYPES
Workers covered under the General System of Social Security and employers must contribute on whose work, except for
the contingencies of work accident, occupational disease and Wage Guarantee Fund, in which case the whole price for
the employer. This is responsible for withholding payroll amounts to be provided by each employee and submit documentation and enter the amount of the fees for their contributions and their workers. The portion of these shares for they must
deduct at the time of payment of their wages, but the employer shall pay the full amount charge.
Born from the requirement that the employment relationship to cessation of the supply of services in a timely manner is
started, it must be listed on maternity and temporary disability.
7.1. Contribution base (BC)
The BC for all contingencies and situations protected by the General Scheme of the SS is the total remuneration, in whatever form or name, which the worker is entitled to receive.
• Diets and allowances for travel expenses, travel expenses, bonuses and urban transport away.
• Compensation for death and for transfer, suspension, dismissal and removal.
• The amounts paid by currency devaluation and compensation for breach of votes or acquisition or maintenance tools
and working clothes.
• The performance of the SS and its improvements and welfare allocations made by companies.
• Overtime, except for accidents at work and occupational diseases, etc.
The minimum ceiling shall not be less than the minimum wage in force at all times, plus a sixth.
QUOTE SOCIAL AND IMPROVEMENTS IN SOCIAL SECURITY BENEFITS
Royal Decree 16/2013 has introduced a very significant extent on contributions to Social Security, which is basically to
expand the contribution base of workers (to allow more revenue), through the modification of Art.109 General Social Security Act which provides computable items in the contribution base.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
152
Under the new wording of Art.109, the contribution base for common contingencies and professional happens to be
composed of all remuneration, both in cash and in kind, with very few exceptions.
In practice, they become part of the contribution base remuneration in very common species, such as:
• Food Vouchers, which are now counted in the bath full quote is from when they were previously exempt contribution
up to the amount of 9 € per day;
• Health Insurance, which previously traded only in excess of € 500 per year per person on health insurance and now
integrated computing pletely reproduced in the contribution base;
• Contributions to pension plans and funds that were previously completely free quotation;
• Pluses of Transport and Distance previously traded only for the portion exceeding 20% of IPREM;
• Free delivery or below market shares or units of the sa group companies or companies not previously quoted to 12,000
€ per year and now becoming public integrally price.
8. PAYMENT OF FEES. TERM OF MEMBERSHIP
The social security contributions and other items that are collected with that (Unemployment, FGS, FP, etc.) Shall be paid
within one month of the corresponding accrual, unless another term for different regimes of the system is established
If income later the following charges will apply:
a) Presenting the contribution documents within the deadline:
»» Surcharge of 3% of the debt, if the quotas are refunded, due within the first month following the expiration of the
statutory period.
»» Surcharge of 5% of the debt, if the quotas within the second month following the expiration of the deadline is refunded.
»» Surcharge of 10% of the debt, if the quotas are refunded due in the third month following the expiration of the statutory period.
»» Surcharge of 20% of the debt, if fees due from the third month following the expiration of the deadline is refunded
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
153
b) Without lodging contribution documents within the deadline:
»» Surcharge of 20% of the debt, if the payments are due refunded before the deadline stated entry in the debt claim
or notice of assessment.
9. SAFETY AND HEALTH. RISK PREVENTION
From the new Law on Prevention of Occupational Risks have established a number of specific obligations on employers
and some have been regulating health and safety conditions for certain specified activities.
Action by the employer in the prevention of risks:
Prior to the start of the employment relationship, workers must undergo a medical examination should be repeated periodically. Some activities require specific certificates (eg, food, food handling, etc.).
The employer first must make and keep the risk assessment to which workers can be subjected, and from the results
obtained should plan preventive action for effective protection. This should, in addition to organizing the resources available to implement adequate prevention, either personally taking preventive action, to nominate one or more workers to
it, or constituting service themselves or others prevention, on the other hand must ensure by health surveillance, control
of working conditions and workers’ activities, and to facilitate the training, information, consultation and participation of
workers.
Entrepreneur is also for the safety and health take a number of measures of general emergency or special situations of
grave and imminent risk and comply with the rules concerning the marking and reducing risk in the workplace or take
preventive measures to certain groups of workers.
It should be noted that since 1-1-2006 is prohibited smoking in any workplace, as well as the specific empowering spaces
for smoking, except those who are outdoors is also prohibited.
The set of preventive measures must be translated into specific documentation to be kept available for:
• The competent authorities.
