31

JUL
2014

Why is it a good time to invest in Spain?

Due to its good climate, its cultural and historical heritage and the popular Spanish character, the Iberian Peninsula has been a popular tourist destination for many years.

Experts, however, point out that, aside from coming here to enjoy your holidays, it is now an excellent moment to invest or establish a presence in Spain. Here at Estudi Jurídic we would like to go over the different ways of doing so in Spain, as well as the factors to take into account:

  1. 1.    Labour market in Spain

Spain has an active population of more than 22 million people, many of whom are highly qualified, ranking fourth in Europe in relation to people with a technical-scientific educational profile, after Germany, France and the United Kingdom.

Moreover, during the last parliamentary term various legislative reforms have been implemented to make the labour market more flexible and to reduce the cost of hiring workers, in order to make foreign investment in our country more attractive.

  1. 2.    Residency visa for investors

Among its incentives for investors, since last September, Spain has been offering the possibility of obtaining a residency visa to any individual making a significant investment providing such an investment complies with any of the following requirements:

An investment of €2,000,000 in Spanish government bonds. 

An investment of €1,000,000 or more in shares of Spanish companies. 

The acquisition of property worth more than €500,000, free of charges. 

A business project to be developed in Spain and which is considered to be, and recognised as being, of general interest taking into account the compliance of at least one of the following conditions: 

1. Job creation.

2. Making an investment with a significant socioeconomic impact in the geographical area in which the activity is going to take place.

3. Making a significant contribution to scientific innovation and/or technology.

  1. 3.    Taxation in Spain

The main direct taxes applicable in Spain are as follows:

Corporation Tax

–       Standard rate: 30%

–       Smaller companies rate [1]: 25% on the first €300,000 of taxable income and 30% on the remainder[2].

–       Start-ups [3] (whether or not they are smaller companies) pay 15% on the first €300,000 and 20% on the remainder.

Income Tax Applicable to individuals resident for tax purposes in Spain and with progressive rates, of between 24% and 52%, although in the Tax Reform Bill of 23 June 2013 the rates are between 20% and 47% for 2015 and between 19% and 45% for 2016.

The main indirect taxes applicable in Spain are as follows:

Value-Added Tax

–       Standard rate: 21%

–       Reduced rate: 10%

–       Super-reduced rate: 4%

The rates depend on the goods that are being transferred.

Property Transfer Tax and Stamp Duty The rates range between 0.5% and 10%, depending on the legal transactions to which the tax is applied and the autonomous region in question.

Another attraction of the Spanish tax system is the regime applicable to companies holding foreign securities (Empresas de Tenencia de Valores Extranjeros: ETVE).

Under this regime, and satisfying certain requirements, companies can enjoy a very beneficial tax treatment where, for example, dividends distributed to their shareholders are exempt, as well as income from foreign sources. 

 

  1. 4.    Ways of establishing a presence in Spain

Spanish commercial legislation offers various alternatives for foreign investment in Spain, the main ones being the following:

  • Setting up a representative office or branch in Spain. Although these legal forms have certain limitations, they are usually of interest to foreign investors as a way of obtaining an initial presence in the Spanish market.
  • Establishing a subsidiary in Spain, by setting up a Spanish company, the most common forms of company being S.A. (Sociedad Anónima), a public limited company, and S.L. (Sociedad de Responsabilidad Limitada), a limited liability company.
  • Partnership or joint ventures with Spanish companies. The Spanish legal system establishes different forms of partnerships which could be of interest to foreign investors.

It is also possible to enter the Spanish market with distributors, agents, commission agents or by setting up franchises, as well as by acquiring productive units of insolvent companies

  1. 5.    Strategic geographical location

The geographical location of Spain has made it a key player in trade relations between Europe, Latin America and Africa. This factor has made it the gateway to a market of more than 1.3 billion consumers.

The ports of Barcelona, Valencia and Algeciras are among the most important European ports in terms of sea traffic and Spain has two of the biggest airports in Europe.

Here at Estudi Jurídic Sánchez & De Canals we are helping various foreign companies with the process of establishing themselves in Spain, giving counsel on the best way of investing and accompanying them at every stage of the setting-up process.

If you are interested in or considering the possibility of establishing a presence in Spain, please do not hesitate to contact us and we will provide you with more information, adapting it to your needs.


[1] A company is considered a smaller company where, in the immediately preceding tax period, its net turnover was less than €10,000,000.

[2] For the years 2011 to 2014, inclusive, there is a reduced rate of 20% and 25%, respectively, for micro-enterprises (entities where the net turnover in the above period is less than €5,000,000 and where the average number of employees in the same period is less than 25).

[3] Applicable to companies established from 1 January 2013, in the first tax period where there is a positive taxable income and in the following one.  

Published by Andrea Serrano

Comentarios

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