FAQ

International Law Firm

FREQUENTLY ASKED QUESTIONS

Here you will find additional information that will help to quickly resolve any doubts you may have.

Incorporation of spanish companies

  • What are the first steps in setting up a Spanish subsidiary?

    The first steps in setting up a new company in Spain would be:

    • a) Identification of the foreign agent: name, address, NIF of origin and Spanish NIF, if applicable. If the new agent does not have a Spanish NIF, it must apply for one before incorporating a company in Spain;
    • b) Choose the company name. You may request five names, in order of preference, in case the preferred ones are not available; and
    • c) Define who will be the directors of the new company. You can opt for a single director, two directors (acting jointly or separately, as you prefer) or a board of directors.
  • To incorporate a company in Spain is it necessary to be physically present in Spain or can it be done by means of a Power of Attorney (PoA)?

    The whole process of incorporation can be done by power of attorney.
    The PoA must include the application for the Tax Identification Numbers of the shareholder and the Directors of the company and also incorporate the company before a Spanish notary.
    Please note that these powers of attorney must be granted at a Spanish consulate or before a foreign notary. Generally, a PoA in two-column format (Spanish/English) is acceptable in many countries. However, in other countries notaries are reluctant to notarise PoAs in foreign languages, so in this case, it may be advisable to execute the PoA in Spanish before the Spanish Consulate.
  • What other documents are necessary to incorporate a Spanish company?

    The tax authorities and the Spanish notary will need proof of the existence of the foreign investor. The preferred document for this purpose is a notarised affidavit (with the correct wording). An extract from a public body, such as the Chamber of Commerce or the Commercial Register, can also be used.
  • Is it necessary to open a bank account in Spain?

    Once the name of the new company is awarded you could open a bank account for the new company information. This bank account would be used to fund the initial share capital. The amounts deposited in the account would not be released by the bank until the incorporation process has been fully completed, i.e., the new company has been registered in the Commercial Register.

    Once the funds have been deposited, the bank will issue an affidavit stating that the share capital has been paid up. This certificate will be filed with the notary where the company is to be incorporated. When sending the funds to the bank account it is important to ensure that the transfer clearly states that the funds are for the share capital of the new company. It is also important that the funds are sent from an account belonging to the shareholder of the new company (e.g. avoiding transfers from other group companies…).

    That said, the Spanish Companies Act does not require the bank account of the new company to be in a Spanish bank. So, theoretically, a bank account could be opened in a foreign bank.

  • What documents are required to open a branch in Spain?

    The following documents are required to open a branch in Spain:

    • Certificate of solvency of the parent company (head office);
    • Resolution of the Board of Directors / Shareholders to open a branch office in Spain, and a
    • Power of attorney in favour of our company to act on its behalf.
  • Are ready-made companies allowed in Spain?

    Ready-made companies are standard companies that have already been incorporated and are ready to be sold to an investor. In case of extreme urgency, they can be useful, but they have two major drawbacks.

    First of all, you can never know whether companies have hidden liabilities or debts. Although sellers always claim that the companies are new and have never been active, there is no way to be sure of this.

    The second major drawback is that these companies are targeted by tax authorities and other regulatory bodies (such as the anti-money laundering commission). This is because, in the past, these companies have been used by criminal organisations to hide the beneficial ownership of certain investments.

  • Does Spanish tax law allow for a company similar to a US S-corporation?

    An S-corporation is a pass-through entity. It does not pay corporate income tax. All income is allocated to the shareholders and taxed on the shareholder’s personal tax return. In Spain we do not currently have any pass-through entities for foreign investors. However, we do have pass-through entities for resident individuals and companies called UTEs and AIEs.
  • Are NIE and NIF the same thing?

    The Tax Identification Number (“NIF”) must be applied for at the Tax Agency, and the number would be the same as the NIE, which is issued by the Police. Therefore, the NIE and the NIF are different things (because they are issued by different authorities and for different purposes) but they actually have the same digits. In short, knowing your NIE you already know what your NIF would be, but this does not mean that you have a NIF until the Tax Agency assigns it to you.
  • Can I apply for a European VAT number if I operate in Spain through a virtual office?