• Representatives of workers.
• Workers designated for preventive activity.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
154
• Components of prevention services company.
10. SPECIAL SCHEME FOR SELF-EMPLOYED OR SELF
Bases and contribution rates by common contingencies in the Special Scheme for self-employed or independent are the
following (Article 15):
1. Types of contribution for common contingencies: 29.80%, or 29.30% if the person is covered by the protection system
closure.
However, when the self employed or not take into account that the protection regime for temporary disability, the contribution rate will be 26.50 per 100.
Workers included in this special regime with no protection available to cover the contingencies arising from accidents
at work and occupational diseases, make an additional contribution equivalent to 0.10%
2. Basis of quotation:
2.1. Minimum Base Bid: 875.70 euros per month.
2.2. Maximum Base Bid: 3597.00 per month.
3. Contribution base for self-employed workers, 1 January 2014, are under age 47 will be chosen by them, within the
limits that represent the minimum and maximum bases.
Same choice may make those self-employed at that date are aged 47 years and his contribution basis in the month of
December 2013 has been not less than 1888.80 per month, or cause high in this Special Scheme.
Self-employed, to January 1, 2014, have 47 years old, if their contribution base is less than 1888.80 per month can
not choose a higher base amount to 1926.60 per month, unless they exercise their option to that effect before June
30, 2014, which take effect from 1 July of the same year, or question the surviving spouse of the business owner, as
a result of his death, there had to be in front of it and register for this Special Scheme 47 years of age, in which case
there will be no such limitation.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
155
4. The contribution base of self-employed workers, to January 1, 2014, having reached the age of 48 or more years will
be between the amounts of 944.40 and 1926.60 euros per month, except in the case of spouse surviving holder’s business as a result of his death, has had to take charge of it and register for this Special Scheme with 45 or more years
old, in which case the choice of basis will be between the amounts of 875.70 and 1926.60 per month.
However, the contribution base of self-employed workers prior to age 50 publicly listed in any of the regimes of the
system of five or more years Social Security will have the following amounts:
a) If the last base price would have been accredited or less 1888.80 per month, will have to contribute a basis ranging
between 875.70 and 1926.60 euros per month per month.
b) If the last base of proven contribution has been higher than 1888.80 per month, will have to contribute for a base
between 875.70 per month and the amount of it increased by 5 100, can choose, if not being attained by a base to
1926.60 per month.
The provisions of the preceding paragraph b) shall also apply with respect to self-employed workers with 48 or 49
years have exercised the option provided for in the second subparagraph of Article 132 Cuatro.2 of Law 39/2010, of
22 December on the State Budget for 2011.
Self-employed workers engaged in street vending or home (CNAE 4781 Retail sale of food, beverages and snuff stalls
and markets; 4782 Retail sale of textiles, clothing and footwear stalls and markets; 4789 Retail trade of other goods
stalls and markets and 4799 Other retail sale not or establishments or stalls or markets) may choose as minimum
contribution base for 2014 a base of 875.70 euros per month, or a base of 753.00 euros per month.
Self-employed persons engaged in doorstep selling (CNAE 4799) may also choose as minimum contribution base for
2014 base 875.70 per month, or a base of 481.50 euros per month.
Self-employed, because of their employed labor developed simultaneously, have contributed in 2013, for common
contingencies multiactivity regime and taking into account both the business and the corresponding contributions to
the employee in the General Conditions and the placed in the Special Scheme in an amount not less than 11,633.68
euros, will be entitled to a refund of 50 100 excess contributions paid that its amount exceeds the above, with the top
50 100 contributions received the Special Scheme, because of their contribution for common contingencies mandatory coverage.
The refund will be paid on application, to be asking it in the first four months of 2014.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
156
The base amount of the contribution protection for cessation of activity of the workers included in the Special Scheme
for the Self-Employed and employees included in the Special Scheme for Agricultural Own Account established in said
Special Regime be that for which workers have opted included in such scheme and Special System (art. 35)
During 2014, the contribution rate for the protection for cessation of activity is 2.20 per 100 by the worker.
