Doing Business 2019 Spain Economy Profile Spain Page 1 Doing Business 2019 Spain Economy Profile of Spain Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Spain About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Spain Ease of Doing Business in DB 2019 Rank Region OECD high income 190 1 Spain Income Category High income 30 DB 2019 Ease of doing business score Population 46,572,028 0 100 City Covered Madrid 77.68 DB 2019 Ease of Doing Business Score 0 100 78.90: Germany (Rank: 24) 77.80: Regional Average (OECD high income) 77.68: Spain (Rank: 30) 76.55: Portugal (Rank: 34) 75.69: Switzerland (Rank: 38) 72.56: Italy (Rank: 51) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Spain 1 1 23 19 30 34 28 48 58 55 73 78 82 86 Rank 109 136 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Spain 100.00 100 86.91 83.00 84.58 79.10 80 70.60 71.74 70.00 70.90 60.00 Score 60 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Spain Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Spain Starting a Business - Spain Standardized Company Legal form Sociedad de responsabilidad limitada (SRL) -Limited Liability Company Paid-in minimum capital requirement EUR 3,000 City Covered Madrid Indicator Spain OECD high Best Regulatory income Performance Procedure – Men (number) 7 4.9 1 (New Zealand) Time – Men (days) 12.5 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 4.0 3.1 0.0 (Slovenia) Procedure – Women (number) 7 4.9 1 (New Zealand) Time – Women (days) 12.5 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 4.0 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 12.0 8.6 0.0 (117 Economies) Figure – Starting a Business in Spain and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 91.19: Regional Average (OECD high income) 90.89: Portugal (Rank: 57) 89.50: Italy (Rank: 67) 88.41: Switzerland (Rank: 77) 86.91: Spain (Rank: 86) 83.58: Germany (Rank: 114) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Spain Figure – Starting a Business in Spain – Procedure, Time and Cost Time (days) Cost (% of income per capita) 2.5 12 Cost (% of income per capita) 10 2 8 Time (days) 1.5 6 1 4 0.5 2 0 0 1 2 3 4 5 6 *7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Spain Details – Starting a Business in Spain – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a certificate of availability for the proposed company name 2 days EUR 13.52 (excluding (certificación negativa de la denominación social) VAT) Agency : Mercantile Registry To register a company, entrepreneurs can choose between obtaining a certificate of availability of the company name or selecting a name from a list of approved names (bolsa de denominaciones). Most companies are registered with a previous certificate. The certificate of availability of the company name is typically requested through the website of the Central Commercial Registry. If the certificate is not requested online, the final document can be obtained by (i) certified mail, (ii) through a notary with the notarial platform SIGNO; (iii) visiting the Central Commercial Registry; or (iv) courier. In all cases, the certificate is issued by the following day. Once the Registry issues the certificate, the requested corporate name will be reserved for a maximum of 6 months from the certificate's date of issuance. Each certificate is valid for 3 months from its date of issuance. Furthermore, once the certificate's validity has expired (3 months), the certificate can only be renewed once, after which a new certificate must be requested. 2 Open a company bank account, deposit capital and obtain a deposit 1 day no charge certificate Agency : Bank In most cases, the entrepreneur deposits the amount of the contributions directly in the bank. Once this is done, the bank issues the relevant certificate evidencing the deposit has been done. However, the contributions can also be directly given to the notary public at the time of granting the deed of incorporation. In this scenario, the notary can deposit them in the company's bank account. 3 File the Single Electronic Document (Documento Único Electrónico - DUE) 1 day no charge and make an appointment with a notary Agency : Help Desk for Entrepreneurs (PAE) Limited liability companies can be incorporated through CIRCE, the electronic platform of the Ministry of Industry, Energy and Tourism. Through CIRCE, the entrepreneur completes a single registration form called DUE that is then sent to the notary's office, the commercial registry, the tax agency and the social security agency (for registration of the company and of its employees, if it has them). The single registration form can be filed at any Help Desk for Entrepreneurs (Puntos de Atención al Emprendedor - PAE) or online by the entrepreneur, in which case a digital signature is required. Once the DUE is sent, an appointment request is generated with the notary chosen for the preparation of the public deed of incorporation. At