ICEX-INVEST IN SPAIN

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What is the “Registro de Inversiones Exteriores” –“Register of Foreign Investments”- and when is it necessary to declare an investment that has been made?

    Investments and withdrawals of foreign capital in Spain must be declared to the “Registro de Inversiones Exteriores” –“Register of Foreign Investments”- within the Ministry of Economy and Competitiveness, for administrative, statistical or economic purposes. Investments from tax havens must be declared beforehand unless they are tradeable stocks that have already been subject to public issue in an official secondary market.


Last updated: 21|08|2013

Who should make the declaration to the Foreign Investment Register?

    a) As a general rule:

    • The non-residents responsible for the investment.

    b) Exceptions:

    • Investment service companies, credit agencies, other authorized financial entities or entities whose involvement is essential for share transfer or which act as custodians or administrators of purchased shares when the investment is made in tradeable stocks;
      The Spanish company in which an investment is made, in the case of nominal shares;
      Investment Fund managers when the investment is made using Spanish funds.

Last updated: 21|08|2013

Employment costs borne by the company for each employee

    In general, any company seeking to employ staff in Spain is responsible for the following:

    • Salary: An employee's salary is the economic consideration he or she receives in return for his/her services. The amount paid shall be that agreed upon between the company and the employee. The minimum employment conditions established in the sector's Collective Agreement should always be respected, with any deviation from that stipulated only permissible if it represents an improvement for the employee. The Collective Agreement is usually the instrument which legally establishes minimum salaries.
    • Social security contributions: All companies with employees need to pay the General Social Security Revenue Office a set amount by way of social security contribution. This sum is divided into the company's contribution and the employee's contribution.
    • The company's contribution is calculated as an additional cost to the gross salary, whilst the employee's contribution is borne by the worker and deducted from his/her gross salary.
      With respect to the employee's Social Security contribution, it is important to bear in mind that this contribution is calculated by applying a specific percentage to the employee's contribution base.
    • The contribution base depends on the employee's salary. In 2012, the maximum contribution base is set at 3,262.50 euros per month.
    • The corresponding percentage which determines the employee's contribution to the contribution base may vary slightly due to a number of circumstances (such as the contract type).
    • As a general rule, the applicable rate when calculating the employee's contribution is approximately 29.90%, regarding coverage of common contingencies - unemployment, training and the Wages Guarantee Fund (in the case of a full-time contract).
    • In addition to the above, the employee's contribution to cover professional contingencies should be added. In this case the applicable rate would vary depending on the company's business activity (for example, the percentage rate applicable in office-work companies is 1%).

    Other costs: The aspects outlined above represent the main costs to be borne by the company. Nevertheless, depending on the stipulations in each Collective Agreement, there may be other costs (social benefits and provisions, bonuses etc).


Last updated: 21|08|2013

Employment Incentives

    In Spain there are a wide range of incentives to encourage employment. These incentives are normally tied into Social Security contribution subsidies or reductions.

    It is worth highlighting the incentives related to the new “Indefinite Employment Contract Offering Support to Entrepreneurs” (Contrato de trabajo por tiempo indefinido de apoyo a los emprendedores), available to companies with less than 50 employees. Assuming that certain pre-requisites are met, the contract in question offers the option to apply significant tax incentives in the form of Social Security subsidies of up to 1,500 euros a year.

    For further information from the Department of Social Security regarding subsidised contracts of this type, employees covered by these incentives, and the subsidy or reduction percentage applicable in each case, click here (only available in Spanish).
    found at this link .


Last updated: 21|08|2013

How many technology and science parks does Spain have?

    Spain, at the beginning of 2010, had more than 80 technology and science parks distributed throughout the 17 Autonomous Communities. The majority of these parks are part of the “Asociación de Parques Científicos y Tecnológicos de España (APTE)” –“Association of Science and Technology Parks of Spain”-, whose website is: www.apte.org.


Last updated: 21|08|2013

What are SMEs?

    Small and medium-sized enterprises (SMEs) can be defined in terms of the number of employees, their business volume or their annual balance-sheet total. According to the European Commission Recommendation 2003/361EC:

    • A medium-sized company can be defined as one which employs at least 250 people and whose annual business volume does not exceed 50 million euros or whose annual balance-sheet total does not exceed 43 million euros.
    • A small company can be defined as one which employs less than 50 people and whose annual business volume or annual balance-sheet total does not exceed 10 million euros.

    SMEs enjoy a special tax regime, with a lower tax rate (25% for profits under 300,000 euros, and 30% for profits over said amount) as well as other fiscal benefits. From a fiscal perspective, an SME is considered to be a reduced-size company and may therefore take advantage of lower tax rates, where the net turnover is under 10 million euros in the preceding tax year.


Last updated: 21|08|2013

Are there any tax breaks for Pymes?

    In accordance with regulations governing corporation tax, those companies whose turnover corresponding to the tax period immediately preceding is less than 10 million Euros shall be eligible for certain tax benefits.

    • With regard to the amortization of new tangible and intangible fixed assets and real estate investments, they are able to amortize these either freely in certain instances, or at an accelerated rate in others.
    • In addition, loss for depreciation of credit to cover risk for insolvency is deductable up to a limit of 1% of receivables.
    • As far as the tax rate is concerned, the idea is that Pymes pay 25% on the first €300.000, and 30% on the rest unless they meet certain employment retention criteria and have a turnover lower than €5,000,000 and an average workforce of fewer than 25 employees. In this case, the tax rate would be 20 and 25 % respectively.
    • Additionally, those entities whose net turnover is less than 1 million Euros will be exempt from the tax on business activities.

Last updated: 21|08|2013

What are “Uniones Temporales de Empresas –UTEs” -“Temporary Business Alliances”-?

    UTE is the acronym used in Spain for “Uniones Temporales de Empresas” -“Temporary Business Alliances”-. This can be defined as a system in which two or more companies which have a common interest come together to carry out a project or provide a certain service, temporarily setting themselves up as a single company for the duration of the project or service.

    The UTE does not have its own legal personality, and so the tax base resulting from the UTE (positive or negative) is assigned to the participants in the temporary joint venture proportionally according to the percentage held as indicated in the articles of association.

    Nonetheless, UTEs behave like independent companies reporting to a single authority and as such should not be confused with joint ventures which are set up as contractual agreements.


Last updated: 21|08|2013

How do “Uniones Temporales de Empresas –UTEs” -“Temporary Business Alliances”- pay tax?

    As regards direct taxation, a special tax system is applicable to temporary joint ventures which meet certain requirements. This system is similar to the fiscal transparency system, although with particular features.

     

    Drafted by:


Last updated: 20|02|2015

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