3 .Who can be an owner of foreign investments in Spain?

The criteria that defines what it is to be an owner is exposed in article 2 of the Royal Decree 664/1999. 

1. Non-residents of Spain: Spanish citizens or non-Spanish citizens that reside outside of Spain. This is independent of the location of residence in Spain or of their foreign patrimony.
2. Corporate bodies located outside of Spain & non-spanish public sovereign entities.  

The regulation of the criteria of resident and non-resident in Spain and also the change of address outlined below is found in article 2 of the Law 19/2003 of the 4^th of July, which establishes that: 

Residents

1. Persons who habitually reside in Spain, except for that contained in paragraph B under “non-residents” below.
2. Diplomats that have been approved not in Spain & staff that work in Spanish embassies & consulates or in international organizations not in Spain
3. Corporate bodies with their residence located in Spain
4. Branches or permanent establishments located in Spanish territory belonging to persons or corporate bodies whom are not resident in Spain.
5. Others determined in similar cases 

Non-Residents

1. Persons who have their habitual residence not in Spain, except for that contained in paragraph B of “Residents” Above.
2. Diplomats that have been approved by the Spanish government & foreign staff that work in foreign Embassies or Consulates or in International organisations in Spain.
3. Corporate bodies with their residence not located in Spain
4. Branches & permanent establishments not located in Spain belonging to persons or corporate bodies who reside in Spain
5. Others that are determined subsequently 

In respect of changing address of corporate bodies or changing the residence of persons then in that case, it will be determined whether there is a need to change the investment as one which is a Spanish investment in foreign territory or a foreign investment in Spain. The procedure for change of address or change of residence is lodged under article 12 of the Royal Decree 664/1999, the implications of which can lead to a corporate body or a person becoming a resident or non-resident & viceversa & furthermore the investment can lose or gain its foreign qualification. 

Such an occurrence should be declared to the investment register of the Ministry of economy within 6 months from which the title holder or the depositary entity of the investment has had their new residence.

In conformity with article 3 of the Royal Decree 664/1999 foreign investments can be channelled through the following operations: 

Participation in Spanish companies – This modality includes the creation of the company, the registration of it, and the total or partial acquisition of the shares. It is also included the acquisition of securities such as the right to subscribe to shares, convertible debenture loans in shares or other similar securities that due to its nature give the right to contribute towards the capital or any other legal business in which political rights are gained. 

Constitution & Expansion of the branches 

Subscription & acquisition of negotiable securities representative of borrowing by residents. (In the case of non-negotiable securities, its classification will not be of foreign investment but foreign finance, and therefore the preliminary requirement of NOF – Number of Financial Operation will be necessary.) 

Participation in investment funds registered in the registry of the national commission of securities market (CNMV) 

Acquisition of property located in Spain, where the contribution is higher than 3.005.060,52 Euros or when regardless of the contribution, the contribution comes from tax havens such contribution is classed as a foreign investment  according to the only article of the Royal Decree 1080/1991 of the 5^th of July. 

Constitution or participation towards contracts of participation, foundations, economic associations, organisations and communities of property, when the total value of the participation of the foreign investors is higher than 3,005.060,52 euros or when, regardless of the contribution, the participation comes from tax havens (only article of the Royal Decree 1080/1991, of the 5^th of July). 

All investments should be declared after being carried out. Investments that require preliminary declaration as those that do not are included.

General Rule: The investment will be declared by the holder of the foreign investment. Furthermore if the operation passes through a Spanish officer authorised to attest commercial documents, he should send to the registry of investments information in relation to the operation in question. In this case, the date of the investment will be noted.

Continues on “The Legal Structure of foreign investment in Spain (3)”