The recently published Royal Decree-Law 4/2013, of February 22, on measures to support entrepreneurs, stimulate growth and create employment (Official Gazette of the Spanish State (BOE) No. 47, February 23, 2013) approves the following important measures:
MEASURES TO AVOID LATE PAYMENT
The Late Payment Act (the “Act”), aimed at combating late payments of monetary debts and abuse to the detriment of creditors, has been reformed, introducing fixed payment periods for commercial transactions. The Late Payment Act applies to all payments of consideration in commercial transactions between companies, and between companies and the public authorities.
If a payment period has not been agreed, it will be understood to be 30 calendar days from the date the goods are received or the services provided. For the first time, the Act includes the possibility to establish installment payment schedules in agreements. The Public Sector Contracts Act has also been amended in relation to payment periods.
The default interest that debtors would have to pay, if applicable, has been increased from 6% to 8%. If no default interest is agreed, it will be the interest applied by the European Central Bank to its most recent main financing transaction.
FISCAL MEASURES TO STIMULATE ENTREPRENEURIAL GROWTH
Several fiscal measures have been introduced relating to company tax and personal income tax, mainly aimed at stimulating entrepreneurial initiatives to develop businesses; for example, a new reduced tax rate applies to newly created entities engaging in business activities and incorporated from January 1, 2013. The tax rate applicable in the first tax period in which these entities’ taxable base is positive, and in the following tax period, is 15% on the first €300,000 of the taxable base and 20% on any amount over €300,000.
Regarding personal income tax, and in line with the measure introduced for company tax, a new 20% reduction applies to net return derived from business activity obtained by taxpayers that (i) started to engage in that business activity from January 1, 2013, and (ii) apply the direct assessment method.
LABOR MEASURES PROMOTING YOUTH EMPLOYMENT AND ENTRENEURSHIP
Important new developments have been introduced to labor legislation aimed at promoting youth employment and entrepreneurship. We highlight the changes concerning temporary contracts through the creation of the "first youth job" contract and the changes to the requirements in internship agreements.
Social security incentives have also been approved for part-time hiring, and hiring by micro companies and for entrepreneurial projects.
MEASURES RELATING TO RAILWAY TRANSPORT
The Railways Act has been amended to enable the progression of free competition, establishing a temporary market scheme that new operators can access by obtaining authorizations in addition to meeting the established conditions. Starting July 31, 2013, railway passenger transport mainly relating to tourism will be regulated under the free competition regime.
HYDROCARBONS: DEREGULATION OF THE SERVICE STATION REGIME
A greater deregulation of the regime on installing service stations has been approved. The authorities’ powers have been limited, and planning requirements have been reduced, allowing retail service stations to be installed in shopping malls, industrial estates and similar facilities.
The autonomous regions will regulate the administrative procedures for authorizing these installations, resolving all issues relating to an installation project in one procedure within eight months and with the understanding that silence is a positive vote.
OBLIGATION FOR INDIVIDUALS AND COMPANIES RESIDING IN SPAIN TO INFORM THE BANK OF SPAIN OF CERTAIN FOREIGN ECONOMIC TRANSACTIONS AND THE TAX AUTHORITIES OF ANY ASSETS AND RIGHTS HELD ABROAD
Individuals and companies must inform the Bank of Spain of (i) transactions they carry out with foreigners; and (ii) assets and liabilities they hold abroad, as well as any changes to these.
All individuals and companies residing in Spain (excluding payment service providers registered with the Bank of Spain) that carry out transactions with non-residents or hold assets or liabilities abroad must meet this information obligation.
Companies belonging to a group must submit this information individually. However, if certain requirements are met, one party can submit the information on behalf of all the others.
In October 2012, a new act was approved, introducing the obligation for companies and individuals to annually inform the tax authorities of any assets or rights they hold abroad.
This annual declaration must include information on the following assets and rights held abroad:
- Accounts held abroad in financial institutions (i) of which the mentioned tax residents are (a) titleholders, (b) representatives, or (c) authorized parties or beneficiaries; or (ii) over which they have powers of disposal.
- Securities, rights, bonds, loans and similar financial instruments. Act 7/2012 includes securities contributed, for management or administration, to any kind of legal mechanism, including fideicomisos (a Spanish concept similar to trust), trusts and estates which, although lacking legal personality, can be used in the course of trade.
- Insurance, and life-long or fixed-period/temporary annuities.
- Properties located abroad or rights to them.
The deadline for submitting this declaration is January 1 to March 31 of the year following the year to which the information refers. However, information relating to assets and rights held abroad corresponding to 2012 must be submitted between February 1 and April 30, 2013.
Significant penalties are imposed for incorrect, incomplete or late submissions. Under law, there is a penalty of €5,000 for unreported, inaccurate, or false information, with a minimum penalty of €10,000 for the categories of assets listed above. The penalty for late submissions is €100 for each piece of information relating to an asset or right, with a minimum penalty of €1,500.
For more information, see our Legal Flash about declaration of information concerning assets and rights held abroad
LEGISLATION IN PROGRESS: COASTAL ACT
Draft bill on protecting the coast and ensuring its sustainable use, and modifying Coastal Act 22/1988, of July 28 (Official Gazette of the Spanish Parliament (BOCG), Series A, No. 29-1, October 19, 2012)
The draft bill substantially changes very important aspects for persons holding assets or rights regulated by the current coastal act, mainly owners of frontline coastal residences, holders of administrative concessions, as well as, in some autonomous regions, persons owning boat moorings or premises at sports marinas. One of the most significant changes is that public-domain administrative concessions would be granted for 75 years instead of the current 30. To benefit from this measure, concession holders would have to ask the corresponding public authority to extend their concessions.
Double taxation: On January 14, 2013, the text of the new Protocol to the Convention between the Kingdom of Spain and the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was published, replacing that approved on February 22, 1990.
The new text changes 14 articles of the convention, modifying the definitions of various concepts, such as permanent establishment, levies and pension funds, as well as those relating to regimes for collective investment institutions and real estate investment funds.