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[ESTABLISHING A BUSINESS ENTITY IN SPAIN]
debts accrued after the non-balance net equity position occurs. As an exception, due to the public health crisis context caused by COVID-19 and until the closing of the tax year initiated in 2024, losses of tax year 2020 and 2021 will not compute to calculate the non-balance net equity position and directors’ liability shall not apply when dissolution cause occurred during COVID-19 state of alert. In case of a corporation, the law provides a mandatory capital decrease when, for more than one tax year, losses reduce the net worth of the company below two-thirds. 4.3 Any special business or investment visa issues Foreign investments subject to report Non-resident investments are free, but they shall be reported to the Directorate-General for International Trade and Investments (DGCI “Dirección General de Comercio Internacional e Inversiones”) for statistical and tax purposes. In some specific cases prior declaration to make the investment is required, as for example when the investment comes from a tax heaven or a non-cooperative jurisdiction and exceeds 50% of the NEWCO’s capital or is made by acquiring real state. • No declaration is needed in cases where the investment does not derive from a non- cooperative jurisdiction (formerly known as tax havens) and the investment is lower than 10% of the share capital or the voting rights. Liberalization is suspended when “foreign direct investments” are made in specific strategic sectors that affect public security, public order or public health. Furthermore, may be suspended based on the investor’s profile or characteristics when:
• the investor is controlled, directly or indirectly, by a third country government; • the investor has invested or participated in sectors affecting public order, public security and public health of another EU Member State; or • the investor represents a serious risk owing to its engagement in criminal or unlawful activities that may affect public order, public security or public health. For the purpose of suspending liberalization, foreign direct investments are: • Those which the investor becomes the holder of a share of at least 10% in the Spanish company’s capital or, when as a result of the transaction, the investor acquires control of all or part of the company according to the terms of Spanish Competition Act (“LDC”) and; • Those made by investors resident in states outside the EU or the European Free Trade Association (“EFTA”); or by investors resident in an EU or EFTA state whose beneficial ownership is held by a non-resident. DGCI can generally or specifically require Spanish companies which have foreign shareholders, and Spanish branches of non- resident persons, to file an annual report with it on the status of their foreign investments. The DGCI may also require the holders of investments to provide the information necessary in each particular case. • Restriction due to COVID-19 As an exception, due to the public health crisis context caused by COVID-19 and the resulting economic vulnerability certain foreign investment have been restricted:
ILN Corporate Group – Establishing a Business Entity Series
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