BUSINESS IN SPAIN Corporate and Tax advantages.

Transcription

1 BUSINESS IN SPAIN Corporate and Tax advantages

2 ABOUT US International Planning Set up companies International Taxation Agreement Negotiation Industrial and Intellectual Property Visa application

3 WHY DO INVEST IN SPAIN? Spanish Highlights (I) Privileged geo-strategic position Perfect bridge between Latin America - Europe - Africa

4 WHY DO INVEST IN SPAIN? Spanish Highlights (II) 5th Economy in the Euro More than 57 million tourists per year 7th largest recipient of foreign direct investment worldwide Spanish language: more than 500 million native speakers Top ten countries in quality infrastructure

5 WHY DO INVEST IN SPAIN? Spanish Legal System Parliamentary Monarchy Three independent branches of government: Executive Legislative Judiciary Continental Law System based on written law as opposed as Common Law System EU Membership: decisive influence specially on commercial law

6 HOW TO DO BUSINESS IN SPAIN New business incorporation (I) Limited Liability Companies Branch and Representative Office Alternatives

7 HOW TO DO BUSINESS IN SPAIN New business incorporation (II) Limited Liability Companies Spanish Companies Act Limited Liability of partners Separate and distinct legal personality Two main types: Sociedad Limitada (S.L.): private limited liability company Sociedad Anónima (S.A.): public limited liability company

8 HOW TO DO BUSINESS IN SPAIN New business incorporation (III) S.L. Private limited liability company S.A. Public limited liability company -Traditionally small or medium-sized enterprise -Lower capital requirement 3,000 -Restrictions on the transfer of quotas -More flexibility and autonomy -Traditionally larger corporations -Higher capital requirement 60,000 -Can be listed on the Stock Exchange Market -Complex legal framework

9 HOW TO DO BUSINESS IN SPAIN New business incorporation (IV) Branch or Representative Office Alternative to setting up a Limited Liability company Secondary establishments Only subject to VAT if they carry out business activities in Spain Do not have separate legal personality Two possibilities: Branch Office: representative of parent company; permanent powers of representation; certain level of autonomy Representative Office: carries out accessory, auxiliary or instrumental activities; does not apply the Corporate Income Tax

10 HOW TO DO BUSINESS IN SPAIN New business incorporation (V) Alternatives Associate through Joint Ventures Other Joint Venture alternatives Temporary Joint Venture (UTE) Groups of Economic Interest (AIE) Silent Partnership Agreement Distribution, agency, franchise relationship with 3 rd. Party already established in Spain

11 HOW TO DO BUSINESS IN SPAIN Incorporating Ltd. Liability Companies: Main Steps (I) Powers of Attorney Company Name Tax Identification Number Foreign Identification Number Cash Contributions Public deed of incorporation

12 HOW TO DO BUSINESS IN SPAIN Incorporating Ltd. Liability Company: Main Steps (II) SL express : alternative to accelerate the process by simplified electronic procedures - Requirements (i). Shareholders only natural persons (ii). Cannot be governed by Board of Directors (iii). Capital cannot exceed 30,000 when the incorporation Beneficial Owner: EU Regulations oblige to provide the identity of the real owner/s.

13 HOW TO DO BUSINESS IN SPAIN Ltd. Liability Companies: Corporate Governance Governance Bodies General Meeting Administrative Body: Directors are under a duty of care and skill (i). Sole Director (ii). Joint and several directors: act independently (iii). Joint directors (max. two if S.A.): act jointly or unanimously (iv). Board of Directors

14 HOW TO DO BUSINESS IN SPAIN Exchange Control and Foreign Investment Regulations (I) Exchange Control and Foreign Investment Regulations in Spain: Free from restriction (generally) Reporting obligation to competent authorities Who are considered Non-residents for these purposes? Individuals domiciled abroad / principal residence abroad Legal companies with registered offices abroad Permanent establishments and branches of Spanish resident individuals or companies abroad

15 HOW TO DO BUSINESS IN SPAIN Exchange Control and Foreign Investment Regulations (II) Reporting obligations (I) Foreign Investment in Spanish entities must be reported To the State Secretary for Trade (within 1 month after investment) Exemption: if proceed from a tax haven and exceed the 50% of the share capital Spanish residents must report all foreign transactions & balances of financial assets & liabilities

16 HOW TO DO BUSINESS IN SPAIN Exchange Control and Foreign Investment Regulations (III) Reporting obligations (II) Loans and credits granted by /to Non-Residents Required to obtain a Financial Operation Number NOF : no longer required as of January 1 st, 2014 Information of payments and transfer of funds Exempt if under 50,000

17 INTELLECTUAL PROPERTY & DATA PROTECTION (I) IP Rights Industrial Property Rights

18 INTELLECTUAL PROPERTY & DATA PROTECTION (II) IP Rights Copyrights, IP rights (literary, artistic, scientific work) National scope of protection Spanish Intellectual Property Act EU Directives & International Treaties aim to harmonise some features Protection is automatic by virtue of the mere creation Registration is not necessary but advisable Infringement: apply for cessation + claim reparation + preliminary injunction IP Rights encompass Moral Rights Rights of economic nature

19 INTELLECTUAL PROPERTY & DATA PROTECTION (III) Industrial Property Rights Rights over intangibles prior Registration Different levels of protection TRADEMARKS Spanish national trademark Spanish Trademark Act Spanish Patent and Trademark Office. 10 years protection renewed Community Trademark Regulation on the Community Trademark within EU Office of Harmonisation in the Internal Market. 10 years protection renewed International protection Madrid System unified application process World Intellectual Property Organisation

