LegalNews

The BOE has recently published the State Rental Price Reference System developed by the Ministry of Housing, under the Housing Law 12/2023 of 24 May.

This law permits autonomous communities, in the exercise of their urban planning powers, to declare a stressed area. Such an area is understood as one in which, among other criteria, the average portion of mortgage or rent costs, combined with basic expenses and supplies, , exceeds 30% of the average income or households income in that area.

In the case of Catalonia, 140 Catalan municipalities have been declared as “stressed areas”, including Barcelona, Alella, Abrera, Sitges, Cambrils, Falset, Vic, Vilafranca del Penedès, etc. Thus, in the 140 municipalities, a control of the rental market will be applied.

Although Catalonia has its own price index, the State index is applicable.

The main cases that could occur in Catalonia are detailed below:

• Housing in Non-Tensed Zone

In the new contracts, the rent will be freely agreed by the parties, regardless of whether or not the owner is a large tenant and regardless of whether or not the property has been rented in the last 5 years.

• Dwelling in a Tense Zone, Small Holder, rented within the last 5 years

In new contracts, the agreed-upon rent may not exceed the previous rent from the most recent lease of the same dwelling within the last five years, after applying the annual rent update clause of the previous contract. Additionally, no new conditions may be established that transfer fees or expenses to the tenant that were not included in the previous contract.

• Dwelling in a Tense Zone, Large Tenancy, rented in the last 5 years

The large tenant must always apply the lowest rent, choosing between the one determined by the index or the one from the previous contract.

A large tenant in these tense areas of Catalonia is considered to be a landlord who owns  5 or more properties. This has been requested by the Generalitat de Catalunya, as opposed to the 10 properties established in the Housing Law.

• Housing in a Tense Zone, not rented in the last 5 years

The new rental reference index will be applied to new contracts for dwellings that have not been rented for five years, whether or not they belong to large tenants. In this case, the agreed rent must be within the margins offered by the application and in no case may it exceed the highest margin.

Finally, it should be noted that the declaration of a stressed area will limit the rental price in these areas for 3 years.

These are some of the most important aspects that are currently applicable. Therefore, if you are interested in knowing all the aspects in detail, you can contact us and we will be pleased to help you.

 

 

 

All issues related to the Family Protocol are always current since there are always companies that have partners from the same family. Before exploring into the various aspects of the Family Protocol, it is crucial to precisely define what it is. In simple terms, we can define the Family Protocol as a framework agreement signed by the shareholders of a company composed of members of the same family. Its purpose is to establish the rules of the game, facilitating decision-making, preserving family relationships, and ensuring the proper development of the company.

According to the study “Las empresas familiares ante el reto de la innovación” (Cruz & Santaló, 2022)[1], conducted by IE University, approximately 89% of private companies in Spain are family businesses. Despite their significant contribution to the economy, there is no specific law regulating the peculiarities of these businesses. Therefore, it is essential for the shareholders themselves to anticipate conflicts and ensure the smooth functioning of the company.

This objective can be achieved by drafting the Family Protocol, which can address a wide range of issues, including:

• Establishing a mission, principles, and values that unify objectives and foster collaboration among partners.
• Defining the process for choosing and composing the governing bodies of the company, establishing majorities for important decisions. Occasionally, additional control bodies not foreseen in the legislation can be created, such as the family council.
• Define standards for the inclusion of family members interested in working in the company.
• Implementing preventive measures to address deadlock situations and disagreements, promoting understanding among family members.
• Establishing rules for the transfer of shares, determining when and to whom they can be transferred, aiming to protect the company from the entry of new shareholders outside the family.
• Considering the right of withdrawal, specifying both the causes and the procedure for carrying out the division of the company when the time comes.

These are examples of elements that can be included in a Family Protocol, although the possibilities are almost limitless. Creating a Family Protocol requires a careful analysis of the company itself, the business, the environment, the owners, and the main relationships and/or aspects to regulate, as well as a review of applicable legislation and case-law.