the moment of incorporation, the entrepreneur must provide to the notary the information on the company's beneficial owners. The notary will inform the Mercantile Registry. After that, at the end of every fiscal year the annual accounts, including beneficial ownership information, must be provided to the Mercantile Registry. Page 8 Doing Business 2019 Spain 4 Obtain through a notary the registered public deed of incorporation and the 7 days See comments fiscal identification number (Código de identificación fiscal - CIF) Agency : Public Notary and Mercantile Registry Within a week approximately, the notary provides a public deed and the company is registered with the commercial registry and the tax authorities. Besides the granting of the deed that requires the physical presence of the founders, the rest of the procedures are completed electronically through CIRCE. Additionally, the CIRCE platform offers other services such as registration of personal data with the Spanish Data Protection Agency and request of the trade name of the company with the Spanish Patent and Trademark Office. The notary fees are as follows (per Number 2, Royal Decree 1426/1989, last modified per Official Gazette 285 of Nov. 17, 2011): 1. Notary fee for public deed of incorporation (a 5% discount applies): - until EUR 6,010.12: fixed sum of EUR 90.15 - for the amount from EUR 6,010.12 until 30,050.61: 4.5 per thousand of capital - from EUR 30,050.61 until 60,101.21: 1.5 per thousand - from EUR 60,101.21 until 150,253.03: 0.5 per thousand - from EUR 150,253.03 until 601,012.10: 0.3 per thousand 2. Additional notary charges (per Number 1-h, Royal Decree 1426/1989, last modified per Official Gazette 285 of Nov. 17, 2011): - designation of positions (cargos): EUR 30.05 - paper cost (papel matriz): EUR 1.50 - authorized mandatory copy (copia autorizada): EUR 30.05 - paper cost for the copy: EUR 1.50 - safety seal (sello de seguridad): EUR 0.15 Registration fees as follows (per Number 2, Royal Decree 1427/1989 last modified per Official Gazette 285 of Nov. 17, 2011): - until EUR 6,010.12: fixed sum of EUR 24.04 - for the amount from EUR 6,010.12 until 30,050.61: 1.75 per thousand of capital - from EUR 30,050.61 until 60,101.21: 1.25 per thousand - from EUR 60,101.21 until 150,253.03: 0.75 per thousand - from EUR 150,253.03 until 601,012.10: 0.3 per thousand - fee for record entry: EUR 6.01 5 Payment of the municipal tax for urban services (tasa por prestación de Less than one day EUR 414 servicios urbanísticos) (online procedure) Agency : CIRCE portal Payment of the municipal tax ("tasa por prestación de servicios urbanísticos") is required before submitting the notification of start of operations ("declaración responsable"). It can be made online (through the CIRCE system) or at a bank. 6 Submit a notification of start of operations (declaración responsable) to the Less than one day included in Procedure Town Council (online procedure) 5 Agency : Town Council The responsible declaration procedure is to be prepared in accordance with an official model, which will include the following circumstances: (i) identification of the owner of the activity; (ii) identification of the office's surface; (iii) identification of the activity declared; (iv) a representation granting that the activity is not undertaken in a building protected due to its cultural interest; and (v) that the activity does not imply the private use or occupation of public domain spaces and goods. This declaration will entitle the applicant to undertake the activity declared, subject to further control by physical inspection of the office by the local authorities or by the technical services of the private agencies authorized by the municipality, depending on to which of those entities the declaration has been filed with. This declaration can be filed with the Municipality in person, by mail or online through the CIRCE platform. 7 Notify the Ministry of Labor and Industry of the start of operations Less than one day no charge Agency : Ministry of Labor and Industry (Dirección General de Trabajo) (online procedure, The corresponding autonomous community must be notified within the first 30 simultaneous with days of the start of activities and the opening of the workplace. Every previous procedure) autonomous community has its own form. Some require that work injury and safety documentation (corresponding to the specific business or workplace in question) be filed along with the forms. Other forms and documents might be needed depending on the workplace activities. Business founders can notify the Ministry of Labor and Industry online through the CIRCE platform. Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 Spain Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - Will be used for general storage activities, such as storage of books or stationery. - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2019 Spain Dealing with Construction Permits - Spain Standardized Warehouse Estimated value of warehouse EUR 1,249,151.90 City Covered Madrid Indicator Spain OECD high Best Regulatory income Performance Procedures (number) 13 12.7 None in 2017/18 Time (days) 147 153.1 None in 2017/18 Cost (% of warehouse value) 4.8 1.5 None in 2017/18 Building quality control index (0-15) 11.0 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Spain and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 78.16: Germany (Rank: 24) 75.41: Regional Average (OECD high income) 73.17: Portugal (Rank: 60) 71.75: Switzerland (Rank: 69) 70.60: Spain (Rank: 78) 67.39: Italy (Rank: 104) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Spain – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 4.5 140 4 Cost (% of warehouse value) 120 3.5 100 3 Time (days) 80 2.5 2 60 1.5 40 1 20 0.5 0 0 1 *2 *3 *4 5 6 7 8 9 10 11 12 * 13 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2019 Spain Figure – Dealing with Construction Permits in Spain and comparator economies – Measure of Quality 15 11.0 11.0 11.0 11.5 Index score 9.5 10 9.0 5 0 Spain Germany Italy Portugal Switzerland OECD high income Details – Dealing with Construction Permits in Spain – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain results of geotechnical study / soil test 17 days EUR 1,875 Agency : Private licensed company A soil study is a requirement before construction specified in the Building Code (Ley 38/1999-Art. 3 & 7) and the Technical Building Code (Real Decreto 314/2006-Annex I-Section 2.1). Contractors ask for a soil test to ensure that the foundation of the building is solid. The engineer must understand the suitability of the soil for the proposed construction work. It allows to build a solid foundation and avoid structures to be damaged, collapsed or leaned. 2 Request and obtain the official alignment (alineamiento oficial) 14 days EUR 186 Agency : Municipality of Madrid The certificate of alignment is issued by the Municipality of Madrid which provides the exact limit of the private property with respect to public roads. 3 Obtain results of topographical study 7 days EUR 800 Agency : Private licensed company A topographical study is conducted prior to construction to measure the levels on the specific terrain. It is a general technical requirement when building a structure of this class. This procedure is required by Codigo Tecnico de Edificacion (March 2006) as part of the Basic Project to be presented. 4 Obtain approval of draft project proposal and implementation plan (Visado 3 days EUR 1,155 del proyecto básico y proyecto de ejecución) from College of Architects of Madrid Agency : College of Architects of Madrid The College of Architects of Madrid must approves BuildCo’s draft project proposal and implementation plan. In particular, the College of Architects of Madrid verifies the professional qualifications of the individual in charge of the construction work and validates the correctness and completeness of the documentation provided for the project with respect to regulations. The following documentation must be provided: -report on the project -implementation plan -administrative and technical conditions’ statement -measurements -budget -health and safety study The procedure is legislated in "Real Decreto 1000/2010 "sobre visado colegial obligatorio". Page 12 Doing Business 2019 Spain 5 Request and obtain a building permit (licencia de obras) 45 days EUR 51,979 Agency : Municipality of Madrid The documents required to obtain the license are the following: • A standardized application form and sheet containing the characteristics of the construction properly completed • Proof of payment of tax • Declaration by one or more technical authors (architect and project design specialists) that the project conforms to the appropriate town planning regulations, and certificate of the structural feasibility, if necessary • Declaration of the promoter that a signboard has been posted at the site to inform the public that a building license has been applied for and to provide information about the proposed operations and activities • Three copies of the technical project designs signed by qualified technician(s) and countersigned by the appropriate official institute (or in this case, by the project’s administrative supervision office, accompanied by the application sheets of the appropriate professional association) • Confirmation of the deposit of a guarantee • Authorization program for independent parts of the construction or approval of partial projects, if requested by the promoter • In cases of renovation/expansion of buildings included in the general catalog of protected elements in historic city centers or historic centers of peripheral districts and historic colonies, a color photographic description of the existing building that permits, during enlargement operations, confirmation