20 INTELLECTUAL PROPERTY & DATA PROTECTION (IV) Industrial Property Rights INDUSTRIAL DESIGNS Spanish industrial designs Legal Protection of Designs Act implements EU Regulations Registration: 5 years protection up to 25 years Community designs EU Regulation on community designs directly applicable in Member States Office of Harmonisation in the Internal Market. 5 years protection up to 25 years International protection Berne Convention, Paris Convention, The Hague Agreement, TRIPS Agreement

21 INTELLECTUAL PROPERTY & DATA PROTECTION (V) Industrial Property Rights PATENTS Spanish protection Spanish Patents Act Spanish Patent and Trademark Office 20 years protection non renewable. Licenses European Patent Issuance System Munich Convention: single application at European Patent Office. 20 years protection Several national patents according to national rules Unique European Patent Issuance System as for January 1, 2014 not yet Spain International Patent Issuance System Unified procedure to protect inventions: World Intellectual Property Organisation

22 INTELLECTUAL PROPERTY & DATA PROTECTION (VI) Industrial Property Rights UTILITY MODELS Limited Nationwide Assessment of the state of the art 10 years protection from Registration

23 INTELLECTUAL PROPERTY & DATA PROTECTION (VII) DATA PROTECTION Spanish Data Protection Act implements EU regulations Most important obligations: Registering data files Informing the subjects about processing Security measures Transferring data Disclosing data

24 TAX PERSPECTIVE Spanish Tax System (I) Spanish Tax System State level Regional level Local level

25 TAX PERSPECTIVE Spanish Tax System (II) State level Direct Taxes Corporate Income Tax (CIT) Individual Income Tax Indirect Taxes Harmonised at EU level Value Added Tax (VAT)

26 TAX PERSPECTIVE Spanish Tax System (III) Regional level Spain Autonomous regions: receive a percentage of state-level tax revenue Specific taxes Basque Country and Navarre: own regulations

27 TAX PERSPECTIVE Spanish Tax System (IV) Local level Business Activity Tax Tax on real property Motor vehicle tax Other taxes: tax on constructions, installations and works,

28 TAX PERSPECTIVE Spanish Tax System (V) Social security contributions Finance social and welfare payments On the employer side 32% of the monthly pay. On the employee side 6.35% of the monthly pay.

29 TAX PERSPECTIVE Corporate Income Tax (I) Corporate Income Tax Taxable event Profits of companies that reside in Spain Conflict of residence Double taxation treaties Tax Base & Tax Rate Declared accounting results subject to adjustments General Current rate: 30% Reduced tax rates: Less than 10 million: 25% if lower than 300,000 Less than 5 million and max. 25 employees: 20% if lower than 300,000 and 25% if 300,000 or above (in 2012 and 2013) New creation companies : 15% and 20% for first and second financial year with profits

30 TAX PERSPECTIVE Corporate Income Tax (II) Corporate Income Tax Tax Credits Profit distribution tax credit Specific tax credits: R&D and technological innovation investments Investment in films and production Reinvestment of extraordinary profits Tax Accrual Taxpayer s accounting year must not exceed 12 months calendar year

31 TAX PERSPECTIVE Corporate Income Tax (III) Corporate Income Tax Special Taxation regimes Corporate restructuring operations Special tax regime and regimes for groups Foreign securities holding regime (ETVE)

32 TAX PERSPECTIVE Value Added Tax (VAT) Value Added Tax Consumption of goods and services Entrepreneurs, professionals, companies must levy this tax Final tax burden borne by consumers VAT is harmonised within EU Rates General 21% Reduced 10% Ultra-low 4%

33 TAX PERSPECTIVE Agreements to avoid double taxation (I) Into force on 1st April 2013 NEW AGREEMENT BETWEEN THE KINGDOM OF SPAIN and THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE S REPUBLIC OF CHINA For the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income

34 TAX PERSPECTIVE Agreements to avoid Double Taxation (II) Hong Kong Parent Company Spanish Subsidiary Company Profit: 0% If participation is > 25%

35 TAX PERSPECTIVE Investment in LATAM (I) HK is blacklisted as tax haven in some important LATAM countries (Mexico, Brazil) HK does not have TT in force with LATAM countries HK has not entered into BITs with LATAM countries LATAM source income to HK investors higher taxes Local taxation is not reduced at source Investments are not legally protected

36 TAX PERSPECTIVE Investment in LATAM (II) CONCLUSION HK holding companies not efficient platform yet to invest in LATAM

37 TAX PERSPECTIVE Investment in LATAM (III) SPAIN PERFECT BRIDGE TO LATAM

38 TAX PERSPECTIVE Investment in LATAM (IV) SPAIN Perfect bridge to invest in LATAM Extensive Treaty Network reduces taxation on source Attractiveness of ETVE: Holding Regime Platform to channel international investments Tailored investment structures must be analysed in advance in case-by-case basis

39 LITIGATION & ARBITRATION (I) Spanish Jurisdiction Subject matter of the case Two instances (Supreme Court is not a third instance) General territorial rule defendant s domicile Simplified enforcement procedures Order for payment procedure European order for payment almost in all EU countries

40 LITIGATION & ARBITRATION (II) Arbitration and Mediation in Spain Important arbitration culture Commercial matters Seat of international arbitration procedures specially Latin America Party of The New York Convention (in 1985) Party of The Washington Convention on the Settlement of Investment Disputes between States and Nationals of other States (in 1965) Mediation Act

41 OUR OFFICES ABA CONTACT US Barcelona Office (Spain) Conde de Salvatierra, 10, 2º 2ª Barcelona Te.: Guangzhou Office Hong Kong Office Unit 1519, Bank of America Plaza Rooms 2119 & 2121, 21/F Leighton Centre 555 Ren Min Zhong Lu 77 Leighton Road Guangzhou Causeway Bay, Hong Kong, China Tel.: Tel.: