Analysis GA&P | September 2015 1 The Second Chance Mechanism (Financial Burden Reduction and other Employment-Related Measures) Act 25/2015 of 28 July (“Act 25/2015”) amends, under its eleventh final provision, the Entrepreneurs (Support and their Internationalisation) Act 14/2013 of 27 September (“Act 14/2013”). When the latter piece of legislation was passed, Spain’s immigration policy only focused on the situation of the labour market; the latest amendment seeks to increase the depth of field by keeping in view not only the specific situation of the internal labour market, but also the immigration policy’s contribution to domestic economic growth. Indeed, a country’s policy in respect of immigration is increasingly considered an element of competitiveness, to the extent that the admission of qualified professionals to our neighbouring countries has become an international reality that is thought to represent, globally, around 30% of international economic migration. The OECD has identified the institutional and regulatory environment of the host State as a key factor conducive to entrepreneurship, and this has driven more advanced countries to introduce systems that are specifically designed to a t t ra c t inve s tmen t and talen t and a re characterised by streamlined procedures and specialised channels. Against this backdrop, below follows a brief description of the changes made by Act 25/2015 to parts of Act 14/2013. 1. Foreign investment and entrepreneurial activity: valued if jobs are created in Spain 1.1. A r t . 7 0 o f A c t 1 4 / 2 0 1 3 d e f i n e s entrepreneurial activity as innovative activity of special economic interest to Spain, holding as evidence of the same a favourable report applied for either from the Economy & Trade Office (Oficina Económica y Comercial) in the relevant geographical jurisdiction or from the Directorate-General for International Trade and Investment (Dirección General de Comercio Internacional e Inversiones). In the case of foreigners legally residing in Spain, the application must be lodged with the Large Enterprises and Strategic Professional Groups Unit (Unidad de Grandes Empresas y Colectivos Estratégicos), which, on its own initiative, must request the report from the Directorate-General for International Trade and Investment, deliverable within ten working days. The examination of the aforementioned applications must consider, in addition to the – in particular and as a matter of priority - creation of jobs in Spain, the following: a) The applicant’s professional profile, his training and professional experience and his involvement in the project. In the event of several partners, the involvement of each of them, both of those requiring a visa or permit and of those not requiring the same. b) The business plan, which at the very least must include the following: 1) a description of the project, stating Establishment of companies and foreign qualified professionals as a support for entrepeneurs and their internationalisation (The New Spanish Golden Visa) Lourdes López Cumbre Professor of Employment and Social Security Law, Universidad de Cantabria Academic Counsel, Gómez-Acebo & Pombo Analysis GA&P | September 2015 2 the business to be carried out, its commencement date, its location, the legal form envisaged for the company, the investment’s potential economic impact, the estimated number of jobs to be created and the functions and qualifications thereof, the envisaged promotion activities and the sales strategy; 2) a detailed description of the product or service, inclusive of its innovative aspects; 3) a study of the market, containing a valuation and expected trend of the same, a description of potential competitors, an assessment of potential consumers and an analysis of supply and demand; 4) the funding for the project, noting the investment needs, sources of finance and financial plan. c) The added value for the Spanish economy, the innovation and the investment opportunities opened up by the project. 2. The establishment of highly qualified foreign professionals 2.1. According to the new wording of art. 71 of Act 14/2013, a residence permit for highly qualified professionals, valid throughout the national territory, may be applied for by companies requiring the engagement of foreign professionals within the Spanish territory under any of the following cases: a) A manager or highly qualified staff membe r when the company o r group of companies meets any of the following conditions: 1) average number o f employee s in Spain during the three months immediately preceding the application, registered under the appropriate Social Security regime, greater than 250; 2) total annual net turnover in Spain in excess of 50 million euros or value of shareholders’ funds or net assets in Spain in excess of 43 million euros; 3) annual average gross foreign investment inflows not lower than 1 million euros in the three years immediately preceding the application’s filing year; 4) foreign investment position totalling more than 3 million euros according to the latest data recorded in the Ministry of Economy’s Register of Foreign Investments; 5) in the case of small to medium-sized companies established in Spain, that such appertain to a sector considered strategic as evidenced by report from the Directorate-General for International Trade and Investment. Evidence of compliance is required one-time only as thereafter the company shall be registered with the Large Enterprises and Strategic P r o f e s s i o n a l G r o u p s U n i t f o r automatically renewable three-year periods. Any alteration in respect of the conditions must be notified by the company to the aforementioned Unit within thirty days, under penalty of being struck off. b) Alternatively and provided that the condition alleged hereunder is considered and proven to be f o r th e publi c in t e r e s t b y th e Directorate-General for International Trade and Investment, a manager or highly qualified staff member when he or she would form part of a business project that means one or more of the following: 1) a significant increase in the creation of jobs directly by the applicant; 2) the maintenance of employment; 3) a significant increase in the creation of jobs in the business sector or geographical area where the work activity will be carried out; 4) an extraordinary investment with relevant socio-economic impact in the geographical area where the work activity will be carried out; 5) a response to trade and investment poli cy con cern s in Spain; 6) a significant contribution to scientific and/or technological innovation. c) Graduates and postgraduates from world-class universities and business schools. 