Investment Opportunities in
Spain: A Legal Overview
Toronto 2013
Index
■
Brief Introduction: Spain’s Profile
■
Investment Opportunities in Spain
■
Banking
■
M&A (Equity & Debt)
■
Real Estate (Commercial & Retail)
■
Receivables against the Public Administration
■
Private Equity
■
Hotels & Leisure
■
PPP’s (Public Private Partnerships)
■
Privatizations
2
Index (cont.)
■
Spanish REITs (SOCIMIs)
■
Spain Holding Companies as a Bridge to Latin America
■
The EU-Canada CETA
■
About Garrigues
■
Contact
3
Brief Introduction: Spain’s Profile
■
7th largest recipient of Foreign Direct Investment (FDI) worldwide, 13th largest
economy in the world and 5th in the EU. (Source: IMF 2012)
■
GDP approximately $1,390B (vs. $1.4 trillion Canadian GDP).
(Source: Eurostat and The
Heritage Foundation)
■
Signs of stabilization: GDP fell by 0.1% on Q2 2013 from a 0.4% fall in Q1 2013.
(Source: Spanish National Institute for Statistics)
■
Spain’s appeal for foreign investors lies not only in its domestic market but also in
the possibility of operating in third-country markets using Spain as a base.
■
Foreign investments in Spain do not require prior governmental approval with a few
exceptions (tax havens, foreign investments in activities directly related to national
security, and Real Estate investments for diplomatic missions by States not
members of the European Union).
4
Brief Introduction: Spain’s Profile (cont.)
■
Spain ranks 17 in the 2013 Index of Investment Freedom.
(Source: The Heritage
Foundation)
5
Brief Introduction: Spain’s Profile (cont.)
■
Setting up a business in Spain is reasonably simple. It ranks 44th (out of 185
economies) on the "Ease of Doing Business“ list. (Source: World Bank 2013)
■
The Spanish tax system is modern and reasonably pro-business. The tax burden in
Spain (i.e. tax and social security contributions as a percentage of GDP) is
approximately 5 points lower than in neighboring countries (UE-27).
■
The Spanish government is taking the necessary steps to redress the financial
situation and provide comfort to international investors and institutions as well as
leading the fight against unemployment.
6
Banking Sector: Current Situation of the Sector
■
Restructuring of the Spanish banking sector still under way.
■
The Spanish banking system has been reduced from 50 entities (in 2009) to 12
entities (in 2012).
■
8 financing entities are under restructuring processes (Law 9/2012 on the
restructuring of the banking sector, drafted to implement the MoU agreed with the
European authorities).
■
Spanish “Bad Bank” (SAREB) operative since the first quarter of 2013, focusing on
the sale of close to 200,000 assets transferred by financing entities.
■
The stress tests carried out in 2013 show that the Spanish banking sector is
complying with EU capital requirements and Spanish banks are regaining access to
funding markets; however, broader economic factors still weigh on the banking
sector.
■
Increasing NPL ratios despite balance sheet improvement.
7
Banking Sector: Investment Opportunities
■
■
Investment opportunities:
■
Acquisition of bank assets, including NPLs and sub-performing loans.
■
Acquisition of non-core banking businesses.
■
Asset backed securities issued by the SAREB’s banking asset funds.
■
Possibility of acquiring large units of assets “in block”.
■
Co-investment with SAREB in Banking Asset Funds (i.e. Project Bull).
■
Distressed debt.
Steep discounts on certain assets depending on their quality.
-
Secured Residential Debt: 60% to 80% discount over book value.
Secured Commercial Debt: 50% to 60% discount over book value.
Unsecured Residential Debt: 85% to 95% discount over book value.
8
Banking Sector: Main Challenges and Adopted Legal Measures; SAREB Overview.
■
SAREB: a majority-private-owned company managed by an asset management
corporation (Sociedad Anónima). Similar to NAMA in Ireland. Owned by the Spanish
government and the “healthy” Spanish banks.
■
184,000 real estate assets transferred by Spanish financing institutions under
restructuring.
■
The FROB (Fund for the Orderly Bank Restructuring) may compel any credit institution
to transfer troubled assets to SAREB.