    A virtual office will not allow you to obtain a European VAT number. You will not be registered with the VIES as a taxable person. In other words, if you intend to buy or sell in other EU countries, the Spanish Tax Agency requires you to have a physical office with at least one employee.
  • If I benefit from the special tax regime for foreign employees posted to Spain (Beckham Law), do I have to file form 720 (declaration of assets abroad)?

    The Tax Law does not expressly state that taxpayers benefiting from the special tax regime for foreign workers posted to Spain are exempt from filing form 720 (declaration of assets abroad).

    However, the Tax Agency has issued a note in which it acknowledges that form 720 is not required for these taxpayers.

  • Is it common practice in Spain to sign a fixed-term employment contract?

    Fixed-term employment contracts are only allowed in certain circumstances. Failing this, the contract must be indefinite.

    Currently, fixed-term contracts are only allowed in two cases: to perform a specific job (e.g. to develop a specific app or software) or to support an employer’s peak workload.

Mergers and acquisitions (M&A)

  • I’ve received an offer to purchase my company and I need advice and guidance before negotiating and closing the operation.

    Lupicinio International Law Firm’s multidisciplinary mergers and acquisitions team has extensive experience advising on all manner of commercial operations. Our M&A team includes litigators who will prevent problems and protect against litigation. We will support you throughout the negotiation process and maximize you best interests:
  • What are the main corporate entities typically involved in private acquisitions?

    The two types of companies typically used in private acquisitions are as follows:

    Public limited company (Sociedad anónima SA in Spanish). The share capital is divided into bearer or registered shares. PLCs can be listed and traded on stock exchanges. SAs must be incorporated with a minimum share capital of €60,000.

    Limited company (Sociedad limitada SL in Spanish). The share capital is divided into shares. SLs cannot be listed on stock markets. The minimum share capital is 3,000 euros.

  • Are there restrictions in company law on the transfer of shares in a private company?

    Shares: In general, shares in joint stock companies are freely transferable. The articles of association may provide for restrictions on transferability, but only in the case of registered shares (and not bearer shares) and taking into account that the transfer of registered shares cannot be totally limited (although a block is allowed for two years from the date of issue of the shares).

    Company shares: In general, shares cannot be freely transferred, and the transfer of shares must be subject to certain restrictions. Shares may be freely transferred between shareholders, group companies, spouses of shareholders, ascendants and descendants (unless otherwise provided for in the articles of association). In all other cases, the transfer is subject to the restrictions laid down in the articles of association. However, the lock-up may only be valid for a maximum of five years from the issue of the units concerned (unless an earlier exit right is provided for).

  • What are the most common ways of acquiring a private company? What are the main advantages and disadvantages of buying shares (versus buying assets)?

    Actions:

    Advantages of buying shares: The main advantage of the share purchase is simplicity. The share purchase agreement does not have to follow a transfer or assignment mechanism for any of the following elements, as they are all transferred indirectly with the transfer of the shares.

    Disadvantages of share purchases: Specific regulations and requirements may apply to the transfer of each asset. Assignment of agreements essential to the continuity and operation of the business (such as supply or maintenance agreements) may be required, and the consent of the counterparties to such agreements may also be necessary.

    Assets:

    Advantages of asset purchases: The buyer can choose the specific assets it wishes to purchase and can dispense with unwanted assets or other assets unrelated to the transaction (as well as liabilities).

    Disadvantages of asset purchase: Buying the business involves receiving all assets and liabilities without the ability to dispense with specific unrelated or unwanted assets. The buyer must also assess the potential impact of change of control clauses in the agreements entered into by the target. Another disadvantage is that if the transaction requires a third party (such as a bank) to take security over the target’s assets in exchange for financing, the share purchase cannot be used.

  • What preliminary agreements are usually made between buyer and seller before the contract?

    Letters of intent: Letters of intent (or memoranda of understanding) are non-binding documents that usually contain commercial and technical information about the project and potential investors.

    The letter usually includes the following:

    • The object of the transaction;
    • Price;
    • The details of the funding;
    • That the offer is not binding;
    • Internal and third party approval (if applicable);
    • The status of the due diligence review; and
    • Future plans for the objective.

    Exclusivity agreements: Exclusivity agreements are normally included in letters of intent or binding offers. Under an exclusivity agreement, the seller must negotiate with only one potential buyer in each period.

