Executive summary of the main legal developments to watch in 2023 in Spain
- Corporate. Companies should consider (i) potential restrictions on dividend distribution, and (ii) the so-called “company moratorium” on determining whether a company has grounds for dissolution based on serious losses.
- Foreign investment. The approval of a Regulation on Foreign Investments is expected this year. It will provide greater legal certainty with regard to requesting prior authorization for foreign direct investments by investors resident in countries outside the EU and the EFTA, as it helps define strategic sectors and investments subject to it based on the investor profile.
- Competition. Two particularly important EU regulations will be applicable this year: (i) the Foreign Subsidies Regulation, addressing subsidies that cause distortions to the internal market, which gives the European Commission extensive powers to investigate financial contributions granted by non-EU countries, and has a direct impact on M&A transactions and public procurement, which may require prior authorization in certain cases; and the (ii) Digital Markets Act (or DMA), which lays down rules for gatekeepers with the aim of ensuring competition and open and fair digital markets, and putting an end to unfair and anticompetitive practices that prevent businesses from reaching end-users.
- Financing, restructuring and insolvency. Debt restructuring and the sale of business units will benefit from a more flexible system introduced under the 2022 insolvency reform, which will undoubtedly encourage the execution of these transactions throughout the year.
- ESG. The EU will continue (i) reviewing the proposal for a Directive on corporate sustainability due diligence, and (ii) developing the technical criteria that will allow information to be provided in 2024 on all of the environmental objectives established in the Taxonomy Regulation.
With regard to environmental aspects, we highlight (i) the entry into force of the new Royal Decree on Packaging and Packaging Waste, (ii) the parliamentary process of the draft bill on sustainable mobility, and (iii) the long-awaited development of the content of the annual climate risk report, which some companies will have to draw up.
- Labor and employment. Companies will face different challenges this year due to (i) the 2021 labor reform, (ii) the management of the crisis, (iii) the constraints on dismissal owing to commitments made during the pandemic and to the war in Ukraine, and (iv) the introduction of new requirements relating to protocols and policies.
- Corporate taxation: two temporary taxes have been introduced that will be imposed on (i) certain electricity, natural gas and liquefied petroleum gas operators; and (ii) certain credit institutions and financial credit establishments. Moreover, in 2023, restrictions will be imposed on the offsetting of tax loss carryforwards in the consolidated tax system under corporate income tax regulations.
- Wealth tax: there have been several significant developments, among which we highlight (i) the introduction of a new tax on great wealth, (ii) the amendment of the regulation on wealth tax with regard to the indirect ownership of real estate in Spain, (iii) the increase in rates applicable to the savings tax base of personal income tax, and (iv) the amendment of the impatriate regime.
- International tax: in 2023, domestic lawmakers are called upon to approve the internal transposed law ensuring a minimum 15% rate on taxation of large multinational groups.
- Environmental tax: companies must submit the corresponding self-assessments for environmental taxes.
- Real estate and urban planning. Housing leases will be subject to several measures such as the extension of the term of the lease and restrictions on annual rent increases. Also, if the draft bill on the right to housing is approved, housing rental prices will be monitored in strained housing market areas.
The Land and Urban Regeneration Act is also expected to be amended (with significant developments concerning the annulment of urban development plans), while fostering the restoration and construction of rented social housing.
- Public procurement. We highlight (i) the entry into force of the amendment of the Act on Public Sector Agreements, implemented under the 2023 Spanish General State Budget Act, as well as (ii) the requirement to report bids submitted in certain cases involving foreign subsidies that may distort the internal market.
- Energy. The Spanish government is expected to approve (i) the sectoral regulation on the development of offshore wind energy and marine energy in Spain, (ii) an order to launch a call for the tender on accessibility in the electricity transport network, and (iii) a new Mining Act.
- Industry. The approval of a new Industry Act replacing the current act is foreseen this year, along with the development of Strategic Projects for Economic Recovery and Transformation (known as PERTE) on industrial decarbonization.
- Digital services and artificial intelligence. Some of the provisions set out in the new European Digital Services Act (DSA) affecting online platforms and other intermediaries will come into force in 2023. Moreover, the proposed European regulation on artificial intelligence will continue being processed.
- Data protection. The European Commission is expected to approve a new adequacy decision for EU-US data transfers.
- Industrial property. In 2023, the Agreement on the Unified Patent Court will enter into force and the processing of the revised Regulation and Directive on industrial designs will move forward.
- Capital markets. The future framework law regulating Spanish securities markets and investment services and its three implementing regulations will continue being processed.
The European Commission is currently processing several legislative proposals aimed at simplifying the rules for admission to trading on EU capital markets.
- Financial regulation. Amendments are also foreseen to the European Long-Term Investment Fund (ELTIF) Regulation, as well as the approval of the regulatory framework applicable to crypto-assets. In Spain, we highlight the foreseeable creation of the Independent Authority for the Defense of Clients of Financial Services (replacing the current complaints services of financial supervisors), and the ban on CFD trading among retail clients.
- Insurance. EU Solvency II regulations will be amended to provide simpler and more proportionate rules for smaller insurance companies and to strengthen cooperation between supervisors. Likewise, a harmonized framework will be developed for the recovery and resolution of insurance undertakings.
- Litigation and arbitration. We expect the approval of rules on procedural, organizational and digital efficiency, as well as the transposition of the Representative Actions Directive. These new rules will bring about significant changes to the Spanish procedural system.
It is also likely that the trend in modernizing bilateral investment treaties will continue to develop, as well as new commercial arbitration arising from the war in Ukraine, and there is the possibility of legal and regulatory reforms being implemented in developing economies, which could affect foreign investment.
- Criminal law. The new whistleblowing act regulating the protection of persons who report regulatory breaches and the fight against corruption will strengthen reporting channels and is likely to result in a greater number of internal investigations.