The Year to Come and Year in Review summarise a selection of major developments you should be aware of from 2021, and a selection of key developments expected in 2022.
Updates to
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key areas in 2021 and 2022
Foreign investment: The Government has published a public consultation on the draft Royal Decree on foreign investment which will replace the Royal Decree of 1999. The aim is to adapt the regulatory framework to Law 19/2003 (modified in 2020, to include a prior authorisation regime for certain foreign direct investments in Spain) and to the EU FDI screening regulation. The draft Royal Decree sets out what is considered foreign investment and disclosure requirements, and specifies the extent to which deregulation is suspended.
EU next generation: Spain’s national recovery and resilience plan was approved by the Economic and Financial Affairs Council (ECOFIN) on 13 July 2021. Various authorities in the country have started to issue calls for tenders as well as grants to enable businesses to access the funds. To date, two major strategic projects (electric vehicles and cutting-edge healthcare) have been approved, with another two (related to aerospace and the agri-food chain) under consideration.
Consumer law: Revised consumer legislation has begun its passage through Spain’s Parliament, to adopt Directive 2019/2161. The law applies to new forms of e-commerce and bans certain practices (such as stealth advertising) that are detrimental to consumers. It also increases the enforcement powers of the Ministry for Consumer Affairs.
Law on business creation and growth: The Government has drafted legislation to encourage entrepreneurship which is expected in 2022. Spanish Company law is amended to remove the requirement for a minimum share capital of EUR 3,000 for limited liability companies. The new law also includes measures to combat business debts. Firms that do not comply with the statutory payment terms will not be eligible for public funding. Contractors’ failure to pay subcontractors or suppliers are also listed as grounds to terminate public contracts, where these failures compromise contract performance.
Start-ups law: The Government has drafted a law aimed at encouraging the creation and success of start-ups. Among other measures, the initial tax that these businesses have to pay is lowered, tax debts can be deferred, and taxation of stock options is improved. A new type of visa is also introduced for remote workers and highly qualified workers. This law will foreseeably be approved in 2022.
Special Purpose Acquisition Companies (SPACs): Amendments to Spanish Company law to regulate SPACs are expected in 2022, with a particular focus on the means of repaying capital to shareholders.
Covid-19. Support measures renewed: The Government has extended a number of support measures such as: (i) suspension of the obligation to file for insolvency and moratorium on creditor petitions, until 30 June 2022; (ii) the deadline for granting state guarantees, through the ICO, until 30 June 2022; and (iii) the temporary requirement for pre-approval of certain foreign direct investment from EU (outside Spain) and EFTA based investors, until 31 December 2022. Losses in 2020 and 2021 will not be considered when determining whether businesses are legally required to be wound up.
Mortgage costs: The CJEU is expected to issue a decision in the next few months on when limitation periods start to run for consumers to demand reimbursement of payments made under invalid terms on mortgage costs. In the case referred for the preliminary ruling, Spain’s Supreme Court is considering two options for when time limits start to run: (i) the date of the court judgment finding the term to be invalid, or (ii) the date of the Spanish Supreme Court judgment that set the case-law principle of reimbursement as the effect of invalidity (23 January 2019) or the date of the CJEU judgment in which it held that action for reimbursement could be subject to a time limit (16 July 2020).
Improvement to the justice system: The Government has announced a draft bill which aims to make the justice system more efficient. Among other aspects, the legislation introduces and promotes the use of out of court methods for resolving civil and business disputes. It also takes steps to speed up judicial procedures and accelerate the digital transformation of the justice system. A root-and-branch overhaul of the Supreme Court appeal process in civil cases is planned, as well as the introduction of a pilot judgment procedure to deal with mass litigation. We expect this legislation to come into effect in 2022.
Collective redress: The Government has launched a public consultation on the implementation of Directive 2020/1828 on representative actions for the protection of the collective interests of consumers. The new law is expected to correct some of the shortcomings in the current rules on collective actions.
Employment law reform: The Government has announced plans to substantially change current employment regulations and repeal the Labour Reform approved in 2012.