Agencies and addresses:
TREASURY GENERAL SS
Barcelona
C / Aragon 273-275
T-93-4962000
Madrid
C / Agustin de Foxa, 28-30
T-91-3348500
NATIONAL INSTITUTE OF SS
Barcelona
San Antonio Maria Claret, 5-11
T-932 849 358
Madrid
Father Damian, 4
T-915 688 300
MINISTRY OF LABOUR AND SOCIAL AFFAIRS
Madrid
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
157
Agustín de Betrencourt, 4
T-915 352 000
GENERAL MANAGEMENT DIRECTION OF MIGRATION
INSTITUTE OF MIGRATION AND SOCIAL SERVICES (IMSERSO)
OFFICE:
GOVERNMENT DELEGATION TO MIGRATION AND IMMIGRATION
PROVINCIAL WORKING ADDRESS, SOCIAL SECURITY AND SOCIAL AFFAIRS OF BARCELONA
Travessera de Gracia, 302-311
T-934 013 000
POLICE CHIEF SUPERIOR CATALAN
Via Layetana, 43
08003 Barcelona
T-93-290 3000
EMPLOYMENT COUNSELING AND SOCIAL AFFAIRS OF SPAIN PERMANENT REPRESENTATION TO THE EUROPEAN
UNION
Boulevard du Regent, 52
1000 BRUSSELS
T-07/322-5119360
EMPLOYMENT COUNSELING AND SOCIAL AFFAIRS MISSION TO SPAIN permanenete OF INTERNATIONAL ORGANIZATIONS 53
Avenue Blanc 1202
GENEVA
T-07/4122-7312230
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
D) THE INDUSTRIAL AND
INDUSTRIAL PROPERTY IN
SPAIN
LEGAL CONTROL Abogados & Consultores de Empresas
159
The Intellectual property is one of the most important assets of the company. It is therefore vital before entering a new
market, ensure proper protection. In Spain, with rare exceptions, the registration principle, which would mean that we
have no right to an invention or trade mark if not previously registered. In our country, unlike, for example, the United
States, is in effect the system first to file: the first priority rights correspond to applying for registration; ie does not use,
except in the case of well-known brands, any rights against third parties.
Also, the registration system to which we have referred governs the principle of territoriality, which means that protection
is only available in countries where the patent or trademark is registered. In the rest, in principle, could be used freely by
others. Therefore, the trade mark or patent in their country of origin does not automatically provide protection in other
countries, being therefore necessary to ensure the protection by recording them.
It is remarkable to note that intellectual property rights are assets, and, therefore, as if it were a material object, may be
subjected to acts of assignment or transfer, transferred by any means permitted by law. One of the most common contracts in this area is the license by which a third party may be authorized to use the rights conferred by registration in
exchange for a fee.
Spain has ratified the major international conventions in this area that, with rare exceptions, do not allow those who have
obtained Spanish nationality in our country the protection of their rights and the protection Spanish nationals in most of
the remaining countries.
Spain’s membership of the European Union has also caused the Spanish legislature has followed the guidelines of the EU
directives on industrial property and therefore the laws of our country is in line with the rest European countries.
a) Brands
The mark is a distinctive sign whose main function is to distinguish and identify market products or services of an employer towards the products or services offered by its competitors. It also plays a major advertising and reputation-building
function. Distinctive signs, especially trademarks, are an effective and necessary for both business policy and consumer
protection instrument.
When launched in the Spanish market a product or service identified by a brand you need to check that:
1) The brand is free to use.
2) The brand is free to be recorded.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
160
3) Brand does not have negative connotations, ie, is commercially suitable.
Before marketing is to verify that there is no identical or similar trademark previously registered for identical or similar to
our products, as this could prevent the use of the sign in that territory.
Once satisfied that they are not violating the rights of others above, you may consider the various procedures for obtaining registration in order to secure exclusive rights and to prevent other companies from using the trademark. To obtain
registration also need to check that the mark is not generic, deceptive, descriptive or contrary to public policy.
Since April 1996, the procedures through which a record can be obtained effectively in Spain are:
1) National system: are registered by the Spanish Patent and Trademark Office (SPTO). These marks may consist of a
large number of signs capable of being represented graphically, which include: words, names, signatures, numerals
and their combinations, slogans, drawings, sound signs, colors and three-dimensional shapes, including packaging
and wrappers. Based on the foregoing, the SPTO not officially denied those brands that engage in the above prohibitions, but performed a computer search in order to communicate your request for information, to the holders of
identical or similar earlier signs that could be of interest to oppose those.
The trademark registration is granted for a period of 10 years, renewable indefinitely for periods of an identical duration, however, the record may be forfeited if the mark is not renewed, if not subject to real and genuine use for a
continuous period of five years, or if it becomes generic or deceptive for products or services distinguished.