    Confidentiality agreements: Non-disclosure agreements regulate the relationship between the buyer and seller regarding the confidentiality of information disclosed in the acquisition process. Additional restrictions or requirements exist for listed entities. Penalty clauses for breach of the non-disclosure agreement may also be included to determine the damages to be paid by the breaching party.

  • What common conditions precedent are typically included in a share sale agreement?

    In a sale of shares, the parties usually agree to include the following conditions:

    • Authorisation by the competition authorities, and provisions if the authorisation is subject to compliance with additional conditions;
    • Authorisation from other administrative bodies;
    • Compliance with legal/statutory requirements for the transfer of shares (transfer of less than 100% of the share capital);
    • Authorisation of the seller’s/buyer’s companies for the transaction;
    • Third-party consents from counterparties to contracts that the target has entered into;
    • Cancellation of bank debts and of the target company’s debts to its corporate group;
    • That certain key executives be retained after the sale; and
    • That the target is not subject to any change clause.
  • Can a seller and its advisors be liable for false, misleading or similar pre-contractual statements?

    Spanish law imposes a general duty to negotiate in good faith (Articles 7.1 and 1258 of the Civil Code).

    Seller: The seller may be liable for pre-contractual misrepresentation. However, except for fraudulent misrepresentations, sales contracts generally limit the seller’s liability to claims for breach of contract (including breach of contractual representations and warranties) and exclude liability for pre-contractual and misleading representations.

    Advisors: The parties usually appoint legal, financial, accounting, tax and commercial advisors to review and structure the transaction in the best possible way. All advisors are subject to certain rules of professional conduct regulated by the Spanish authorities. For example, legal advisers are subject to the Code of Conduct of the Legal Profession and the General Statute of the Spanish Legal Profession, and financial advisers are subject to the rules approved by the National Securities Market Commission (CNMV) and the Bank of Spain.

  • What are the main procurement documents and who usually prepares the first draft?

    The main documents of a procurement are the following:

    • Letter of intent;
    • Confidentiality agreement;
    • Acquisition agreement (SPA or asset purchase agreement); and
    • Disclosure letter in which the seller makes the general and specific disclosures that qualify the warranties included in the SPA (unless a general disclosure is made with respect to due diligence information).
  • Can a share purchase agreement provide for a foreign law? If so, are there provisions of national law which apply automatically?

    Regulation (EC) 593/2008 on the law applicable to contractual obligations (Rome I) allows the parties to choose the applicable law. Therefore, the parties can agree on which law shall apply, and can choose the law they consider most appropriate to govern the rights and obligations arising from the contractual relationship under the share purchase agreement.

    The governing law chosen by the parties shall govern only matters relating to the agreement itself and the contractual relationship arising therefrom. However, if the target company is Spanish, the foreign law governing the share purchase agreement may not regulate corporate law issues, such as the following:

    • Transfer of shares;
    • Requirements for the approval of corporate resolutions in a Spanish company; and
    • Foreign investment regime.
  • Are seller warranties and indemnities usually included in purchase agreements and what main areas do they cover?

    Seller warranties and indemnities are usually included in purchase agreements. The content can be decided on a case-by-case basis, mainly depending on the following:

    • The results of the due diligence carried out prior to the acquisition;
    • The characteristics of the transaction and of the target company or business; and
    • The position of each contracting party during the negotiation and its bargaining power.

    If there are several sellers, each of them must indemnify the buyer for any breach of representations and warranties:

    • Jointly (jointly and severally), depending on the seller’s percentage shareholding in the target company.
    • In solidarity.
  • What are the main limitations of warranties?

    Limitations of warranties:Purchase agreements often include limitations on warranties. The contracting parties have flexibility in structuring their indemnity agreement. Limitations are negotiable between the parties (and depend on their bargaining power).

    However, indemnification obligations may be subject to the following limitations:

    • Defined damages;
    • Quantitative limits;
    • Time limits for claiming damages; and
    • Repayment commitments.

    Limitations of liability for breach of fundamental warranties and for wilful acts or omissions of the seller are neither permitted nor valid under Spanish law.

  • What are the remedies for breach of warranty? What are the time limits for making claims under warranties?