Securities legislation and investment firms: The Government has announced a raft of reforms to securities legislation, which are expected to continue their legislative passage during 2022. These aim to reorganise and refine the Spanish Securities Market law and related regulations as well as transpose various EU directives such as: prudential supervision of investment firms (IFD), simplification of requirements for financial actors to help economic recovery from Covid-19, providers of data supply services, crowdfunding and insurance.
Regulatory guidance on suitability assessments for entities providing investment services: The Securities Market Commission (CNMV) has launched a public consultation on draft technical guidance for entities providing investment services. This updates the standards on assessing customers prior to recommending products or providing other services that require this assessment under MIFID II. Approval is expected at the start of 2022.
Law on right to housing: A nationwide law on the right to housing is due to be passed in 2022. Among other aspects, the law caps rents in “areas of market tension” and raises property tax on vacant homes. Changes are also made to the procedures for evicting vulnerable tenants.
Changes to insolvency law: Insolvency law is expected to be amended during 2022 to implement the EU Restructuring and Second Chance Directive. The amendments aim to make it easier to restructure viable businesses and improve insolvency procedures and will bring major changes to current pre-insolvency and insolvency rules.
National budget: The national budget for 2022 is awaiting parliamentary approval and continues the expansionist path of the 2021 budget. A minimum corporate income tax of 15% is planned for firms that pay tax on a consolidated basis or with a turnover of EUR 20m or more. The ceiling is also lowered to EUR 1,500 on tax deductible individual contributions to private pension schemes.
Digitalisation of company formation: The EU Digitalisation Directive is expected to be implemented during 2022. It aims to facilitate the formation of companies electronically, reducing costs, time and red tape.
Telecommunications law: It is expected that a new telecommunications law will be enacted in 2022. This extends the scope of the law to include number-independent interpersonal communications services or messaging services, and overhauls the rules on managing the civil radio spectrum to speed up the deployment of 5G networks.
Changes to anti-trust rules: The Government has amended competition laws to implement the ECN+ Directive. Among other changes, the investigative powers of the competition authority (CNMC) have been beefed up and sanctions have become even more stringent. The possibility has also been introduced for the CNMC to take no investigative action on low-priority complaints.
Trucks cartel: Damages claims arising from the European trucks cartel continue to set trends. In 2021, there have been several important judicial rulings in relation to this matter, including by the CJEU in a case involving Spanish firm Sumal (C 882/19), which makes it clear that a Spanish subsidiary may be responsible for the damages caused by a cartel in which only its parent company participated abroad.
Changes to companies and securities legislation: The EU Directive on Long-term Shareholder Engagement was implemented in April. In addition to those changes arising from the Directive, the legislation included improvements to corporate governance and the working of capital markets. Major changes were introduced across different areas: double voting shares, related party transactions, directors’ remuneration, raising capital, prospectuses etc.
Covid-19 support measures: As the year has progressed, the Government has taken new measures and extended some of those already in place to tackle the crisis. The measures, mostly of a social and economic nature, have focused on financial support for businesses and the self-employed, protecting the most vulnerable members of society and job retention.
Equality plans and equal pay audits: Since 14 April, all firms, of any size, must keep a transparent record of their pay for the whole workforce. This is in addition to the requirement for employers with 50 or more workers to have equality plans in place and conduct equal pay audits.
Higher fines for employers: Since 1 October 2021, fines in connection with employment law infringements have increased by 20% (albeit with no retroactive effect).
Renewable energy auctions: The Government continues to hold auctions for renewable energy capacity under the new support framework, according to the indicative timetable for 2020-2025. The first auction of 3 GW capacity was held in January 2021. The second, to allocate 3.3 GW of solar PV and wind capacity, was held in October 2021. A third renewables auction is planned before the end of the year and is aimed at solar thermal, biomass and other technologies.
Climate Change and Energy Transition Act: Spain’s Climate Change and Energy Transition Act was passed in April. The Act encourages movement towards a decarbonised economy. It sets targets for reducing greenhouse gas emissions for 2030 and 2050 and contains various means for promoting energy from renewable sources, alternative fuels and sustainable mobility. The law also requires issuers of securities, credit institutions, insurers and reinsurers, and certain companies, to report annually on the financial impact of the risks related to the emissions they cause.
Gas and electricity prices: The Government took a number of regulatory measures in September to mitigate the impact of high natural gas prices on customers’ gas and electricity bills. Notably, this included a charge on “windfall” profits made by certain plants that do not emit greenhouse gases.