of the correct alignment of the enlargement plans with the historic city zoning restrictions • License of parceling, if the new construction needs previous parceling • Official alignment, if required • Project design of installation of telecommunications infrastructure Real Decreto 346/2011 • Project design of the use of solar energy for heating (either as an independent project design or as part of the general project design), signed by a qualified technician and countersigned by the appropriate official institute, if required by the Regulation Concerning the Harnessing of Solar Energy for Thermal Use • Reglamento de seguridad contra incendios en los establecimientos industriales RD 2267/2004, de 3 de diciembre, modificado en parte por el RD 560/2010 de 7 de mayo • Security and health certification or a basic certification regarding RD 1627/1997 de 24 de octubre • Certify the destination of all the construction waste and demolition (RCD) according to the Law 5/2003 and amendments by Law 9/2010 (regarding abandoned and discharged wastes) This procedure is regulated by the Ordenanza Fiscal Municipal Reguladora del Impuesto sobre Construcciones, Instalaciones y Obras (ICIO), dated October 9, 2001 (in accordance with the amendments approved by Plenary Council dated September 25, 2013). Since the end of 2012, the time to obtain a building permit was reduced to approximately 45 days. 6 Notify labor authority of the start of construction (apertura del centro de 1 day no charge trabajo) at the Ministry of Employment, Tourism and Culture Agency : Ministry of Employment and Social Security Upon authorization from the College of Architects of Madrid, and in line with “Orden TIN/1071/2010, de 27 de abril” BuildCo must notify the Ministry of Employment, Tourism and Culture of the start of construction. 7 Receive initial inspection 1 day EUR 375 Agency : Municipality of Madrid According to the building license, one on-site inspection must be carried out during construction and one at the end of the process. If, during the inspections, the committee detects any possible infringements of the building regulations or criminal law, a proposal on sanctions must be made, and a copy of the written record is given to the public prosecutor. At minimum, administrative proceedings are initiated. In each inspection report, a record is included that provides information on every person involved and their roles, as well as on the facts, circumstances, dates, and results of the inspection. The record is regarded as a public administrative deed. The record must be signed by the inspector(s) and by the person to whom the construction works have been attributed at the time of the inspection. The inspection can only be conducted once the construction has started, for that reason this procedure cannot be simultaneous with the previous one. Page 13 Doing Business 2019 Spain 8 Obtain completion certificate (visado del certificado final de obra -CFO) 3 days EUR 204 from College of Architects of Madrid Agency : College of Architects of Madrid Once construction works have been completed, the architect and surveyor must sign off a document certifying that the construction has followed the approved plans. Therefore, both individuals are responsible for the construction performed. This completion certificate must be approved by the College of Architects of Madrid. This procedure is legislated in "Real Decreto 1000/2010, de 5 de agosto, sobre visado colegial obligatorio". This procedure can only be done when the consturciton is finalized, for that reason this procedure cannot be simultaneous with the previous one. The basis of the cost is in "Precios del Visado de los Trabajos profesionales". The formula used is the following: Cost of approval = Módulo x C x S x Qv x F / 6000. For a warehouse such as the Doing Business case study: M = 497.43; C = 9.00; S = 1300.6; Qv = 1.40; F = 0.15. Therefore, cost of approval is 497.43 *9*1300.6*1.40*0.15/6000 =203.79 EUR" 9 Request final inspection in connection with the occupancy permit (licencia 1 day EUR 1,116 de primera ocupacion y funcionamiento) Agency : Municipality of Madrid Private collaborating entities (ECU) carry out the inspection and issue the declaration of conformity at the end of the construction works. BuildCo must pay a fee to the collaborating entities. The cost details to request and receive final inspection is provided on the official website of the Municipality of Madrid, (www.munimadrid.es). The legal basis is Agreement of the Local Government Board of the City Council of Madrid, dated September 26, 2013, setting the maximum price for services of the private collaborating entities for 2014 (Official Gazette of the City Council of Madrid N. 7015 (09/30/2013)). 