The protocol only binds the signing parties of the document. Therefore, situations may arise where, despite having a signed Family Protocol, some aspects may not be fully applicable due to lack of effectiveness against non-signing third parties. Hence, it is important to establish sufficient legal mechanisms to ensure this effectiveness.

As can be seen, the protocol allows foreseeing and addressing future situations and problems, avoiding conflicts that could have a significant economic and emotional effect. The development of a Family Protocol is a complex matter that has a significant impact on the future of the company. Therefore, it is crucial to seek appropriate advice from experienced professionals in the field. At BUSQUETS, we are available to provide you with the necessary guidance. Feel free to contact us if you wish to explore deeper into this topic, we will be delighted to assist you with anything you need.

[1] Cruz, C., & Santaló, J. (2022). Las empresas familiares ante el reto de la innovación. Ernst & Young. Obtenido de https://static.ie.edu/fundacion/pdf/Informe_Empresa_Familiar_IE.pdf

The Constitutional Court has admitted an unconstitutionality appeal filed by the Popular Parliamentary Group on two grounds:

On the one hand, the possible confiscatory nature of the tax. The 2021 Budget Law increased the maximum marginal rate by 1%, thus increasing the state rate from 2.5% to 3.5%. This modification has served as a basis for raising the possible confiscatory nature of the tax. This issue would not affect taxpayers with tax residence in Catalonia, since the unconstitutionality, if declared, would be limited to the state rate of the tax introduced in the Budget Law for 2021, and therefore would only affect the autonomous communities that have not approved their own tax rate and / or non-resident citizens who pay tax applying the state rate.

On the other hand, the conversion of a tax from temporary to permanent, by means of an improper regulation. This conduct is prohibited by article 134 of the Spanish Constitution, which in its seventh paragraph establishes the prohibition to create new taxes by means of a Budget Law. If the TC declares unconstitutional the legislative technique that has turned a temporary tax into a definitive tax by declaring unconstitutional the suppression of the 100% rebate of the tax, said rebate would be in force and consequently the total refund of the liquidations corresponding to the Wealth Tax practiced in the fiscal years 2021 and following years should be made.

In view of the foregoing, it is relevant to consider whether or not to request the rectification of the self-assessments of the tax filed in the years 2021 and 2022. Everything suggests that the TC will maintain the criterion used in its Judgment on Municipal Capital Gains (STC 182/2021) by which it was required to have appealed the liquidation or to have requested a rectification of the self-assessment. In accordance with this criterion, failure to comply with these requirements could lead to the establishment of the situation as consolidated and, consequently, the impossibility of obtaining a refund.

It is necessary to decide if such request to urge the rectification of the self-assessments of 2021 and 2022 can be profitable, taking into consideration that any action against a self-assessment of the Tax would entail the interruption of the prescription period of 4 years (article 66 of the General Tax Law), and in each case, it must also be assessed if a possible revision to such tax is convenient.

From Busquets, we are at your disposal in case you may need any support in this regard.

For some time now, investment rounds have been the most common financial strategy employed by new entrepreneurs to launch their businesses and start-ups. The rise in this way of financing has primarily been driven by the difficulty, especially for start-ups, in obtaining traditional bank financing.

An investment round is a process through which a company secures the necessary funds for its business development, thanks to the participation of private investors who become shareholders in the company.

So, the question arises: How do these private investors become part of a company’s share capital?

This operation is executed by increasing the company’s share capital (usually involving a portion allocated to share capital and another to share premium). Depending on the execution procedure, this can be done through the creation of new shares.

The incorporation of new investors in the company can be facilitated through three types of capital increase: monetary contributions, non-monetary contributions, and credit compensation.

In the first scenario, the capital increase, funded by monetary contributions, is carried out through investments in the company in the form of cash from investors.