■
Assets: Real Estate owned, loans, or credits related to developers’ activity (including
land acquisition and construction financing), profit participating loans and participations
in companies with the same asset profile transferred by nationalized institutions (Bankia,
Catalunya Banc, NCG and Banco de Valencia) and financing institutions under
restructuring processes (BMN, Liberbank, Caja3 and Ceiss).
■
Assets can be transferred by means of any legal transaction, without third-party consent
or having to meet the procedural requirements applying to companies’ structural
modifications.
■
The transferred assets cannot be rescinded through claw-back actions provided for in
the Spanish insolvency regulations.
■
In case of transfer of disputed claims, the provisions of article 1,535 (credits sold in
litigation) of the Civil Code will not apply.
9
Banking Sector: Disposal of SAREB’s Assets and the Banking Asset Funds
■
The SAREB is using Banking Asset Funds (“BAFs”) as the main asset disposal structure.
■
BAFs are envisioned as a specific vehicle combining elements of funds (i.e. securitization
funds) to permit the reorganization, repackaging and disposal of assets and liabilities
transferred to SAREB through the elements of structure finance and an advantageous tax
regime for investors, particularly foreign investors.

Main Legal Features of the BAFs:
 Separate or independent pools of assets without legal personality
(requiring third-party management through exclusive and
designated managers/trustees).
 BAFs will allow different pools of assets. Investors can take
exposure to bulk, selected pools or individual assets.
 BAFs are entitled to issue notes to accredited investors only.

Tax Regime Applicable to Investors:
 BAFs will be subject to corporate income tax at a rate of 1% and
will be eligible for the special rules on collective investment
vehicles.
 Non-resident income taxpayers with a permanent establishment in
Spain will apply the tax rules provided for shareholders or
investors in collective investment vehicles under Law 35/2003.
 Income obtained by non-Spanish-resident investors without a
permanent establishment will be exempt from non-resident
income tax on the same terms as income from public debt.
SAREB
Trustee
BAFs
Accredited
Investors
10
Banking Sector: Disposal of SAREB’s Assets and the Banking Asset Funds (cont.)
■
Project Bull: SAREB’s first significant real property deal, consisted of the sale of a
majority stake in a BAF (a package of 939 real estate assets) to Miami-based
private-equity firm H.I.G. Capital for €100M (August 2013).
■
Project Bermuda: Sale of a €245M portfolio of syndicated loans from the Spanish
real estate property group, Colonial, to Burlington Loan Management Limited
(August 2013).
■
As of July 2013 more than 1,800 real estate assets assigned to SAREB have been
sold (gross revenues of more than €900M).
11
Banking Sector: NPLs. Current Situation of the Market
NPL ratio over total loans is at a
11% high. Assignment of NPLs
by certain financing entities to
SAREB (not qualified as a bank
for these purposes) justifies the
dramatic drop in Dec 2012 and
Feb 2013.
Is this the actual size of the market?
Probably not…

Credit institutions have been
granting grace periods, extending
maturity dates, refinancing loans to
prevent
having
their
loans
characterized as NPLs.

Why? No NPLs = No reserves.
Thereby improving the appearance
of their balance sheets.

Transfer of loans to SAREB has
also helped improve the balance
sheet of Spanish banks.
Source: Bank of Spain
12
Banking Sector: Loan Portfolios Investing Opportunities
■
Latest Relevant Banking Transactions in 2012 and 2013:
■
Bankia: Sale of auto and consumer loan portfolio of €873M to a fund affiliated
with Apollo Global Management (U.S.), as part of the sale of its auto and
consumer loan unit, FinanMadrid (March 2013).
■
Banco Popular: Sale of a consumer NPL portfolio of €1.1B to AnaCap
Financial Partners (UK) and Lindorff (Norway) (December 2012).
■
BBVA: Sale of a residential mortgage and consumer NPL portfolio of €1.5B to
Lone Star and Varde Partners (Sweden) (October 2012).
■
Bankia: Sale of a consumer and SMEs financing NPL portfolio of €926M to
Aktiv Kapital (Norway) and Oko Investments (Luxembourg) (September October 2012).
■
Citigroup: Sale of two portfolios of performing and non-performing consumer
loans for an aggregate amount of €440M to a fund affiliated with Apollo Global
Management (U.S.) (September 2012).