10 Receive final inspection 1 day no charge Agency : Municipality of Madrid BuildCo. can receive a final inspection once the construction is finalized. For that reason this procedure cannot be simultaneous with the previous one. 11 Obtain occupancy permit (licencia de primera ocupación y funcionamiento) 60 days no charge Agency : Municipality of Madrid As soon as construction is finished, in order to receive the first operating license (licencia de primera ocupación), the builder must submit the following documents to the ECU: • Final certificate of terminated construction (declaration of conformity), which must be signed by the technical director of the work. This certificate must declare that the constructed building is in accordance with the issued license. For modifications that do not need approval of the City Council (23.2 of the Ordenanza Municipal de Tramitación de Licencias Urbanísticas de 23 de diciembre de 2004), the builder has to detail these modifications. • If urbanization works have been carried out simultaneously with construction, and this urbanization was completed by the builder, the builder must present the final certification of these works. • Certificado final de obra visado por el Colegio Profesional y Plan de Autoprotección (Ordenanza Municipal de Tramitación de Licencias Urbanísticas de 23 de diciembre de 2004 - BOCM de 7 de enero de 2005) The purpose of the operating license is to verify that the construction and activities have been executed according to the project and the conditions under which the license had been granted, and that the construction has been completed and is adequate for urban determinations, the atmosphere and the security of its specific destination. 12 Register the new building 18 days EUR 1,247 Agency : Property Registry With the occupancy permit BuildCo. can register the newly built warehouse. Registration fees cannot exceed EUR 2,181.00 according to "Real Decreto 1427/1989, de 17 de noviembre, por el que se aprueba el arancel de los registradores de la Propiedad" Notary and registration fees depend on the value of the building. This can only be requested upon reception of the occupancy permit. Page 14 Doing Business 2019 Spain Request and obtain water connection 10 days EUR 1,200 13 Agency : Canal de Isabel II In parallel with registering the building. BuildCo. can request the water services. If the flow of water is less than 6 liters per second or if fewer than 25 counters are needed in one hall, only the following documents must be submitted: • Technical report (Memoria técnica), not required if the flow of water is less than 3 liters per second • Form 2.1.4 • Confirmation of fee payment (EUR 12.28 must be paid at the counter) • Two copies of Form 2.1.3 (Impreso de Final de Obra) If the required flow of water is more than 6 liters per second or if more than 25 counters are needed in one hall, the following additional documents must be filed: • Project design from an engineer specialized in planning water facilities • Fee (in this case, a certain percentage of the budget) Since this procedure can be applied to another organization, it can be simultaneous with the previous one. Takes place simultaneously with previous procedure. Page 15 Doing Business 2019 Spain Details – Dealing with Construction Permits in Spain – Measure of Quality Answer Score Building quality control index (0-15) 11.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer; Private firm. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer; Unscheduled inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, in- house engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the University degree 1.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) in architecture or engineering; Being a registered architect or engineer. Page 16 Doing Business 2019 Spain What are the qualification requirements for the professional who supervises the construction University degree 1.0 on the ground? (0-2) in engineering, construction or construction management; Being a registered architect or engineer. Page 17 Doing Business 2019 Spain Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest • Regulatory monitoring of utilities’ performance supplier. (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 18 Doing Business 2019 Spain Getting Electricity - Spain Standardized Connection Price of electricity (US cents per kWh) 24.8 Name of utility Iberdrola City Covered Madrid Indicator Spain OECD high Best Regulatory income Performance Procedures (number) 5 4.5 3 (25 Economies) Time (days) 95 77.2 18 (3 Economies) Cost (% of income per capita) 96.4 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 8 7.5 8.0 (27 Economies) Figure – Getting Electricity in Spain and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 98.79: Germany (Rank: 5) 94.41: Switzerland (Rank: 11) 86.45: Portugal (Rank: 32) 85.47: Regional Average (OECD high income) 85.28: Italy (Rank: 37) 83.00: Spain (Rank: 48) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 19 Doing Business 2019 Spain Figure – Getting