On the other hand, the compensation for the capital increase may involve non-monetary contributions. These are contributions that, while not in monetary form, can be evaluated economically. This is a common method for incorporating key employees, for instance, when they contribute new software they have developed for the startup.

Lastly, capital can be increased by offsetting credits. In this case, two common situations arise. In the first scenario, an investor issues a “convertible note” (a not very precise translation from English) and converts it into share capital, thereby becoming a shareholder. This approach is used to consolidate multiple investors in the same investment round when all of them have previously issued convertible notes. In the second situation, a key collaborator in the project has provided services that the startup could not afford. As a result, this collaborator becomes a creditor of the company and converts their credit into shares, joining the project as a shareholder.

If you are an entrepreneur looking for external financing, in the process of an investment round or if you are an investor interested on participating in a startup as a partner, providing either capital or technology (or both), do not hesitate to contact us through info@busquets-abogados.com. We can help you in everything you may need.

The Spanish startup ecosystem continues enjoying good health. Today, our country has more than 11,000 startups, employing around 140,000 people. These data place us as the fourth European country in number of startups, only behind the UK, France and Germany.

In the last decade, the Spanish startup ecosystem has grown significantly. The numbers speak for themselves: this sector has increased its value twenty-fold, reaching more than 83 billion euros by 2022.

It is also true that during the first half of 2023 the situation has changed slightly. It is easy to see that investors are a little more cautious and company valuations are significantly lower than just a few months ago.

However, it seems that, despite this, international investors have identified Spain as a priority investment destination for this type of company, seeing it as a source of potential success stories, and some of the world’s most renowned funds are committed to investing in Spanish startups.

In conclusion, numbers show that the year-on-year increase in the volume of investment attracted in Spain is higher than the average for the rest of Europe, which certifies the maturity of the emerging companies in our country.

But, considering this maturity and internal strength that the sector has already reached nowadays, it is time to ask ourselves what is happening with the internationalization of Spanish startups.

• Scaleups

Internationalization is the key for startups to grow. Most entrepreneurs know this and are looking for the growth of these companies and their conversion into what are known as scaleups: startups that already have some experience and want to make an ambitious leap.

To become a scaleup it is necessary to have an internationalization project and that this aspect is understood by the company and its partners as a strategic decision practically from the beginning of its activity, feeling global and planning its international expansion carefully and accompanied by specialized legal advisors.

• Latin America is one of the main target markets for Spanish entrepreneurs.

According to current data, Latin America is one of the priority destinations for Spanish startups.

Several studies suggest that this American region could already account for more than 40% of the total foreign turnover of Spanish startups and the most representative sectors would be telecommunications and e-commerce.

It should be noted that the entrepreneurial ecosystem in Latin America has also been expanding at a fast rate. Such is the growth that last year it managed to capture more than 15,000 million dollars in venture capital investments, according to data from the Association for Private Equity Investment in Latin America. Today this area is one of the most highly valued by Spanish startups seeking to expand their businesses to other countries.

Spanish startups that choose to internationalize in Latin America mostly do so in countries like Mexico and Colombia because they understand these are growing countries, highly stable, with reliable regulatory frameworks and in which Spanish entrepreneurs have detected that there are great business opportunities that have not been covered by national companies.

In case you are an entrepreneur and want to analyze the possibilities of internationalization of your company, do not hesitate to contact us. We will be happy to help you with everything you need.

The Spanish Government is working on the new Housing Law. The approval is currently pending, although it is expected to be approved before the next elections due on 28 May 2023.

Some of the main novelties of the Housing Law draft are detailed below, focusing mainly, among others, on the limitation of rental prices in stressed areas, modification of the concept of large holder, limitation of repercussions and increases, rights regime and inflation, etc.

1.NEW FEATURES OF THE FUTURE HOUSING LAW

We would like to emphasize that at the time of this note, the aforementioned Housing Law has not yet been definitively approved. Therefore, the following should not be considered definitive.