3. Residence permits under intra-company transfers 3.1. The new art. 73 of Act 14/2013 requires that those foreigners moving to Spain und e r a w o r king o r p r o f e s si on al Analysis GA&P | September 2015 3 relationship or for vocational training with a company or group of companies established in Spain or in another country must hold the appropriate visa according to the duration of the transfer and a residence permit under an intra-company transfer, which will be valid throughout the national territory. In addition to proving fulfilment of the general requirements of art. 62 (on the residence visa for inves tors) , evidence of the following is required: 1) the existence of real business activity and, where applicable, that of the group of companies; 2) a higher education degree or equivalent or, where applicable, minimum pro fessional experience of three years; 3) the existence of a working or professional relationship, prior and ongoing, of three months with one or more of the group companies; 4) company documentation evidencing the transfer. 3.2. Residence permits under intra-company transfers can take one of two forms: a) The first is the residence permit under an EU ICT intra-company transfer. This permit is appropriate in temporary assignments to work as a manager or specialist or for training from a company established outside the EU to an entity belonging to the same company or group of companies established in Spain. For these purposes, an individual who has amongst his or her functions the management of the company or of a department or subdivision there of shall be considered a manager. An individual with specialist expertise related to the company’s activities, techniques or management shall be considered a specialist. And finally, a university graduate transferred in order to obtain training in the company’s techniques or methods and who receives remuneration for this shall be considered a trainee. The maximum duration of the transfer is three years for managers and specialists and one in the case of trainees. Holders of a residence permit under a valid EU ICT intra-company transfer, issued by Spain, may enter, reside and work in one or more Member States subject to prior permit notification or application, as appropriate, to the authorities of said States in accordance with their legislation implementing Directive 2014/66/EU of the Parliament and of the Council of 15 May 2014 on the conditions of entry and residence of third-country nationals in the framework of an intra-corporate transfer. Entities established in other Member States of the European Union may transfer to Spain, after notifying the Large Enterprises and Strategic Professional Groups Unit, foreign holders of an EU ICT intra-company transfer permit whilst said permit is valid. It is true that the Directorate-General for Migration (Dirección General de Migraciones) may object within a period of twenty days, stating the reasons for such objection, to mobility in the following cases: i) where the conditions in this provision are not met; ii) where the documents submitted have been fraudulently acquired or have been falsified or tampered with; iii) when the maximum duration of the transfer has elapsed. In the event of objection by the Directorate-General for Migration, the first State shall allow re-entry without further formalities of the foreigner transferee and his or her family. If the transfer to Spain had not yet taken place, the refusal shall prevent the same. b) The second form is the national residence permit under an intracompany transfer. This permit is appropriate in those cases not covered by the previous section or once the maximum duration of the transfer referred to in the preceding paragraph has elapsed. 4. Intra-company transfers of groups of professionals 4.1. For its part, the new art. 74 of Act 14/2013 contains the rules on intra-corporate transfers of groups of professionals and its simplified procedure. In this regard, companies or groups of companies t h a t m e e t t h e r e q u i r em e n t s o f Analysis GA&P | September 2015 4 art. 71(1)(a)1 may apply for collective processing of permits that will be based on the planned management of a temporary quota permit applied for by the company or group of companies . Those companies or groups of companies may apply for registration with the Large Enterprises and Strategic Professional Groups Unit. The registration will be valid for three years, renewable as long as the requirements are met. Any alteration in respect of the conditions must be notified by the company to the aforementioned Unit within thirty days, under penalty of being struck off. Registered companies are exempt from proving fulfilment, at the time of the application, of some of the rule’s requirements. However, the Administration may, of its own initiative, check compliance with these requirements, for which the entity must have supporting documentation. 4.2. In any case, this regulation does not apply to companies or groups which, in the three years immediately preceding the permit application, have been sanctioned for a serious or very serious infringement in immigration matters or have not proven compliance with requirements in checks carried out by the Administration. 5. General rules on permits 5.1. Residence permit processing is handled - ex art. 76 Act 14/2013 - by the Large Enterprises and Strategic Professional Groups Unit, providing for the use of electronic means, and the granting of the permits lies with the Directorate-General for Migration. A decision must be delivered within twenty days from the filing of the application with the body competent for processing, after which time the permit is deemed granted by administrative silence. The decision must state the reasons on which it is based and may be open to administrative review. Moreover, applications for residence permits under this section shall extend the validity of the applicant’s residence or long-stay status pending the outcome of the procedure. 