A new feature is the creation of “virtual office” of the Spanish Office.
Patents and Trademarks (https://sede.oepm.gob.es) by Resolution of the Ministry of Industry of March 9, 2010. ESPO
is well integrated into the ministerial initiative to bring public administration to the digital environment, in order to facilitate and streamline administrative procedures relating to intellectual property rights.
2) International System: the Madrid / Madrid Protocol: The so-called “international system” is composed of the Madrid
Agreement of 1891 and the Protocol Relating to the Madrid Agreement of 1989 administered by the World Intellectual
Property (WIPO) in Geneva.
It should be noted that although “international system” is named it is not strictly speaking, but is simply a system in
which administrative procedures are unified and by which, in short, what you get is a plurality of registers.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
161
The applicant must designate the countries in which protection is sought and that obviously must have ratified either the Agreement, while the Protocol, depending on the agreement based on which the application is processed.
Subsequently, WIPO notify the national offices of the designated countries and, within one year (in the case of the
Agreement) or 18 months (in the case of the Protocol) these offices not preclude registration based on its national law,
the mark will be recorded.
No it is an open system, since they are only entitled individuals or legal entities having a link (nationality, domicile or
actual and effective establishment) with a country party to one or both of the treaties cited, may on the basis of a
registration or application with the trademark office of that State, to obtain an international registration having effect
in some or all of the countries of the Madrid Union.
Represents a significant advance as the incorporation of Spanish language processing of trademark applications in
the International Registry System from April 1, 2004.
Equating the Spanish to English and French (so far, the only method recognized languages) will increase undoubtedly
the exchange of trade relations, both from the perspective of the internationalization of Spanish companies abroad as
on the attracting international markets Spaniards business.
This initiative will also facilitate adherence to the system of international registration of marks in Latin American countries, which may be submitted in your language and process requests for international brands, reducing costs and
gaining ease of processing.
3) Community trade mark: The main feature of the CTM is its unitary character. Through a single procedure and a single
record holder registered protection throughout the territory of the European Union, covering 27 states.
The CTM covers, through a single record, a market of about 500 million consumers.
It is noteworthy that the CTM does not replace the trademark rights of the Member States. The national, international
and Community trade mark systems can coexist and in some cases complement.
The Community trade mark system via a single application and a single operation, to obtain a single record that gives
direct protection in all member countries of the European Union. Therefore, the entrepreneur who wants to market
their products or provide their services in Europe, instead of having to file an application in each of the countries
where you intend your marketing, you can get an EU register which gives exclusive rights to the brand in all States of
the Union. It is also noteworthy that the CTM is open to virtually all companies in the world system, and all those who
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
162
are entitled to have a domicile or establishment in the European Union or in a country party to the Paris Convention
or domiciled in a member of the World Organization of the country trade.
The CTM is administered by the Office for Harmonisation in the Internal Market (OHIM), based in the city of Alicante
(Spain). The CTM applications may be submitted in any official language of the European Union, although the applicant must designate, in any case, a second language among the five officers OHIM (German, Spanish, English, Italian
and French), which may become the language of the procedure in the case of opposition or revocation or invalidity
actions.
Another great advantage of the CTM is not proof of its use for obtaining registration is required, with the use of the
mark in one country of the European Union sufficient to maintain the validity of the same.
Additionally, the drastic reduction of the fees for the registration of Community trademarks supposed, since May
2009, an unquestionable incentive to opt for this registration system.
Registration is granted for 10 years and renewable for the same periods, the renewal subject to payment of the fee
being.
A Community trade mark shall confer on the holder in the entire territory of the European Union the right to prevent
others from using it without his consent, and the identical or similar signs which could cause a likelihood of confusion among consumers. It is very important to mention that in case of rape, it is possible to punish acts done by any
State of the European Union. Questions about rape CTM correspond to the national courts of Brand Community,
designated by each State.
In this sense, we refer to the Organic Law 8/2003 of 9 July, the Bankruptcy Reform amending the Organic Law 6/1985
of 1 July on the Judicial Power, which designates the commercial courts and the relevant section of the Alicante
Provincial Court as a Community trade mark courts in Spain, in first and second instance, respectively, extending its
jurisdiction for these purposes, the entire national territory.
b) Protection of inventions in Spain
Inventions can be protected in our legal system through the following legal instruments that give their holders exclusive
rights: patents, utility models and industrial designs.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
163
Patents seek to boost investment in R & D as well as the advancement of technology in a country. The State grants exclusive rights to the invention for a limited period, generally 20 years, in exchange for which, after this period the invention
into the public domain, and can benefit all of society technical advantage provided by the invention.