13
Banking Sector: Legal Aspects in the Acquisition of Loan Portfolios
■
Loan identification and analysis (Due Diligence).
■
Main legal issues regarding credit assignments and transfers:
■
Borrower's consent:
-
General Rule: consent is not needed, except for partially drawn facilities.
Need to review specific provisions of Loan Agreements.
■
Formalities: Public Deed & Recording with the Land Registry and/or Movable
Property Registry.
■
Disputed Credit Rights (Section 1,535 of the Spanish Civil Code)(*).
-
Borrower's right to cancel the loan by paying certain amounts (price of the
assignment, associated costs and interest accrued from the date on which the
assignee acquired such loan).
-
Cancellation rights to be exercised by borrower during the 9 days following the
acquisition of the loan by the assignee.
-
Servicer agreements.
(*) Not applicable to SAREB deals
14
Banking Sector: Legal Aspects in the Acquisition of Loan Portfolios (cont.)
■
Transfer of Mortgage Loans: Land Registry (protection before third parties and
the Servicer).
■
Insolvency Proceedings:
■
-
Mortgage-backed loans are classified as privileged credits.
-
Claw-back Period under Spanish regulation: 2 years prior to the bankruptcy
filing(*).
Financing and novation of credits may have an impact in securities rank and
insolvency privileges.
Data Protection: Only notice is required. Borrower’s consent is not needed.
(*) Not applicable to SAREB deals
15
Banking Sector: Distressed Debt
■
Possibility of acquiring corporate debt at a discount.
■
Lender-friendly conditions on new money.
■
Possibility of acquiring equity through debt conversion or enforcement of security
interests over shares.
■
Numerous refinancing transactions of large Spanish groups under negotiation.
■
Shorter term of refinancing agreements during 2011 and 2012 has led to new
rounds of refinancing negotiations among large Spanish corporations (i.e.
construction, infrastructures and media are highly leveraged sectors).
■
Spanish insolvency regulations are switching to a more lender-friendly framework:
pre-insolvency refinancing agreements may avoid claw-back actions if they obtain
court approval.
■
Possibility of applying a form of “scheme of arrangement” to dissenting lenders to
avoid enforcement actions and to provide a common term of stay to all lenders if at
least 55% of the financial creditors of the debtor agree to the refinancing.
16
M&A (Equity & Debt)
■
M&A Alternative Transactions:
■
Debt for equity swaps.
■
Capital growth.
■
Unattended capital calls from LP’s: Preferred equity structures.
■
Pre-Chapter 11 acquisitions.
■
Acquisition of non-core assets from financing entities.
■
Acquisition of companies with losses carried forward (bases imponibles
negativas) but unable to turn such tax advantages into working capital.
■
Threat: Application of articles 71 and 73 of the Spanish Insolvency Act (clawback):
■
If a company becomes insolvent, any transaction executed in the previous two
(2) years may be subject to rescission if said transactions are detrimental to
the interest of the Company’s group of creditors (i.e. Sale of a core business
asset of a company may be deemed detrimental).
17
Real Estate (Commercial & Retail)
■
Acquisition of Foreclosed Properties or Assets Owned by Financial Entities:
■
Spanish financial entities own a great portion of Spanish Real Estate: Lands, unfinished
developments and final products that will need to be disposed of through sale or
assignment to SAREB with a discount in each case.
-
Family households: 15 – 25 % discounts over book value.
Recreational housing: 40 – 60% discounts over book value
Commercial: 35-60% discounts over book value.
Source: Bank of Spain
18
Real Estate (Retail & Commercial)
■
Acquisition of Income Producing Assets:
■
a) Sale & Lease Back (or Lease-to-Buy) of single assets / portfolios:
■
Spanish Credit Institutions’ retail offices.
Hotels & Resorts.
b) Final Product (trophy assets / commercial assets)
-
Quality products still available.
Discounts from 30 – 40 % over book value.
Generation of cash flows and ballpark returns between 9% and 14%.
19
Real Estate (Retail & Commercial) (cont.)
■
Real Estate Finance: With traditional lenders out of the market, non-traditional
players (investment banks, insurance companies, pension funds or land
developers) are building up new lending strategies to inject debt into the real estate
market:
■
a) Traditional Lending (Senior, club deals, syndicates)
■
High LTV: Up to 60% to 70%.
