The world economic situation, characterized by the rise in the prices of raw materials, the shortage of semiconductors and the slowdown of the supply chain, as a consequence, among other factors, of the Chinese zero covid policy or the Russian invasion of Ukraine, seems to lead us to a recession -hard or soft, that remains to be seen. In principle, a scenario like this invites us to be cautious, especially when making investment decisions, but it also invites us -paradoxical or contradictory as it may seem- to do just the opposite, that is, to take positions in order to be in the front line when the clouds dissipate and the economy finally improves, as expected sooner or later it will happen.
The Spanish economy is no stranger, as practically no economy is, to a crisis of this type, as revealed in the Spanish case by some indicators, such as the retail trade index or de industrial production one, the former being stagnant and the latter contracted. However, other indicators, such as tourism, show positive signs of recovery, contributing in 2021 with 88 billion euros to the Gross Domestic Product (GDP), a contribution that represents 7,4% of the national GDP. Without going any further, this last indicator is in itself encouraging enough as for to bet on the Spanish economy and explore the different vehicles that can be used -either with a local partner or not- to invest in it.
A foreign investor can do so by buying -totally or partially- an already existing company, or by setting up a new one, taking into account in both cases that there is no limitation whatsoever to gain control of 100% of the capital. In the first case, there is no sector that is not open to this possibility -except for very few exceptions of strategic nature. In the second case, if what the foreign investor wants is to set up a new company, then he can resort -either as a physical person or a juristic one, individually or collectivelly- to any of the two most commonly used, the Limited Liability Company (S.L. or S.R.L., in Spanish) or the Stock Company (S.A.)
The requirements demanded by the Spanish legal system to establish either of the two companies are similar to those required by the legal systems of other countries. Yet there are some peculiarities that can not be overlooked, such, inter alia, the following ones:
–Capital: In the case of a SL or SRL, the capital is € 3,000 and must be fully paid up at the time of incorporation. While in the case of a SA, the capital is € 60,000, 25% of which has to be paid up, as in the case of a SL or SRL, at the time of incorporation. However, when the law on the creation and growth of companies comes into force, a SL or SRL may be incorporated with a capital of € 1.
–Foreigner Identity Number (N.I.E, in Spanish): A NIE is a personal and tax identification number that is mandatory for all foreigners with financial, professional or social affairs in Spain. It can be requested either by themselves, or by a proxy holding a power of attorney, at a Police Station in Spain or at a Spanish Embassy abroad, as appropriate.
–Bank Account: An account in the name of the future company (“Company in Constitution”) must be opened in a bank in order to deposit the legally required capital. After that, the bank must issue a Certificate that must then be provided to the Notary together with the Negative Certificate of the Name of the new company, the NIE and the Memorandum of Incorporation and the By-Laws for the Notary to execute the corresponding public deed.
–Tax Identification Code (C.I.F. in Spanish): A Tax Identification Code must be requested from the State Tax Agency, providing, at the time of doing so, together with Form 036, copies of the Memorandum of Incorporation and the NIE.
–Stamp Duty (I.A.J.D. in Spanish): This tax is levied on certain legal acts, such as the constitution of companies. Its rate, calculated on the company’s capital, ranges between 0.5% and 1.5%, depending on the autonomus community in which the company is going to be set up. In Madrid, for instance, it goes up to 0.75%.
-Registration: Finally, the public deed executed before a Notary, along with its annexes, must be registered in the corresponding Provincial Commercial Registry.
Spain is a market in itself. A large, rich and varied market made up of 17 markets, corresponding to the 17 Autonomous Communities of which it is composed, from Andalusia to Galicia, or from Extremadura to Valencia, passing through Castilla y León and Castilla La Mancha, among others. It offers to foreign investors numerous business opportunities in multiple sectors, such as Food and Beverages, Tourism, Real Estate, Logistics and Transport, Renewable Energies, Ceramics, Shipbuilding or Fish and Fish Farming. These sectors, like any other sector, are open to foreign investors, exceptions apart, without any lists that limit or condition their investments, and they are also supported by regulatory frameworks that ensure the free repatriation of dividends.
But in addition to being a market in itself, Spain is also a platform for entering third markets. A platform to enter the rest of European markets, or also in markets as close by history, culture or language as the Latin American markets. This triple advantage -a market in itself, an European market and a Latin American market- makes Spain an enormously attractive place to invest -particularly for investors from the Indo-Pacific or the Asean areas, to whom this Blog is specially addressed-. Why not try it? Because “he who fails to plan, plans to fail”.