On the 3rd December 2010, the Spanish Parliament issued a new law that speeds and reduces the costs of setting up a Spanish Limited company.
The aforementioned law was a response to the current climate in which the raising unemployment rate has forced many Spaniards to become self-employed.
Up until December 2010 the costs for setting up a simple Spanish Limited Company were astronomical. The timescales involved were also too long as it used to take more than a month to set up a limited company.
The new law shortens the timescales involved to a quite satisfactory level more in line with other European countries. For instance, on applying for a name for the company, the “Registro Mercantil” (Spanish equivalent of the Companies House) will have to issue the name within 24 hours, allowing the Notary Public who prepares the Deed of Incorporation to have the deed ready in the following 24 hours. Once the Deed of Incorporation has been signed, the “Registro Mercantil” will get the deed registered in the following 3 days. The above means that the timescale to set up a Spanish Limited company has been shortened from 30 plus to 5 days.
The cost of setting up the company has also been noticeably reduced. It used to be in the region of 800 € but now a Spanish Company can be set up for only 100 €.
This is a clear advantage for entrepreneurs willing to set up their own company in Spain and this will incidentally help the currently damaged Spanish Economy as more business will be created. On the other hand, Notaries and Registrars from the Companies House are a little bit sceptical about whether these new measures will make any difference to the already tumbled Spanish Economy. I wonder whether these comments from Notaries and Registrars are genuine and honest comments or just a simple rant after seeing their fees cut dramatically. As we say in Spain “It does not rain for the taste of everyone” (No llueve a gusto de todos).
On the 10th February, the European Court of Justice issued an important Judgement in connection to the tax treatment to Charities within the UE in respect of Inheritance Tax.
The Judgement is a response to the current variety of regulations within the Union in connection to Inheritance taxes and more particularly to Charities. In this specific case, a Belgian national appointed a German Charity as heir of her estate. Belgium laws grant attractive tax allowances to charities in respect of assets acquired via an inheritance but this only applies to charities domiciled in Belgium or in the deceased’s country of domicile. This treatment is clearly unfair and the aforementioned Judgment stated that the Belgian laws contravene article 63 of the Treaty of the Functioning of the European Union, as this implies a restriction to the free movement of capital within the state members.
This Judgment is extremely positive because it implies that European charities inheriting assets in another state member can benefit of the same allowances as the equivalent resident charity would do. However, this is of little help with my beloved country of origin. As some of you may know, Spain makes no allowances to Spanish charities when inheriting assets. On the other hand, UK Charities are usually Inheritance Tax exempt. This means that any UK charity inheriting assets in Spain will be tax exempt in the UK but will face an Inheritance tax bill in Spain.
In light of this, it may not prove convenient to leave in a will a Spanish asset to a UK charity because the latter will be charged quite heavily. Furthermore, there might be some legal problems to transfer the title over the asset as Spanish law does not recognise trusts and most UK charities are formed through a Trust.
As usual, proper legal guidance is advisable prior to leaving an asset in Spain to a UK charity through a will as there might be more legal and tax efficient ways to transfer the assets to the desired beneficiary.
The World is getting smaller. There is no doubt about it. In this era of globalisation, we have seen British acquiring properties in other countries such as Spain, France, Italy, you name it. The British affair with sunny places is well known. Programs such as “A place in the sun” are a good example of it. However, not everyone has taken the necessary measures to deal with the assets they own abroad and to ensure that their loved ones are covered if something were to happen. I am talking obviously about the convenience of making a will.
Fortunately, not everyone has neglected this particular point as many have signed wills to cover their assets abroad. Some have even signed a peculiar type of will called “international will” which I personally find very confusing. This so called “international will” is presented to the testator as the panacea, the magic solution, the philosopher’s stone that will cover the entire testator’s worldwide estate.
I have seen a couple of these “international wills” and they have raised several alerts on me as they do not appear to comply with a specific jurisdiction and therefore are under the risk of being considered null. For instance, the wills I have seen were signed by English nationals and were supposed to deal with assets in Spain. However, the form of the wills was neither compliant with Spanish or English law. This could involve a potential nullity that will inevitably lead to intestacy as Spanish law states that it is possible to sign a foreign will as long as this complies with the formalities of the country where it’s signed. Unfortunately, the “international wills” I have seen do not comply with a specific jurisdiction and therefore the potential problems are numerous.
I might be wrong but my opinion is that if someone has signed one of those “international wills” then the person should seek legal advice as it may be the case that the will is not valid. He/she may still be on time to change the will and grant a proper will that will be recognised in the necessary countries.