The patentee may exploit the invention and prevent third parties from exploiting it, entering the market or trade without
their consent. During his term, the third party may only exploit the invention prior license holder.
Patents are granted for a period of 20 years from the application date. However, for maintenance is necessary to pay annual rates increased every year. After this period, the subject of the patent falls into the public domain and may be used
by any party. The Supplementary Protection Certificate for pharmaceutical and plant protection products, in force since
1998, extend the duration, with a maximum of five years, during the time that would be required for the grant of the administrative authorization for the marketing of these products.
Finally, the reform of the Patent Act operated by Law 17/2009, of 23 November, abolished the requirement that the transmissions and patent licenses have to necessarily be a public document, referring to the Implementing Regulations of the
Law Patent for the definition of the formal requirements. This regulation has been recently renovated to bring the documentary to the registration requirements of assignments, licenses, property rights, name changes and other modifications
of rights for all types of industrial property, significantly reducing the administrative burden.
c) Intellectual property
In Spain, the intellectual property is governed by Royal Legislative Decree 1/1996 of 12 April, approving the revised text
of the Copyright Act is approved. Also, for the issues of intellectual property, it is appropriate to note that Spain is part of
the Berne Convention for the Protection of Literary and Artistic Works.
They are all subject to copyright of literary, artistic or scientific work such as books, musical compositions, audiovisual
works, blueprints, drawings, graphics, computer programs and databases original creations.
In Spain, intellectual property arises from the moment of creation, without any registration is required, which involves
automatic protection. However, it is always possible to place the work in the Registry of Intellectual Property in order to
get a stronger test against third parties.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
164
Protection for copyright lasts 70 years after the author’s death if it is an individual. In cases where legal persons are recognized as a writer, that protection is 70 years from the 1st of January following the lawful disclosure of the work or the
year of its creation, if he had disclosed.
Intellectual property rights generates various types, some economic, and other “moral” nature. The latter are inherent and
inalienable, and allow the author, among other things, whether his work is to be disclosed, and demand recognition of
his authorship. On the contrary, the rights of economic exploitation or can be traded, so that you can dispose of them to
third parties.
In Spain, the ownership of rights is always for the creator of the work, unless it is created in the course of an occupation,
it is a collective work or rights are transferred to a third party.
As we advanced, computer programs are protected by copyright with documentary information that accompanies them,
being protected by copyright and having certain exceptions, the same treatment as literary works.
Said Copyright Act besides regulating copyright, related rights also acknowledges called for performers, phonogram
producers, producers of audiovisual recordings and broadcasting organizations.
d) Action against violations of intellectual property rights
The owner of the intellectual and industrial property may bring an action to against those infringing their rights in Spain,
both in the civil courts as criminal proceedings.
The procedure for the filing of actions in the civil courts is regulated by the Law on Civil Procedure, which sets the standard for judgment as a legal remedy that the trademark holder may enforce its rights against third parties.
The holder whose rights have been infringed may apply:
• The cessation of acts that violate the law.
• Compensation for damages suffered.
• The seizure of the infringing goods.
• To be awarded the seized objects or media.
• The adoption of the necessary measures to prevent further attacks that violate the right measures.
• The publication of the conviction.
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
LEGAL CONTROL Abogados & Consultores de Empresas
165
The rights holder may also seek injunctive relief aimed at ensuring the effectiveness of the actions.
The intellectual property rights are also protected by the criminal law.
So in addition to related marketing, use, manufacture and imitation of inventions and trademarks without authorization of
the proprietor activities, modifying the Penal Code, which entered into force on October 1, 2004, introduced an offense
of forgery plant varieties and parallel imports. Against such offenses, the criminal code provides for penalties that, after
the aforementioned modification, have been established in imprisonment of six months to two years and fines of twelve
to twenty four months.
It is also noteworthy that the causes have been extended to determine that a particular offense severity magazine, for
which the Penal Code provides for higher penalties of imprisonment (one to four years), fine (twelve to twenty four months)
and disqualification for the exercise of the profession related to the infringement (for a period of two to five years).
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
[email protected] www.legalcontrol.com
Investing in Spain
C/ Velázquez, 20, 6º dcha. 28001 Madrid (España)
Telf. (+34) 91 435 10 55
[email protected]
www.legalcontrol.com