Posts Tagged ‘Spain’

Foreign Notary Deed in Spain

Friday, August 3rd, 2012

A recent press release from the Consejo General del Poder Judicial (General Council for the Judiciary) reports an interesting ruling of the Spanish Supreme Court. The decision, of 19 June 2012, ratifies the one of the previous instance according the registration in a Spanish Land Registry of a deed of sale of an immovable located in Spain, notarized by a German Notary. Taking into account the rules of private international law the Supreme Court confirms the validity of the foreign deed in Spain as a basis for a Registry record.

In the instant case litigation arose from the sale of an apartment in Tenerife, which was acquired undivided by two German citizens. One of them sold his share to a third party with the consent of the other; the transfer was formalized by a German notary and the acquirer sought to have it recorded in the Land Registry of Puerto de la Cruz. The registrar refused, considering that the German document lacked full legal force in Spain; his decision was upheld by the General Directorate for Registries and Notaries, but rejected on appeal both by the Court of First Instance and the Audiencia Provincial, as well as by the Supreme Court.

According to the Supreme Court, a decision such as the one taken by the registrar and supported by the General Directorate cannot be approved under the current understanding of the freedom to provide services at the European Union level; also, to require the involvement of a Spanish Notary would mean an unjustified limitation to the freedom of transfer of goods. Article 1462 of the Spanish Civil Code, which applies in the case, equates issuing of a public deed with delivery of the sold thing; the provision does not require that the deed be granted by a Spanish Notary public, therefore a formally valid deed granted by a foreign Notary will have the same effect (in terms of equation with delivery) as one notarized in Spain. The Supreme Court believes that this interpretation matches the EU tendency to avoid duplication of formal requirements, once they have been fulfilled in a member State for a purpose identical or similar to that required in the State where the act thus documented aims to produce effects. To back this opinion the Court leans on the Commission’s Green Paper of December 14, 2010 entitled “Less bureaucracy for citizens: promoting free movement of public documents and recognition of the effects of civil status records”; on the consistency of the understanding with the Spanish regulation on foreign investments, which does not require that contracts be notarized by a Spanish Notary; and on Article 323 of the Spanish Civil Procedure Act, which accords full evidential effect to public documents formalized abroad when comparable to the Spanish “escritura pública” in as far as the role of the Notary is concerned, regardless of the formal differences.

Two members of the Court do nevertheless dissent with the idea that Article 1462 Civil Code allows for the same treatment to be granted to Spanish and foreign deeds, as, according to the provision, equation between the public deed and the delivery of the sold asset is excluded when the deed states (or it can easily be inferred) otherwise. In this regard, the differences between the German and the Spanish systems for the conveyance of ownership justifies the need for the intervention of Spanish Notaries: only they can safeguard the essential rules of the legal transfer of property that governs our country, which is that of título y modo (grounds of acquisition followed by the traditio or delivery)

Significant Tax Changes Announced in Spain 2012 Budget

Tuesday, April 10th, 2012

On March 30, 2012, the Spanish government announced the 2012 budget. At the same time, the government approved Royal Decree-Law 12/2012, which introduces a number of relevant changes in the corporate tax area, including new limitations on the deductibility of interest expense.

Interest-capping rule

Following a trend started by other European governments, the Spanish government has introduced an interest-capping rule that replaces the existing thin capitalization provisions. The new interest-capping rule, which will apply to both related- and unrelated-party debt, limits tax relief for net interest expense to 30 percent of the taxpayer’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”), with some adjustments. For entities that are part of a tax consolidated group, this 30-percent limit will apply to the EBITDA of the group. (more…)

Spain – Regional Administrative Tax Court Acknowledges the Application of EU Law over Previous Discriminatory National Law

Friday, February 10th, 2012

The Madrid Regional Administrative Tax Court (known as “TEAR”) in a decision dated 29 November 2011 (notified on 27 December 2011) acknowledges the application of EU Law over previous discriminatory National Law on the treatment of EU resident pension schemes (in this particular case, a UK pension fund). In this regard, the TEAR specifically refers to the Spanish National High Court of Justice (“Audiencia Nacional”) which delivered a judgment regarding withholding taxes levied on three Dutch pension schemes in Spain.

