Spanish companies, big or small, must declare to Hacienda the financing they receive.
In the case of foreign investment this is particularly important due to the Spanish Government’s recent efforts in tackling money laundering.
Foreign investment in Spain is subject to two basic rules, Royal Decree 664/1999 on foreign investments, and Law 19/2003 on the legal regime of capital movements and economic transactions with other countries. Royal Decree 664/1999 deregulated practically all foreign investment transactions, adapting Spanish domestic law to the rules on the freedom of movement of capital contained in Articles 56 et seq. of the Treaty of the European Union.
The most notable aspects of the regulations applicable to foreign investments are the following:
- In general, and for merely administrative, statistical and economic purposes, foreign investments must be reported afterwards to the Directorate-General for Trade and Investments, once the investment has been made. Exceptions, which require prior notification:
- Investments from tax havens, which must be reported before and after the event.
- Foreign investments in activities directly related to national security, and real estate investments for diplomatic missions by non-EU Member States.
- Foreign investments in the industries listed below are subject to industry-specific legislation and require prior notification:
- Air transportation
- Raw materials, minerals of strategic interest and mining rights
- Television, radio, gaming, telecommunications
- Private security
- Manufacturing, marketing and distributing of arms and explosives and national security related activities
If you have a startup or a Small and Medium Enterprise (SME) in Spain and have received foreign investment – and none of the exceptions mentioned above apply to you – you must declare the investment before the Directorate-General for Trade and Investments by filling in Modelo D-1A.
Modelo D-1A is used to declare foreign investments in Spanish companies that are not listed on the stock exchange. The declaration must be submitted digitally within one month from the completion of the investment using a special software called AFORIX, which can be downloaded here. You can find instructions on how to fill in the form here.
Below is a summary of all the forms associated to declaring foreign investments and which can be completed using the AFORIX software.
- D-1A. Form for declaring foreign investment in non-listed companies, branches and other forms of investment.
- D-1B. Form for declaring foreign disinvestment in non-listed companies, branches and other forms of investment.
- D-2A. Form for declaring foreign investment in real estate.
- D-2B. Form for declaring foreign disinvestment in real estate.
- D-4. Annual Report on development of investment in Spanish companies and branches, with foreign shareholders.
- D-5A. Form for declaring Spanish investment abroad in non-listed companies, branches and other forms of investment.
- D-5B. Form for declaring Spanish disinvestment abroad in non-listed companies, branches and other forms of investment.
- D-6. Form for declaring Spanish investment abroad in listed securities, by its owners.
- D-7A. Form for declaring Spanish investment abroad in real estate.
- D-7B. Form for declaring Spanish disinvestment abroad in real estate.
- D-8. Annual Report on development of Spanish investment abroad.
- DP-1. Preliminary statement of foreign investment coming from tax havens in non-listed companies, branches and other forms of investment.
- DP-2. Preliminary statement of foreign investment coming from tax havens in real estate.
- DP-3. Preliminary statement of Spanish investment abroad in tax havens in non-listed companies, branches and other forms of investment.
- DP-4. Preliminary statement of Spanish investment abroad in tax havens in real estate.
Foreign transactions declarations with the Bank of Spain
For purely statistical and informative purposes the Circular 4/2012 of Bank of Spain establishes that resident individuals or entities in Spain that carry out transactions with non-residents or hold assets or liabilities abroad must report them to the Bank of Spain.
The frequency of the notifications depends on the volume of transactions carried out as follows:
- ≥ €300 million the information shall be provided monthly.
- ≥ €100 million but less than €300 million, the information shall be provided quarterly.
- < €100 million but more than €1 million, the information shall be provided annually.
- < €1 million, the return will only be submitted to the Bank of Spain at the express request thereof, and in a maximum period of two months following the date of that request.
Anti-money laundering obligations of notaries
As stated in Law 10/2010 on the Prevention of Money Laundering and Terrorist Financing, along with other legal provisions, notaries should meet certain obligations to prevent money laundering. Be aware, thus, that if you receive foreign investment and must modify your company papers in front of a solicitor, he will have to identify you and any other person appearing before them to conduct notarial business.
If you have questions or want additional information don’t hesitate to contact AvaLaw at +34 932 553 107.