Inversiones Extranjeras Navarro LLima Abogados Zaragoza Sociedades

Developments on the foreign investment declaration regime. Which transactions must be declared?

The entry into force on 4 July 2023 of Royal Decree 571/2023 brought with it an update of the foreign investment declaration regime. New features include, for example, the incorporation of new operations, the modification of the reporting thresholds and the elimination of the obligation to report portfolio investments.

Inversiones Extranjeras Navarro LLima Abogados Zaragoza Sociedades

Which transactions must be declared?

Firstly, we will try to provide a summary table on the DECLARATION OF FOREIGN INVESTMENTS IN SPAIN. In this area, the operations that must be declared to the Foreign Investment Register are as follows:

1. The participation in the capital of Spanish companies, whether or not they are listed on a stock exchange, provided that it is carried out by a non-resident investor who holds or achieves, through this transaction, a holding equal to or greater than 10% of the share capital of the issuer or of its voting rights. Therefore, all those that do not reach this minimum are excluded.

2. The acquisition of units and shares in collective investment undertakings and closed-end collective investment entities, provided that the management company is resident and as a result a holding equal to or greater than 10% of the equity or share capital of the entity is to be acquired or is entitled to be acquired.

This is one of the cases introduced by the new Royal Decree 571/2023, which establishes the obligation for the resident management company to report only if the non-resident investor holds 10% or more of the assets or capital.

Inversiones Extranjeras Navarro LLima Abogados Zaragoza Sociedades

3. Contributions by shareholders to the net assets of Spanish companies which do not entail an increase in the share capital, provided that the shareholder has a holding in the capital equal to or greater than 10 %.

4. Any type of financing from a foreign company to Spanish companies belonging to the same group of companies, provided that the financing exceeds the amount of €3,000,000 and the repayment period exceeds one calendar year.

5. The reinvestment of profits in Spanish companies and any other form of investment (e.g.: formalisation of joint venture contracts) provided that the non-resident investor’s shareholding exceeds 10% of the total value and also exceeds €1,000,000. As a new feature, UTEs are now also obliged to file a tax return.

6. The acquisition of real estate sites in Spain by non-residents, the amount of which exceeds €500,000 for each individual property, so that if two properties are purchased for a value of, for example, €350,000 each, there is no obligation to submit an investment document.

Inversiones Extranjeras Navarro LLima Abogados Zaragoza Sociedades

What has the new legislation on the Spanish investment regime abroad envisaged?

Secondly, with regard to the regime for SPANISH INVESTMENTS ABROAD, the regulations provide for the application of the same regime as above, i.e. the requirements in terms of thresholds (percentages of participation) and amounts are the same as in the case of the declaration of foreign investments in Spain, with the difference that, in this case, the investment is made in a foreign company.

In short, as has just been explained, this matter involves various obligations and complexities that need to be analysed on a case-by-case basis, which is why at Navarro Llima Abogados we have extensive experience in the sector and professionals willing to provide comprehensive support throughout the entire investment process both in Spain and abroad.

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