Secondary assets: Traditional finance is not available for non-core assets.
Attractive pricing: High spreads as the only way to finance: +400pbs
b) Creative and Innovative Structures: +800pbs (combining junior debt,
mezzanine lending, preferred equity).
20
Receivables Against the Public Administration
■
The Spanish Public Administration is untimely in paying its service
providers/suppliers:
■
Central Administration average aging of payments: 49 days.
■
Autonomous Communities average aging of payments: 145 days.
■
Local administrations average aging of payments: 157 days. (Source: ATA 2013)
■
In the Spanish Healthcare Sector, the average aging of payments was reduced
from 473 days as of December 31, 2011 to 273 days as of December 31, 2012. As
of August 2013, the average aging in this sector is 323 days. (Source: Fenin 2013)
■
Legal measures adopted:
■
“Montoro Plan”: The plan provided an amount up to €17B against the
Spanish National Budget in 2012, foreseen to be followed by a second plan
before the end of 2013.
■
New law on the control of commercial debt by the public administration
(project approved by the Council of Ministers on September 20, 2013) to be
passed by Congress following the urgent procedure for enactment.
21
Receivables Against the Public Administration (cont.)
■
Opportunities: Acquisition of Receivables
■
Receivables against the Public Healthcare Sector:
-
In 2011 and 2012, several big Pharma companies (Teva, Roche, Sanofi,
Siemens, Novo Nordisk) have sold significant receivables portfolios at discounts
ranging from 15% to 25% to international investors (Cerberus, Lone Star, etc).
-
Other players and SMEs are willing to sell at greater discounts (15% to 35%).
22
Private Equity
■
Some growing sectors (PE):
■
Health / Assisted care facilities for the Elderly: High returns with
substantial CAPEX and business depending on the regional public health
system (except for private players). A higher concentration of private players
for 2013 is expected.
■
Pharma / Biotech: Spanish technology is very competitive and profitable but
has been highly dependent on public subsidies, tax rebates on R&D and
grants. PE’s are bringing private money into the table.
■
Telecom & Media: Industries liberalized. We expect higher concentration in
telecoms. In media, advertising revenues have declined dramatically. Some
PEs have taken positions in media groups (audiovisual services and content)
and cable operators. Spectrum is available for theme channels.
■
A sweet spot for takeovers? Low market capitalization. Still a possibility but
unlikely.
23
Private Equity (cont.)
■
Opportunities:
■
EBITDA Multipliers Going Down: The spread between sellers and buyers’
valuation is decreasing affecting mid-term returns positively. Opportunity for
build-ups.
■
Covering Unattended Capital Calls and Funds of Funds: Capital
commitments agreed at fund raising cannot be attended or financed. Mature
funds find no easy exits.
■
MBO Market: Lacks financial partnership (Target managers can no longer
see capital increases from Funds or LP’s and LP’s are willing to dilute to
comply with approved business plans). Alternatively, managers are looking for
Fund or LP’s replacement to buy-out.
■
Private Equity Divisions of Savings Banks: Forced to divest chasing
liquidity for the institution and trying to get rid of Real Estate / Finance
leverage.
24
Hotels & Leisure
■
Spain ranks 1st in Europe and 4th in tourist arrivals worldwide.
■
Spanish hotels are generally highly leveraged: Although the operating income is
usually positive (GOP per room), the financial burden forces hotels to negative
results.
■
Opportunities:
■
Acquisition of a hotel portfolio (Mainland, Balearic & Canary Islands,
Caribbean).
■
Acquisition of specific assets (including debt restructuring).
■
Sale & lease back over facilities.
■
Hotel manager replacements.
■
Debt markets: Spanish hotel chains’ strength overseas will become an
alternative source of financing through debt issuances, mostly international
covered bonds with international resort collaterals.
25
PPPs (Public Private Partnerships)
■
During the last two decades, Spain has seen a huge investment boom which
resulted in the development of a number of reliable solutions regarding the
creation, refurbishment, maintenance and management of public infrastructure
(airports, ports, national roads and highways, high speed railways, metro, hospitals,
etc.).