Electricity in Spain – Procedure, Time and Cost Time (days) Cost (% of income per capita) 90 90 80 Cost (% of income per capita) 80 70 70 60 60 Time (days) 50 50 40 40 30 30 20 20 10 10 0 0 1 2 3 4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Spain and comparator economies – Measure of Quality 8 8 8 8 7.5 7 7 7 6 Index score 5 4 3 2 1 0 Spain Germany Italy Portugal Switzerland OECD high income Page 20 Doing Business 2019 Spain Details – Getting Electricity in Spain – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Iberdrola and await estimate 20 calendar days EUR 0 Agency : Iberdrola Customers must submit an application for a new connection with the utility. Iberdrola Distribución Eléctrica will prepare an estimate and inform the customer with a letter about the estimated costs of the project and the technical characteristics of the project. The payment is made at the bank. A receipt of this payment has to be submitted to Iberdrola at the time when the customer signs the supply contract. 2 Obtain license for external works from City Council 25 calendar days EUR 956.6 Agency : City Council Customers need to obtain a license for the external works from the municipality. The tax for this license is charged as 4% of the cost of the works, plus a fee for provision of urban services (‘Tasa por prestación de servicios urbanísticos’), and a fee for private use of public spaces (‘Tasa por Utilización Privativa o Aprovechamiento Especial del Dominio Público Local’). . 3 Await completion of connection works by Iberdrola or private firm 30 calendar days EUR 20,500 Agency : Iberdrola Customers have two choices: The external connection works can be done by Iberdrola or the customer can hire a private licensed electrical constructor. In most cases, for a connection with a capacity of 140 kVA, customers hire a private company to carry out the works. For such a capacity, the connection is considered in most cases as low voltage. This cost includes materials and labor. 4 Obtain clearance of electrical installation 15 calendar days EUR 0 Agency : General Directorate for Industry, Energy and Mining (‘DGIEM’) The customer obtains a clearance of the electrical installation (‘acta de puesta en servicio’) from the General Directorate for Industry, Energy and Mining to certify that it is in compliance with its requirements. The documents to be presented are: - Contract of maintenance of proof of own capacity of maintenance of transformers - Certificate of conclusion of works - Initial certificate of inspection by the OCA - Declaration of responsibility 5 Sign supply contract with Iberdrola and await meter installation and 5 calendar days EUR 2,615.72 electricity flow Agency : Iberdrola Irrespective of who executes the actual works of the connection (installation of the transformer, excavation for cables etc.), Iberdrola is always in charge of installing the meter and the final energization of the project. The meter can be rented or bought by the customer. Most clients prefer to rent it at an approximate cost of EUR 12 per month. According to Article 79 of the Real Decreto 1955/2000, the utility can levy a security deposit in the amount of one month of future consumption (corresponding to 50 hours supply of the contracted load). Additional fees for the access to electricity (cuotas de acceso) and for the final connection (derechos de enganche) also apply. Takes place simultaneously with previous procedure. Page 21 Doing Business 2019 Spain Details – Getting Electricity in Spain – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.5 System average interruption frequency index (SAIFI) 0.7 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.controlast uenergia.gob.es/fact ura- electrica/factura/Pagi nas/conceptos- factura.aspx Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 22 Doing Business 2019 Spain Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. • Official costs only (such as administrative fees, - Has no trees, natural water sources, natural reserves or historical monuments of duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 23 Doing Business 2019 Spain Registering Property - Spain Indicator Spain OECD high Best Regulatory income Performance Procedures (number) 6 4.7 1 (4 Economies) Time (days) 13 20.1 1 (New Zealand) Cost (% of property value) 6.1 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 22.5 23.0 None in 2017/18 Figure – Registering Property in Spain and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 86.12: Switzerland (Rank: 16) 81.72: Italy (Rank: 23) 78.36: Portugal (Rank: 36) 77.17: Regional Average (OECD high income) 71.74: Spain (Rank: 58) 65.70: Germany (Rank: 78) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Spain – Procedure, Time and Cost Time (days) Cost (% of property value) 7 12 6 Cost (% of property value) 10 5 Time (days) 8 4 6 3 4 2 2 1 0 0 1 *2 3 4 *5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 