invertir en españa 2015 (eng)

Investing in Spain 2015

Margarida Crous Peraferrer

Foreing investments´ Spanish regulated sectors are:

National defense

Broadcasting

Telecommunications

Air transport

Gaming and betting

TAX PAYERS CLASSIFICATION:

Classifications of tax payers under Spanish tax Rules:

Tax residents:

Taxable base: Worldwide income (Double taxation applicable

under Tax Treaty conditions)

Non tax-residents.

Taxable base: Only Income obtained in Spain.

ESTABLISHING IN SPAIN BRANCH/SUBSIDIARY FOR TAX PURPOSES:

Branch: Considered a permanent establishment for tax

purposes subject to Non-resident regulations

Subsidiary: Considered a resident company for tax purposes

entirely subject to Spanish Tax regulations.

Individuals who spend 183 days during a tax year in Spain are normally deemed tax resident .

Or, “centre of vital interests” is in Spain,

Or, your spouse lives in Spain eventhough spend less than 183 days per year in Spain

SPANISH TAX RESIDENCE CRITERIA FOR INDIVIDUALS:

Individuals relocated to Spain with employment contract

allowed to choose being taxed as a non-resident for 5 years: :

Avoid taxing worldwide income

Maximum tax rate capped to 24% the first 600,000€

This option must be considered carefully

Specific amendments to the definition of tax residency (to attract wealthy foreing workers):

COMPANY DIRECT TAXES

TAXABLE BASE = EBT according to IFRS

Reduced size Co (less 10millions turnover) entitled to free depreciation

acompanied by the creation of employment

TAX RATE:

15% NEWLY FORMED COMPANIES. FIRST 2 YEARS OF TAXABLE PROFIT.

28% (2015) 25% (2016)

Capitalization reserve: 10% tax base reduction provided

profits are reinvested (additional 10% for SMEs)

PERMANENT ESTABLISMENT TAXATION

Management and general administrative expenses assigned

by the Parent company to the PE, tax deductible if:

1. Are included in the PE’s financial statements and

2. Assigned in a continuous and rational manner.

Tax rate: 28% (2015) 25% (2016)

% of Tax Country’s agreement if lower

Complementary taxation: When an PE transfers revenues

abroad, supplementary taxation 20% (2015) will be required.

Except when parent companies established in the UE (non tax

heaven) or in countries with DTT

P.E TAXATION

REAL ESTATE INVESTMENTS

TAXATION OF PROPERTY OWNED BY NON RESIDENTS:

RENTED PROPERTY: Rental income is taxable but expenses are

not deductible except in case of EU residents.

NON RENTED PROPERTY: Imputed income tax is

payable. The idea is that you could rent out your

property if you wished.

or

VAT

VAT applicable when transaction takes place in the Spanish

territory according to VAT rules.

VAT tax rate: 21%

Reduced Tax rate: 10% for certain products, including food

Super reduced tax rate: 4% for a short list of products

considered to be basic necessities (milk, eggs, flour, books,

etc.)

Real estate transactions VAT Rules

New property sales (residential): 10% VAT

Commercial properties: 21%

Secondhand property sales not subject to VAT but

subject to Transfer tax (tax ceded to 17 autonomous regions)

NON RESID.-SALE OF SPANISH PROPERTY

3% of property’s sale price must be retained by the buyer and

paid to Spanish tax authorities as a contribution to Non-

resident Income Tax regarding capital gains tax (20%). May

be tax will need to be refunded.

NEW EXIT TAX

NEW 2015:

An exit tax is established on unrealized capital gains of shares

for taxpayers that lose the status of tax resident in Spain

The value of their stake in their company exceeds €4 million

or when they own more than 25% of a business and its value

is more than €1 million

Profit tax based on legal system

Non-resident individuals With P.E Resident company

- IRNR (non-resident

income tax; income

earning by earning;

without compensation

between them) 24%

- Company tax of 28% or

treaty rate + 20% (2015)

for transfers to parent

except EU

- 28% (2015): rate may be

lower with deductions

- 25% (2016=

Canary Islands

REASON:

Canary Islands is an ultra-peripheral region of the EU, it has its

own Economic and Fiscal System (REF)

Fully approved by the EU in which double-taxation and fiscal-

transparency treaties apply

Advantages of Canary Special Zone (ZEC)

The effective period of the ZEC legislation ends 31 December

2026 although they can be extended with prior authorization

from the European Commission


Requirements for companies that wish to register in the ZECs:

Newly incorporated company with domicile located within ZEC

At least one of members of board of directors resident in Canary I.

Create 5 jobs in Gran Canarias or Tenerife, 3 in the other islands

within the first 6 months and maintain an average workforce during

the period in which company is registered as ZEC

Activities allowed in the ZEC

Submission of descriptive report


4% Corporate tax rate (currently in Spain: 28%)

Dividends distributed to parent companies exempt from

withholding tax (application of parent-subsidiary agreements

and double tax treaties)

Exemption from general Canary Island tax (IGIC-equivalent to

VAT) in transactions inside the ZEC and imports


Note: only useful for partners or transactions outside Spain

because If the parent company of the ZEC entity is a Spanish

company, it will not qualify for the tax credit for double

taxation of dividends or capital gains generated within Spain

(fiscal transparency will be applicable)

Alternatives when ZEC formalities are not accomplished

• Applicable to all types of companies, including PE of non-

resident companies

90% Corporate tax reduction applicable to non-distributed

profits reinvested in the Canary Islands

“Archipielago Canario” is on the off-shore invests top list.

Only Madrid has received more funds thant the Canary

Islands in 2014.

Golden Visa-Residence VISA for investors

• Residence visa to reside for at least 1year.

• Residence authorization for 2 years that can be renewed:

− If investment is maintained and

− If at least one visit to Spain has been made during the

residency period.

• To apply for the initial residence authorization, the person

must hold an investment visa.

Golden Visa

• Who can apply for it?

• Investors who make a significant investment in Spain:

− Real estate investment threshold: €500,000

− Shares or bank deposits (€1,000,000)

− Public debt (€2,000,000)

− Business projects in Spain considered to be of general interest

The visa can be obtained without requiring actual residency in

Spain, understood to be above 183 days.

It is only necessary to visit Spain once during the residency

period.

• Joint application for authorization of spouse and children.

Golden Visa

The visa does not include a work permit (except in the case of

business projects) and also does not require residing in Spain,

although it is necessary to visit the country once a year and

freedom of unlimited travel allowed within the Schengen area

A recent Draft-Law expects to expand benefits by including a

work visa and expanding the family members that can be

included (grandparents and representatives)

Golden Visa