■
The most widely used form of cooperation between private and public sectors are
license agreements for performance of public works. This model is an
attractive solution for private investors due to:
■
Structure of relations between the parties is standardized and balanced;
■
The agreement may be subject to an assignment, security (mortgage/pledge);
■
The agreement allows for the possibility to adjust the economic terms in order
to reinstate the economic balance in the relation;
■
It is a standard requirement that the agreement is concluded by the special
purpose vehicle after the completion of procurement procedure.
26
PPPs (Public Private Partnerships) (cont.)
■
Current PPPs opportunities are focused on:
■
Unfinished infrastructures.
■
Toll-Road Management (all toll road consortiums in the Region of Madrid are
currently in insolvency proceedings).
■
Railways (infrastructure & management).
■
Management of the Public Healthcare System (public hospitals / primary
attention centers).
■
High speed train AVE.
27
Privatizations and Management of State Assets
■
Spain plans to raise around $37.7B from privatization or by offering management of
state assets which will be used to pay off public debt and reduce treasury issues.
■
Assets include:
■
AENA, the Spanish public entity that owns and operates the majority of
airports and air traffic towers in the country (on hold).
■
RENFE, the railway operator and its railroad train stations. Further, ADIF
(public entity responsible for the management of the railway system) is selling
373 non-core properties divided into 231 sets of properties.
■
PUERTOS DEL ESTADO, the public entity responsible for the entire stateowned harbors system.
■
The regional televisions of Madrid (TeleMadrid), Castilla La Mancha and
Asturias (RTPA).
■
The Spanish Export Credit Insurance Company CESCE (Compañía
Española de Seguros de Crédito a la Exportación). Subject to limitations.
■
The hotel chain PARADORES DE TURISMO DE ESPAÑA.
28
Privatizations and Management of State Assets (cont.)
■
■
■
■
■
■
■
CANAL DE ISABEL II, the company that manages water services in the
autonomous region of Madrid.
Divestments of companies in which the state holding Sociedad Estatal de
Participaciones Industriales has a stake (i.e. HISPASAT, IAG, EBRO FOODS
or RED ELÉCTRICA DE ESPAÑA).
HISTORIC REAL ESTATE buildings (including buildings located in downtown
Madrid or Barcelona).
HEALTHCARE SERVICES: Management of six (6) hospitals and certain
healthcare centers in the Region of Madrid (on hold).
Management of AENA’s AIRPORT PARKING (AENA is the Spanish public
entity owning the majority of airports in Spain).
CASTELLON AIRPORT, a recently developed airport near Valencia.
At a local level, numerous cities are offering the management of public
services to private companies (sale of APEMSA, the water service company
in El Puerto de Santa María, creation of a PPP for the management of waste
disposal in Orense, etc.)
29
Spanish REITs (SOCIMIs): New Legal and Tax Regime (Law 16/2012)
■
The so-called Sociedades Anónimas Cotizadas de Inversión en el Mercado
Inmobiliario (SOCIMIs) are Spanish vehicles with a similar legal and tax regime to
that of Canadian REITs (Technical Amendment Act 2012, November 21st). The
new SOCIMI regime creates a window of opportunity for foreign real estate
investors, private equity and pension funds, family offices or investment banks.
■
Main Attraction of SOCIMIs: Tax Benefits and Incentives
■
Special (beneficial) Corporate Income Tax treatment: 0% general income
tax rate.
■
Special Tax Regime applicable to non-resident shareholders: Dividends
received by non-resident shareholders may not be taxed in Spain upon certain
conditions
■
Tax benefits applicable to the acquisition of residential properties:
SOCIMIs benefit from a 95% tax rebate on the Transfer Tax-Stamp Duty Tax
levied by the acquisition of residential properties destined to be leased (and
also by the acquisition of land to be developed to such residential lease
purposes).
30
Spanish REITs (SOCIMIs): New Legal and Tax Regime (Law 16/2012) (cont.)
■
SOCIMIs’ Legal Requirements:
■
The entity must be a Spanish corporation (Sociedad Anónima) with a
minimum share capital of €5M.
■
The stock of a SOCIMI must be traded on a regulated stock exchange or on a
multilateral trading facility (MTF). Such regulated stock exchanges or MTF
must be located in Spain, within the European Union (EU) or the European
Economic Area (EEA).