5.2. Holders of a residence permit may apply for two-year renewal periods provided they continue to meet the conditions that gave rise to the right, and shall be processed using electronic means. The Directorate-General for Migration may request the necessary reports to pronounce itself on the continued fulfilment of the conditions that gave rise to the right. Filing of the application for renewal shall extend the permit’s validity pending the outcome of the procedure. Such validity will also be extended in the event that the application is filed within ninety days after the end of the previous permit, without prejudice to the opening, where appropriate, of the relevant sanctioning proceedings. Any change du ring the re siden ce that affects fulfilment of the conditions for admission must be notified by the applicant to the Large Enterprises and Strategic Professional Groups Unit within thirty days (seventh additional provision of Act 14/2013). The competent bodies of the General Administration may carry out the checks they deem appropriate to verify compliance with the legislation in force and, where it is found that the statutory conditions are not met, the permit or visa may be revoked (stating the reasons for the same) once the residence or visa holder has been given the chance to be heard. 6. Insufficient regulation for a judicious objective 6.1. To foster entrepreneurship and business activity, Act 14/2013, first, and now Act 25/2015, provide certain exceptions to the rigid rules on residence and work permits for foreigners. It is recognised, first, that foreigners may apply for a visa to enter and stay in Spain for a period of one year “for the sole or main purpose of carrying out the preparatory steps to pursue an entrepreneurial activity” (art. 68 Act 14/2013). On obtaining this long-stay visa, entrepreneurs can achieve residence status, to which the described 1 See section 2.1 a) of this briefing note. Analysis GA&P | September 2015 5 regulation is geared. And so, foreigners requesting entry to Spain or who, holding a residence permit or long-stay visa, intend to initiate, conduct or direct business activity as entrepreneurs, may obtain a residence permit for business activity that is valid throughout the national territory. In the described amendment the legislator draws a difference between the residence for entrepreneurs, defining entrepreneurial and business activity for this purpose, and the dispensation of a residence permit for highly qualified professionals, regulating two different legal regimes. In the first case, not only the applicant’s profile acquires special significance, but also the business plan submitted; in the second, it is the Spanish companies that require qualified foreign staff under a working or professional relationship amongst management or highly qualified staff and graduates or postgraduates from world-class centres. Aside, laying down specific regulation, are the residence permits under intra-company transfers for those foreigners who move to Spain under a working or professional relationship or for vocational training with a company or group established in Spain or in another country. Such permits are for a maximum period of three years for managers or specialists and one year in the case of trainees, although the legislator leaves the door open in recognising the possibility of permitting residence under an intra-company transfer “when the provided maximum time has elapsed”. Lastly, special consideration is given to intra-company transfers of groups of professionals, that is, the collective processing of permits based on the planned management of a temporary quota of permits applied for by companies or groups of companies. 6.2. As can be seen, it involves long-stay visas or residence permits allowing for investment, professional conduct, starting a business, but also rendering of services under employment, without an express referral to the work permit rules contained in the Foreigners (Rights, Freedoms and Social Integration in Spain) Act 4/2000 of 11 January. Both self-employment and paid employmen t a re gove rned by somewha t restrictive rules. Thus, paid employment requires residence and work permits to perform any lucrative activity, be it workrelated or professional. The effectiveness o f bo th permi t s i s condi tional on registration with the Social Security. If it is the employer that requests a work permit such will be conditional upon the presentation of the employment contract evidencing the continuous provision of services throughout the period of validity of the residence and work permits. Absence of any such permit, and apart from the employer’s Social Security-related liability, shall neither invalidate the employment contract regarding the rights of foreign workers nor obstruct the obtainment of benefits under the international conventions for the protection of workers or other benefits to which they may be entitled, provided such are compatible with the foreigner’s situation (art. 36(5) Act 4/2000). It is true that, except in cases provided by law, the recognition of a benefit shall not modify the irregular administrative situation of a foreign worker. However, the law allows the application of special criteria for those nationalities with which there is a principle of reciprocity. 6.3. The administrative simplification and attraction of foreign talent, skills and investment sought by the regulation s u p p o r t i n g e n t r e p r e n e u r s h i p i s extremely plausible. Not surprisingly, it opens a much more attractive field for the internationalization o f our companies and business groups, which need to increase their competitiveness to expand in global markets. However, legislation which includes long-stay visas or residence permits for professional (and/or work-related) activities should have made some kind o f re ferral , renovation or modernisation of the rules on work permits. The lack of connection between two pieces of legislation - unless lower-ranking administrative instructions or subsequent legislative amendments prevent it - contributes to implementing distortions Analysis GA&P | September 2015 6 For further information please visit our website at www.gomezacebo-pombo.com or send us an e-mail to: email@example.com. Barcelona | Bilbao | Madrid | Valencia | Vigo | Brussels | Lisbon | London | New York which are easily avoided with more precise legislative drafting. Leszek Nowak, a Polish philosopher and expert in the application and semiotics of legal rules, proposed the fictional construct of a rational legislator. Assuming such rationality, systematic jurists can attribute to the legislator the solutions proposed by them in order to bring the law into conformity with certain axiological s tanda rd s , clo se gap s , elimina te contradictions, clarify vague terms, eliminate superfluous rules, etc. And all this without involving an amendment of positive law, presenting their proposals as a description of the law in force as it must have been genuinely intended by the legislator. But, to avoid such fiction, it would suffice to polish legislative drafting with the necessary connection between two legal fields that are concurrent in the application of the same.