• Expansion of stressed areas

In order to declare an area as a stressed area, the following shall be taken into account:

1. That in the area in question the cost of the mortgage or monthly rent exceeds 30% of the average income in the area.
2. That the sale or rental price of the house has increased 3 points above the CPI in the 5 years prior to the declaration of stressed area.

• Regulation of rental prices in stressed areas

For new rental contracts, rental price limitations will apply in stressed areas. On the other hand, in “Non-stressed” areas, no limits will apply.

However, the criteria for setting these limitations will depend on the status of the owner.

1. For large holders, a price containment index would be applied that is to be determined and that will be set by each Autonomous Community.
2. For small owners, the price will be determined by the indexation to the previous agreed income, so only the corresponding increase can be applied, that is, 2% in 2023, 3% in 2024, and the new index that would apply from 2025.

In addition, an important novelty is that it is prohibited to increase the rental price by adding expenses such as IBI, community fees, garbage rate, etc.

• New definition for large holders

The new Housing Law considers a large holder to be the natural or legal person who owns 5 or more properties. These properties should presumably be of an urban nature, and garages or storage rooms will not be taken into account. It is also likely that anyone owning a built-up area of more than 1,500 m2 would be considered a large holder.

On the other hand, small owners would be those individuals or legal entities who own less than 5 dwellings.

• Limit to the update of the rental income eliminating the CPI

For existing rental contracts and those signed once the new Housing Law has come into force, the annual rent update will be limited to 2% until 31 December 2023 and 3% throughout 2024.

By 2025, it is planned to eliminate the CPI, which would be replaced by a new reference index by which all rents will be updated and which will be more stable and lower than the CPI.

• Fees of the real estate agency in charge of the property

It is widely assumed that the payment of real estate fees and expenses arising from the rental will be borne by the owner of the property.

• Regulation of seasonal rentals

The draft includes an additional provision requiring the creation of a group to study this type of contract. It provides that within six months of the entry into force of the law, this working group is to be set up to make progress on a legislative proposal for the regulation of rental contracts for use other than as a dwelling and, in particular, for seasonal rental contracts for dwellings.

• Punishment for empty properties

With the intention of bringing properties to the market, the new law provides for local councils to be able to apply a surcharge of up to 150% of IBI.

Specifically, if property has been empty for more than 2 years, the surcharge would be 50% and if it has been more than 3 years, 100%.

In addition, an additional surcharge of another 50% is foreseen if the owner has two or more properties in the same municipality.

Finally, it should be noted that 20% of new developments must be allocated to social housing, either for rent or sale.

2.CONCLUSIONS

We are facing a future Housing Law especially focused on renting, although it also refers to tax incentives for owners, or measures in eviction procedures, and that in any case, will mean a normative and restrictive regulation for homeowners.

The Anti-Fraud Law has recently established that from 1 January 2023, taxpayers (both companies and individuals) who hold cryptocurrencies will have to declare to the Tax Agency both the amount and its monetary value at the end of the previous tax period. Although this is a very new issue, the Tax Agency has already established some criteria to follow.

Firstly, there are 3 main information forms by means of which cryptocurrency holders will have to inform the Tax Agency about the value of virtual currencies for the 2022 tax year.

• Form 721, which must be used to declare the wealth of coins whenever they exceed the amount of 50,000 euros. It must be filed before the end of the first quarter of 2023 (31 March 2023).
• Forms 172 and 173, by means of which the declarations of cryptocurrency service providers with tax residence in Spain will be made. Form 172 is intended for both individuals and companies to declare the balances of their cryptocurrencies (their own and those of their clients). Form 173, on the other hand, is reserved for companies with tax residence in Spain that participate in the cryptocurrency business regardless of where they provide their services and the location of the virtual currencies or their holders.