■
The appraisal of the fixed assets (real estate assets) of the SOCIMI shall be
made by an independent expert appointed by the Spanish Commercial
Registry.
■
At least 80% of the SOCIMI’s assets shall be invested in (a) urban real estate
properties destined to be leased; (b) land to be developed for subsequent
lease purposes, and provided that the development works commence within
the 3 years following the acquisition of such land; or (c) shares in other
SOCIMI or similar companies.
31
Spanish REITs (SOCIMIs): New Legal and Tax Regime (Law 16/2012) (cont.)
■
The SOCIMI must be the owner of its real estate assets (e.g. as a result of a
sale and purchase transaction).
■
SOCIMIs are subject to an annual mandatory dividend distribution
requirement under the following percentages: (i) 90% of operating profits; (ii)
50% of gains from qualifying assets and the remaining 50 % in mandatory
reinvestment in 3 years; (iii) 100% of dividend income from qualifying
subsidiaries.
The first SOCIMI created under this regime is expected to start trading in the
alternative stock exchange (Mercado Alternativo Bursátil) in the near future. For
the fiscal year closing on December 31, 2013, it is expected that close to ten
SOCIMIs will commence operating, although their listing may be delayed to 2014.
32
Spanish Holding Companies (ETVEs) as a Bridge to Latin America
■
■
■
ETVE stands for “Entidad de Tenencia de Valores Extranjeros” (Foreign-Securities
Holding Company).
What makes the ETVE regime particularly attractive is the combination of: (i) the
specific features of the Holding Company Regime (ETVE); (ii) the applicability of
DTT and (iii) the applicability of EU Law.
Tax advantages:
■
Participation Exemption: if certain requirements are fulfilled, the dividends
received by the ETVE from its foreign affiliates, as well as capital gains
realized by the ETVE as a consequence of transfer of the participation, will be
exempt in Spain.
■
Withholding tax exemption on profit distributions to non-resident
shareholders (dividends from Spain to Canadian investor), if certain
requirements are met.
■
No domestic tax on capital gains realized by the non-resident shareholders
(if Canadian investor sells ETVE), if certain requirements are met.
33
Spanish Holding Companies (ETVEs) as a Bridge to Latin America (cont.)
■
The DTT’s signed by Spain permit, if certain requirements are met and in
certain cases, the repatriation of profits to Spain with limited taxation in the
source country.
Repatriation of profits to Spain from other member states of the EU with
limited taxation in the source member state (ETVEs are fully entitled to the
applicability of EU Directives, e.g. Parent-Subsidiary Directive) .
Legal requirements to qualify for the participation exemption regime for
dividends/capital gains by the ETVE:
■
■
■
Qualifying subsidiaries: minimum 5% shareholding percentage (or €6M
investment), plus one year holding period.
■
The profits distributed by the subsidiaries must derive (at least in a 85%) from
entrepreneurial activities performed outside Spain.
■
The foreign subsidiary must be subject to a tax of a similar nature to the
Spanish Corporate Income Tax (fulfilled if there is a DTT in force applicable to
the subsidiary).
■
The subsidiaries (at any level) and/or the direct shareholders cannot be
resident of tax havens.
34
Spanish Holding Companies (ETVEs) as a Bridge to Latin America (cont.)
■
Legal requirements to qualify for the ETVE regime:
■
Corporate purpose of the company: among others, management and
administration of stock representing a participation in the equity of nonresident entities. Accordingly, apart from holding activities, the company may
carry out any other type of business activity.
■
Certain minimum level of substance (human and material means) required.
■
Registered shares (bearer shares not allowed).
■
Communication to the Tax Authorities of the option for the application of the
regime. The regime is applicable for the whole year in which the
communication has been filed and for any subsequent years unless the
company revokes it.
35
Spanish Holding Companies (ETVEs) as a Bridge to Latin America (cont.)
■
Tax treaties signed by Spain with Latin American countries:
■
Argentina
■
Bolivia
■
Brazil
■
Chile
■
Colombia
■
Costa Rica
■
Cuba
■
Dominican Republic
■
Ecuador
■
El Salvador
■
Mexico
■
Panama
■
Peru (not in force)
■
Uruguay
■
Venezuela
The network of Double Tax Treaties:

Spain is one of the countries with the largest number of
Double Tax Treaties signed with Latin American countries.

