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Vicente Bootello |
In December the Spanish Government approved certain measures on tax, labour, social security and deregulation to foster investment and job creation. This legislation was enacted with a view to continuing and bolstering the policy for the growth of the Spanish economy and increasing its competitive position through measures to support business activity. The measures will govern tax periods beginning January 1 2011.
All reforms share the common purpose of serving directly to bolster the confidence of economic operators and the stability of investors, since these objectives are fundamental to the recovery of the Spanish economy.
Nonetheless it is important to note that this piece of legislation provides for another type of incentive measure, such as those which make it possible to expedite the incorporation of corporate enterprises (sociedades mercantiles de capital).
Accelerated depreciation for new assets
The new legislation provides for accelerated depreciation for investments in new fixed assets used in economic activities. Unlike the requirements stipulated in the legislation in force to date, this tax incentive is not conditional on job preservation.
The timeframe for taking this incentive is also extended by three additional years to cover acquisitions of new fixed assets from 2011 through 2015, and may be taken by individuals, traders or professionals.
Exemptions from transfer tax
In the understanding that the current economic situation makes it advisable to eliminate barriers to the creation, capitalisation and preservation of enterprises, the new legislation provides for an exemption from transfer tax under the corporate transactions heading for the following types of transaction: incorporation of companies; capital increase; contributions made by shareholders which do not entail a capital increase; and relocation to Spain of the place of effective management or the registered office of a company where neither one nor the other was previously located in an EU member state. Doubtless this should boost business investment in Spain.
Measures to stimulate SMEs
In connection with corporate income tax, the new modification raises the threshold on net sales which cannot be exceeded by enterprises wishing to qualify for the special regime for small enterprises from €8 million ($10.6 million) to €10 million. Said enterprises are also allowed to continue applying the special provisions for which they qualify for the three years immediately following the year in which their net sales fall below the €10 million threshold.
This will mean that many more enterprises (those which, as stated above, have annual net sales of less than €10 million) will be taxed at the reduced rate of 25%, as from this reform, on the first €300,000. This €300,000 tranche is equally applicable to enterprises entitled to apply the reduced rate of 20% (net sales of less than €5 million, average workforce of less than 25 employees and job preservation).
We hope that this set of relief measures, both tax and non-tax, together with those already introduced and those likely to be approved by the government this year, will serve to facilitate Spanish growth.
Vicente Bootello (vicente.bootello@garrigues.com)
Garrigues – Taxand
Tel: +34 94 470 06 99
Fax: +34 94 444 79 98
Website: www.garrigues.com