With regard to taxation, the new regulation considers that cryptocurrencies can be the cause of capital gains or losses, and however low these may be, the obligation to declare them arises. This obligation will only affect those who hold cryptocurrencies with a combined value of more than €50,000 at the end of the previous tax period. The new section 46 provided for this purpose will only have to be completed when there is a capital gain. There is no obligation to declare losses, but it is recommended that they be included because they can be offset in the future against other gains (if they occur). The sale, exchange of cryptocurrencies and capital gains are taxed in the special part (savings base) of personal income tax. Mining operations, by contrast, are taxed on the general tax base.

Cryptocurrencies are treated in the same way for Wealth Tax purposes as foreign currency capital, so they must be declared at their market value on the date of accrual (31 December). If the individual does not exceed the minimum exemption from this tax, they do not have to declare them.

We recommend to analyse the new obligations in detail, because failure to comply it will result substantial penalties.

Law 18/2022 (“Crea y Crece Law”) introduced a new section to Article 15 of the Unfair Competition Law, which is not trivial and which provides that repeated non-compliance with the rules against defaulting in commercial transactions shall be considered unfair.

It is important to bear in mind the new wording of the precept, especially for those companies that, despite the current regulations on combating late payment in commercial transactions, are negotiating and accepting collection conditions that are higher than the limits set out in the aforementioned Law.

In our opinion, the application of this precept should not be automatic, and for a breach of the rules against defaulting to be considered unfair conduct, it must be present two important facts:

• Competitive purpose, in other words, that the non-compliance is aimed at improving one’s own position in the market and that it is of minimal significance in influencing the market.
• Repetition of the conduct, that is, several breaches of conduct are required and it is not unreasonable to require a considerable number of breaches (i.e. more than two).

We are very close to the entry into force of the rule, so it will be necessary to be attentive to the evolution of doctrine and case law in this respect. However, in order to clarify more precisely any potentially infringing behaviour, please do not hesitate to contact us; we will be pleased to help you.

On 23 December 2022, the Startup Law came into force (although some tax measures came into force on 1 January 2023), but which are its main new aspects and what can I do to declare my company as a Startup?

Emerging company or Startup status.

In order to benefit from the rules contained in this new law, the Startup will need to obtain the status of an emerging company, and, to this end, entrepreneurs must apply to ENISA for certification of the innovative venture.

For the purposes of granting this certification, ENISA will assess, among other aspects, the degree of innovation, the company’s stage of life, the market attractiveness, its business model, its team or competition in the industry. The following requirements are foreseen for Startups, for example: it must be newly created (maximum 5 years since its incorporation), and it must develop an innovative entrepreneurial project with a scalable business model.

Once declared as a Startup and registered in the Commercial Register, entrepreneurs will be able to benefit from the advantages of the new law.

But what are these advantages?

Among the benefits included in the new law, we could highlight the following:

1. Tax advantages such as, for example, the 15% rate of Corporate Tax (provided the taxable base is positive) for up to 4 years, deferrals or tax debts, and incentives in Personal Income Tax for the creation of companies.
2. 100% reduction of the Special Regime for Self-Employed Workers’ contributions for self-employed companies that remain employees.
3. Simplification of formalities required for foreign investors in order to obtain their identification documents and special tax regime for impatriates with the aim of attracting foreign investment and retaining talent.
4. New option on treasury stock to reward the Startup team or its collaborators, being able to incentivise them, therefore, not only with money but also with a percentage of participation in the company, keeping them motivated and linked to its growth.
5. implification of deadlines for the registration of acts and agreements in the Commercial Register, for example with regard to incorporation and capital increases, and reduction of notary and registry fees.
6. Procedures to encourage innovative public procurement and collaboration between Startups and universities.

These are just some of the advantages contained in Law 28/2022, on the promotion of the startup ecosystem, known as the Startups Law, but if you are an entrepreneur or investor and would like to know all the detailed aspects, as well as how to implement the advantages provided, please contact us and we will be happy to help you.