The TEAR states that the tax treatment suffered by the non resident UK pension fund in Spain during FY 2004 was discriminatory under EU Law compared to a resident Spanish pension fund. The TEAR stressed that the Spanish tax law was discriminatory on the grounds of nationality as well as violating one of the four main principles of EU Law, namely the free movement of capital (Art. 63 TFEU). In addition, the TEAR reiterates that since 1 January 2010, the Spanish domestic legislation was amended as a result of said discrimination in order to be compliant with EU principles. (more…)

Tax Agreement between Kingdom of Spain and the Commonwealth of the Bahamas

Friday, October 7th, 2011

The Tax Exchange agreement was published in the Spanish Gazzette the 15/7/2011

As per article 1, the agreement will facilitate that the competent authorities of the Contracting Parties shall provide assistance through exchanging information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement. (more…)

Wealth Tax is now ON! – The Banana Republic of Spain

Sunday, September 18th, 2011

Amending the Constitution without public consultation during the summer holidays and reinstating Wealth Tax without Parliament discussion indicates that not only financially, but morally, there is something very wrong with Spain. The reinstatement of the Wealth Tax by decree during the existing tax year may respect the letter of the law, but disregards in all fairness the principle of retroactivity and parliamentary consultation. (more…)

Writing Off Debt of dubious provenance vs Raising taxes to asphyxiate the Economy

Wednesday, August 10th, 2011

Events are moving quickly in Europe this week and  politicians are talking rubbish about raising taxes in a state of desperate panicking, instead of addressing the fundamental problem, which in my view is writing off effective bad debt.

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Foreign Direct Investment in Spain Triples in 1 Year

Tuesday, August 2nd, 2011

According to the United Nations Conference for Trade and Development (UNCTAD), foreign direct investment in Spain has tripled in 1 year, increasing by 177% to 25,000 million dollars.

The annual UNCTAD World Investment Report for 2010 has seen Spain rise to 14th place in the ranking for last year’s inward foreign investment, and is testament to the fact that the Spanish economy is beginning to recover since its fall in 2009.

Amongst other positive developments highlighted in the report is the fact that the global economy is gaining strength, with emerging countries increasing their direct investment to a record level in 2010.

Although global FDI flows are still around 15% lower than recorded before the financial crisis, foreign investment grew by 5% around the world to 1.24 billion dollars in 2010. The document acknowledges China alongside Russia and India has having become strong investors.

UNCTAD forecasts that FDI flows are expected to continue to grow in 2011 to 1.4 or 1.6 billion dollars. This increase should continue through 2012 and 2013, when flows could reach 1.9 billion dollars.

This could be a sign that investor confidence is coming back and hopefully heralds the beginning of a global recovery.

Gibraltar & Spain, what’s going on?

Saturday, April 17th, 2010

We are surprised, happily surprised, to see Spain signing another TIEA. This one with Bahamas signed on March 11, 2010, follows the Netherlands Antilles, Aruba, Trinidad y Tobago agreements. Please see our Taxprecision post for more information.

When coming to Gibraltar, the question brings some political issues to the table which must be put aside as a matter of urgency.

The Spanish Tax legislation clearly discriminate Gibraltar by discouraging the furtherance of trade, commerce and business with this territory of the UK and part of the EU.

There are powerful economic reasons to end this situation. Gibraltar accounts for 3% of the exports in Andalucia, compared with a 4% with Morocco, or another 4% with Mexico or US. Gibraltar is, therefore, a strategic partner of Andalucia.

I can understand that a generation of Spaniards may still have some issues coming to terms with reality. I would like to invite my fellow Spaniards to rethink their position by reviewing our 2008 posting to get to know Gibraltar and more about its OECD compliance.

There are compelling reasons for the Spanish government to speed up the signature of this TIEA and remove Gibraltar from the list of Tax Havens as per Spanish RD1080/91.

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