    Resources: In the event of breach of a warranty, the possible remedies are set out in the contractual indemnity regime of the relevant purchase agreement. Legal actions under Spanish law, such as nullity action (if applicable) or action for breach of contract according to article 1.124 of the Civil Code, can also be exercised.

    Acquisition agreements often include a single remedy clause to limit the remedies available in the event of breach of contract.

    Time limits for claiming guarantees:Procurement agreements include different time limits for claiming damages for breach of warranty, depending on the nature of the claim (e.g., labour, social security, tax or administrative):

    • A general time limit for claims (usually between 12 and 36 months). The buyer is likely to request an extension of the limitation period so that a full financial year can elapse and the accounts for that year can be audited (i.e., a period of 18 months); or
    •  A specific time limit, which usually coincides with the legal limitation period plus several days for the most sensitive claims (tax, labour, social security, environmental, data protection and criminal).
  • What forms of consideration are typically offered in a share sale?

    Forms of consideration: Cash is the most common form of consideration. Consideration can also be structured in kind (e.g. shares or financial instruments).

    Factors involved in the choice of consideration: The price must be determined or subject to determination. The most common pricing mechanisms are purchase price adjustment and lockbox mechanisms, together with fixed price. The use of lockbox mechanisms in the Spanish M&A market (as opposed to purchase price adjustment) has increased significantly.

    The price may be structured as a fixed price (payable at closing or deferred), or a variable price (usually consisting of an earn-out structure). The price may be partially retained by the buyer or deposited in an escrow account for the period during which an escrow claim can be made against the seller under the purchase agreement.

  • Can a company give financial support to a potential buyer of shares in that company?

    Restrictions: A company must not do any of the following:

    • Advance funds, provide loans, guarantees or collateral.
    • Put in place any other financial assistance scheme for a potential buyer of:
      • their actions;
      • if the undertaking is a public limited company, the shares of its parent undertaking; or
      • if the company is a limited liability company, the shares of any company in its corporate group.

    If the financial assistance prohibition is violated, the financial assistance transaction is void. However, experts defend the position that if the seller acted with gross negligence and was aware of the financial assistance structure, the entire acquisition transaction can also be declared void.

    Exemptions: In the case of public limited companies, the following structures are exempted from the above restrictions:

    • Assisting employees of the company to acquire shares in the company (includes both management and employees, but excludes members of the board of directors); and
    • Transactions carried out by banks and other financial institutions. In order to qualify for the exemption, the financial institution must make available a mandatory reserve equal to the amount provided as financial assistance.
  • Do different types of documents have different legal formalities? What are the formalities for the execution of documents by companies incorporated in your jurisdiction?

    Contracts are binding regardless of their form if they fulfil the requirements for validity. However, some contracts must be recorded in a public register before they are fully effective against third parties (such as transfers of shares in a limited company and pledges of shares).

    Consent exists from the moment that:

    •  The offeror is aware of the other party’s acceptance; and
    •  The offeror cannot ignore the bona fide acceptance (once the acceptance has been sent).

    In such cases, the contract is presumed to have been concluded at the place where the offer was made.

  • What are the formalities for the granting of documents by foreign companies?

    The execution of deeds by foreign companies is subject to the same formalities as the execution of deeds by Spanish companies. However, at the time of notarisation of the acquisition agreement, the foreign company must provide the notary with the following:

    • Sufficient powers of the representative;
    • A solvency certificate of the foreign company; and
    • The VAT number of the foreign company.

    The first two must be notarised and apostilled in accordance with the 1961 HCCH Convention Abolishing the Requirement of Legalisation of Foreign Public Documents (Apostille Convention) or following the relevant embassy procedures.

  • What formalities are necessary to transfer the ownership of shares in a limited liability company?

    In connection with the transfer of ownership of shares in a limited liability company, a public deed of share purchase must be executed, and all changes in the ownership of shares must be recorded in the company’s shareholder ledger.

  • I need to know if my company respects the law.

    We help you find out through our due diligence and legal planning service. We offer practical, realistic, and constructive advice aimed at finding out whether your business is taking advantage of the tax, corporate, labour or regulatory advantages offered by the existing legal framework in your sector of activity or whether or not you are aware of an adequate risk map.

Fiscal

  • What transfer taxes are payable on a sale of shares and on a sale of assets? What are the applicable rates?