The objective of DTTs is to reduce or avoid double taxation
on income derived from the investment project by the
investor resident in another country.

The signing countries establish rules to distribute the taxation
rights over specific income items so as to assure certain tax
reduction or exemption rights in the source country over said
income that will also result taxable in the investor’s country of
residence. Thus, cross-border investment and trade are
encouraged through tax certainty both for tax authorities and
taxpayers.
36
Spanish Holding Companies (ETVEs) as a Bridge to Latin America (cont.)
■
■
The Network of Bilateral Investment Treaties (BITs)
■
Spain is amongst the countries with the largest number of Bilateral Investment
Treaties signed with Latin American countries. It has signed agreements with
Argentina, Bolivia, Chile, Colombia, Costa Rica, Cuba, Dominican
Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico,
Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela.
■
The objective of Bilateral Investment Treaties is to intensify economic
cooperation, create favorable conditions for investments and protect
investments in foreign jurisdictions.
Protections Mainly Include:
■
Fair and equitable treatment of the investments made by foreign investors.
■
National Treatment: The foreign investor will not receive a less favorable
treatment than that accorded to nationals of the contracting state or those of
third States.
37
The EU-Canada CETA
■
On October 18, 2013, the President of the EU Commission and the Canadian
Prime Minister reached a political agreement on the key elements of a
Comprehensive Economic and Trade Agreement (CETA).
■
In 2012 the EU was Canada’s second most important trading partiner after the US,
and Canada the 12th most important trading partner in the EU.
■
This CETA is the first of its kind entered into by the EU and an advanced economy.
■
The agreement is expected to increase two-way bilateral trade in goods and
services by 23% (up to approximately Can$ 36,6bn – €26bn).
■
The EU-Canada CETA will remove over 99% por tariffs between the two
economies and create sizable new market access opportunities in services and
investments.
■
Additionally, the EU-Canada CETA will liberalize trade in financial services,
telecommunications, energy and transport.
■
Regulations on intellectual property rights to be harmonized between the two
economies.
38
The EU-Canada CETA (cont.)
■
Although a political agreement has been reached, the CETA is expected to be
ratified within the next two years.
■
Advantages on both sides: Cheaper imported goods, duty-free access for
producers (e.g. increase of quotas of Canadian meat in the EU and European
cheeses in Canada), award of contracts with public administrations open to
participants on both sides of the Atlantic, a more level playing field in intellectual
property protection.
39
About Garrigues
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Since 1941, Garrigues has participated in many of the largest transactions involving
both public and private foreign investment in Spain and Portugal.
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With more than 1,500 attorneys, offices in the major cities in the Iberian Peninsula
and 13 international offices, Garrigues enjoys an unparalleled position helping
clients in executing foreign investment opportunities and accessing to the deal-flow.
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Three new offices opened in Latin America in the second semester of 2013:
Mexico, Peru and Colombia.
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Clients and Institutions recognize the quality of our services and market
penetration:
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Contact us
Ferran Escayola
780 Third Avenue, 35th Floor
New York, NY 10017
+1 212 751 9233
[email protected]
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Ferran is the resident partner responsible of the Garrigues NY office. Represents public and private companies,
multinationals, investment banks, private equity funds (LPs, GPs and targets), hedge funds, private banking / family office
clients and services and industrial companies in their investments in Spain and internationally in the US and Latin America.
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Among his main activities, Ferran advises purchasers and sellers in both share and asset deals, mergers, debt and corporate
restructurings, joint-ventures, LBOs, MBOs, BIMBOs, strategic alliances and related transactions, with a particular emphasis
on cross-border deals.
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Ferran has been regularly recognized as a “leading lawyer” by Chambers Global, named finalist at the “40 Under 40” awards
by The M&A Advisor (US) and winner at the Iberian Lawyer “40 Under 40”. He has also been recognized by “Best Lawyers” in
Spain in 2008, 2009, 2010 and 2011.
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Co-manages the Garrigues’ U.S. Desk.
Specialization:
M&A and Private Equity
Acquisition Finance
Foreign investments in Spain and Spanish
investments in the US and Latin America.
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