Secured bonds: The EU Covered Bond Directive was implemented in November. The new law regulates the issuance of covered bonds by Spanish credit institutions (including Spain’s financial agency, the ICO) and their supervision. It will come into force in July 2022.
CNMV clarifies disclosure requirements: The CNMV has publicly clarified the scope of sustainability‐related disclosure requirements for financial advisers, discretionary portfolio management service providers, Spanish alternative investment fund managers (SGIIC) and Spanish closed-ended alternative investment fund management companies (SGEIC).
Money laundering: Spanish money laundering and terrorist finance legislation was amended in April (via a government decree) to implement the fifth Money Laundering Directive. Among other changes, this extends the list of regulated persons and requires the Ministry of Justice to create a register of beneficial owners. The decree is now a parliamentary bill and, as a number of amendments have been submitted, the law is expected to change.
Banking directives - CRD5 and BRRD2: The implementation of EU Directives CRD5 and BRRD2, on banking supervision and resolution, respectively, into the Spanish legal system (by way of a government decree) was approved in April. The legislation will have a major impact on capital requirements and the debt held by these types of institutions. The decree is now a parliamentary bill and a number of amendments have been submitted, so the law can be expected to change. Detailed regulations are also pending, which we expect to be approved in 2022.
Cross-Border distribution of funds: The implementation of Directive (EU) 2019/1160 with regard to cross-border distribution of collective investment undertakings has been approved. Read more…
Intellectual property: A government decree in November 2021 brought an end to the system of collective rights management, which to date was mandatory and the responsibility of copyright collecting societies. Publishers and authors of press can now individually negotiate the permission for their work to be used online.
New statute for the legal profession: The right to legal professional privilege (confidentiality of correspondence, extended to all those who work professionally with lawyers) is now covered thoroughly in the new statute, which also imposes limits on the advertising of professional services and contains rules relating to consumer rights.
Closer scrutiny of open-ended collective investment companies (SICAVs): The Government has tightened the requirements for SICAVs to pay tax at 1%. Only those holders of shares with a value of EUR 2,500 or more (EUR 12,500 in the case of SICAVs with compartments) will count toward eligibility for the 1% rate. Spanish tax authorities may check that this requirement is met.
Measures to prevent tax fraud: A Spanish law was passed in July containing measures to prevent and combat tax fraud, implementing Directive 2016/1164. This important legislation contains a raft of tax measures, notably changes to rules on international tax transparency and the introduction of an exit tax.
Spanish REITs (SOCIMIs): A new special tax rate of 15% applies to firms under Spain’s “REIT-like” regime from 1 January 2021, on their non-distributed profits that are not taxed at the standard corporate income tax rate and that are not covered by the allowed period of reinvestment.
Cross-border tax planning arrangements: After the publication in December 2020 of Spanish Law 10/2020, which transposed Directive (EU) 2018/822 (commonly known as DAC6), the detailed regulations were announced in April 2021. These set out: (i) the concept of cross-border tax arrangements; (ii) who must report information; (iii) the points of intersection that will determine the requirement to report to Spanish tax authorities; and (iv) the nature of the disclosure requirement, deadlines and information to disclose.
Hybrid mismatches – amendments to Spanish corporate and non-resident income tax rules: In March, Spain changed the rules on its corporate and non-resident income taxes, to implement Directive (EU) 2016/1164 (ATAD 2) in relation to “hybrid mismatches”. The law is intended to prevent situations that could result in a double deduction or a deduction without inclusion in Spain due to differences in the legal characterisation of payments or transactions between different territories (whether Member States or third countries).
Late payment interest charged by tax authorities: Spain’s Supreme Court has held that late payment interest charged by tax authorities can be deducted for corporate income tax purposes.
Local capital gains tax: Following the recent ruling by Spain’s Constitutional Court, the Government has approved a new way of calculating the tax levied by local councils on “increases in value of land” (known as the plusvalía municipal). There is now no liability for the tax unless property actually increases in value. The changes came into effect on 10 November 2021.
Cybersecurity: Additional regulations have been introduced on the security of network and information systems, marking further progress in adopting the NIS Directive into Spanish law.
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