    Sale of shares: The transfer of shares is exempt from value added tax (VAT) and transfer tax, unless:

    • The purchaser acquires more than 50% of a company whose assets are mainly real estate in Spain; and
    • The purpose of the sale is to avoid taxation on the transfer of the real estate owned by the company whose shares are transferred.

    In such a case, transfer tax or VAT may be due on the same terms as on a property transaction. Once control of a real estate company has been acquired, any further acquisition of shares in the company is also subject to transfer tax or VAT.

    The VAT rate is 21% (reduced rates of 10% and 4% still exist for certain assets), and the transfer tax rate for the transfer of real estate and specific real estate companies ranges from 7% to 11% (depending on the location of the property).

    Sale of assets: If the asset (or set of assets) to be transferred qualifies as a business unit (a business unit or branch of activity is considered to exist when the assets and liabilities transferred constitute an independent unit, capable of operating by its own means; the determination of whether or not the set of assets and liabilities being contributed qualifies as a ‘business unit’ is examined on a case-by-case basis) for VAT purposes, the sale of assets will not be subject to VAT. In that case, if immovable property is also transferred within the business unit, only transfer tax is payable on the transfer of the immovable property asset.

    If the VAT exemption does not apply, the transfer of assets will be subject to VAT, and the taxation of each asset being transferred will have to be analysed separately. In certain circumstances, taxpayers may decide not to avail themselves of the VAT exemption, and then the transfer of immovable property will be subject to VAT but not to transfer tax (VAT and transfer tax are mutually exclusive). In this case, the reverse charge mechanism applies, i.e., the taxpayer collects the VAT and deducts it in the same period.

Employment

  • Is there an obligation to inform or consult employees or their representatives or to obtain the consent of employees for the sale of shares or assets?

    Sale of assets: The transferor and the beneficiary employers must inform the legal representatives of their employees affected by the change of ownership with the following information:

    • Expected date of transfer of the asset;
    • Reasons for the transfer of the asset;
    • Legal, economic, and social consequences of the transfer for workers; and
    • Planned measures with regard to workers.

    If there are no employee representatives, this information should be given directly to the employees concerned.

    Where the selling or acquiring company envisages taking measures in relation to its employees as a result of the transaction, it must, before implementing any measures, initiate a period of consultation in good time with the employees’ legal representatives on the measures envisaged and their consequences for the employees.

    Sale of shares: In a sale of shares, there is no legal obligation to inform or consult employee representatives or employees.

Competition/anti-trust

  • Summarise the competition law framework that may apply to private procurement.

    The Spanish merger control rules are set out in Law 15/2007 on the Defence of Competition (LDC) and its implementing regulation (RDC). A transaction must be notified to the Comisión Nacional de los Mercados y la Competencia (CNMC) when the conditions of Articles 7 and 8 of the LDC are met.

    Merger control rules applicable at EU level should also be taken into account. Spanish competition rules will not apply to transactions falling within the thresholds of Regulation (EC) 139/2004 on the control of concentrations between undertakings (the Merger Regulation) (with some exceptions).

    Triggering/threshold events: Triggering events include:

    • The merger of two or more previously independent companies;
    • The acquisition by an undertaking of control of all or part of one or more undertakings; and
    • The creation of a joint venture and, in general, the acquisition of joint control of one or more undertakings, where these undertakings perform on a lasting basis the functions of an autonomous economic entity.

    Control results from rights or any other means which, in law or in fact, make it possible to exercise decisive influence over an undertaking (Article 7(2) CDL).

    The triggering thresholds are as follows:

    • Market share threshold:
      • The merger leads to the acquisition of or an increase in the share of 30% or more of a relevant product or service market in Spain, or in a geographic market in Spain.
    • Turnover threshold:
      • The aggregate turnover in Spain of all participants in the last financial year is more than 240 million euros; and
      • The aggregate turnover in Spain in the last financial year of at least two of the participants exceeds EUR 60 million.

    However, the transaction may be exempted from notification if:

    • The target’s turnover in Spain is less than EUR 10 million in the last financial year.
    • The individual or combined market share of the participants does not exceed 50 % in any affected market in Spain or in a geographic market in Spain (or the market share of the target alone).

    Notification and regulatory authorities: Notification is mandatory when the above thresholds are met, and no exemption applies. The notification must be made before the transaction is executed.

    The notification is usually filed with the CNMC when the acquisition or merger agreement is signed and is set as a condition precedent to closing or (in takeover bids) when the bid has been announced, or up to five days after the bid is submitted to the CNMC.

    Substantive evidence: The substantive test for authorisation is whether the transaction is a potential impediment to the maintenance of effective competition in all or part of the Spanish market (Article 10, LDC). In determining this, the CNMC considers the following:

    • The structure in all relevant markets;
    • The position of the parties in the affected markets and their economic and financial strength;
    • The level of actual and potential competence;
    • The options available to providers and consumers;
    • Barriers to entry;
    • Trends in supply and demand for products or services;
    • The bargaining power of the parties; and
    • Any economic efficiencies resulting from the transaction.

Due diligence

  • I need to know whether my technology company complies with current regulations.

    We can help you confirm this via our due diligence and legal planning services. We offer practical, realistic, and constructive advice to inform you if your company is maximizing available tax, corporate, employment and regulatory advantages that exist under the current legal framework in your business sector, and whether you have sufficient risk planning in place.

Refinancing

  • I want to refinance my business and I need an expert in banking and financing operations.

    Our multidisciplinary refinancing team comprises financial and legal experts experienced in, among others, the refinancing of large, listed company, the management of insolvency proceedings and the representation of companies in negotiations with financial institutions and vice versa.

Internacional trade

  • I’m a business owner who wants to internationalize my operations. what do I need in order to expand my business into overseas markets?

    With 35 years of experience in international practice, Lupicinio International Law Firm has a network of lawyers all over the world who can provide specialized global legal services in the jurisdiction you need.

  • A foreign company is interested in becoming my local partner and has sent me a complex contract I don’t fully understand. would you be able to advise me as to its content?

    A careful drafting or review of the contract clauses is advisable, especially with high value and international contracts, to protect against future problems. Together with the law firm Weil, Gotshal & Manges we have designed a prevention service that can protect you against possible future litigation and arbitration proceedings.

Latin america

  • I want to expand my business in Latin America, and I will need legal advice in third countries from local lawyers. does Lupicinio international law firm work with local law firms in those countries?

    Even though Latin America does not present the same cultural or language barriers as an investment in Asia or Africa might, out Latin Desk can help you. Comprised of a team of lawyers with extensive experience in Latin America, they can assist you to make sure your American business plans and investments are successful.

  • I export to Cuba, a country under us sanctions which does not have a convention with the EU can you help me to perform my business activities there without any risks?

    Our International and Compliance teams will identify the risks inherent in sensitive operations and assist you with their multidisciplinary long-term vision. When considering compliance and regulatory risk issues there are no shortcuts.

Middle east

  • I am planning to invest in the middle east, but beforehand I need a comprehensive legal opinion on those markets that will allow me to successfully execute my business strategy.

    Lupicinio International Law Firm is the first Spanish law firm that has specialized in legal advice for companies who wish to invest in the Middle East. We will guide you through all of the investment phases and provide you with local lawyers who can ensure your project is operating correctly, minimizing the legal risk.

Contact

Contact our lawyers in Spain or in any of the countries where we have an international presence.

Contact-form

* These fields are required

Esta página web usa cookies

Las cookies de este sitio web se usan para personalizar el contenido y analizar el tráfico. Además, compartimos información sobre el uso que haga del sitio web con nuestros partners de análisis web, quienes pueden combinarla con otra información que les haya proporcionado o que hayan recopilado a partir del uso que haya hecho de sus servicios.

Privacy Settings saved!
Configuración de Privacidad

A continuación, puedes elegir qué tipo de cookies permite en este sitio web. Podrá revocar este consentimiento, obtener más información e informarse de sus derechos en la Política de cookies.

*Para guardar tu configuración acepta o rechaza las cookies que desees y haz clic en el botón cerrar.


  • wp-wpml_current_language
  • bm_sz
  • _abck
  • ak_bmsc
  • __cf_bm
  • wordpress_gdpr_cookies_allowed
  • wordpress_gdpr_cookies_declined
  • wordpress_gdpr_allowed_services
  • MCPopupClosed

Rechazar todos los servicios
Acepto todos los servicios