24 Doing Business 2019 Spain Figure – Registering Property in Spain and comparator economies – Measure of Quality 30 26.5 25 22.5 23.5 23.0 22.0 Index score 20.0 20 15 10 5 0 Spain Germany Italy Portugal Switzerland OECD high income Details – Registering Property in Spain – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Notary requests property information from the Property Registry 1 day EUR 9.02 Agency : Property Registry According to the law (Art. 175 of the Decree dated on June 2, 1944), the notary is obliged to duly inform the parties, be aware of the ownership and encumbrances on the property, and consult the Property Registry books before executing the deed. The consultations can be done on-line at www.registradores.org and the printout from the internet is valid. This document is an “Informative Land Registry Extract” containing the same information as an Ownership and encumbrances Certificate, and bearing the same responsibility of the Registrar in case of mistake as a formal certificate would provide. This is an information product specifically foreseen by the Mortgage Law to answer the Notary's requests of Information related to registrable acts and contracts. The Notary submits an electronic request and receives the information also by electronic means. From that moment and for the next ten days, the Registrar must inform the Notary about any Document submitted to the Land Registry related to the same property, within the maximum term of 24 hours since such document was submitted to the Land Registry Office. This procedure is aimed at preventing any surprises or unexpected situations while the contract is being formalized. Article 28 of "Act 24 /2005 on reforms to foster productivity", orders the direct and on line access from notaries to the register books in order to obtain information and register the notarial deeds. This obligation was stated by the former Act 24/2001. Nevertheless, up to now registries have not implemented this law and notaries still have to ask information via "telefax", according to article 354-a of the Mortgage Act of 8 February 1946 and the implementing Regulations of 14 February 1947. 2 Notary obtains cadastral description Less than one day, if obtained Agency : Cadastre online electronically The Notary would search the land parcel corresponding to the property object of the transaction to identify the area of the land whether there are any buildings in the property and the cadastral value for tax purposes (for property transfer tax/value added tax, for municipal capital gains tax and for real estate tax). No cost if the "Graphic Consultation" is submitted on line. But it does not include neither the name of the owner nor the cadastral value of the property. Those data can be obtained at a cost of 1€ or 2€ (depending on the extension of the certificate) via the notarial platform SIGNO that includes both the name of the owner and the cadastral value of the property. The Notary has special access to the Cadaster database. If parties check this information by themselves, they still can verify boundaries, size and buildings, but they cannot obtain information on ownership and cadastral value. In order to obtain this information, they have to request an extract for a fee. Page 25 Doing Business 2019 Spain 3 Execution and delivery of the public deed of purchase of the property 2 days EUR 715.71; Agency : Notary (Notary’s fees Property transfers are valid with a private contract between the parties, plus the (decreasing scale): handing over of the possession of the property to the buyer (ie. the "traditio" EUR 730 for a through, for example, the handing over of the keys to the property to the buyer). property of this value However, in order to make the property transfer opposable to good faith third (minus 5% discount) parties, it has to be registered at the Land Registry, and in order to be registered, the contract between the parties has to be notarized. Additionally, if the buyer For property values acquired the property in good faith, his title over the property would be not exceeding EUR indefeasible after registration. 6.010,12: EUR 90,151816. for the Notary fees are set according to a cumulative scale: excess amount between EUR • Property value up to EUR 6,010.12: EUR 90.151816; 6.010,13 and 30.050,61: 0,45%. for • For the excess amount between EUR 6,010.13 and EUR 30,050.61: 4.5 per the excess amount 1,000; between EUR 30.050,62 and • For the excess amount between EUR 30,050.62 and EUR 60,101.21: 1,50 per 60.101,21: 0,15%. for 1,000; the excess amount • For the excess amount between EUR 60,101.22 and EUR 150,253.03: 1 per between EUR 1,000; 60.101,22 and 150.253,03: 0,1%. for • For the excess amount between EUR 150,253.04 and EUR 601,012.10: 0.5 per the excess amount 1,000; between EUR 150.253,04 and • For the excess amount between EUR 601,012.11 and EUR 6,010,121.04: 0.3 601.012,10: 0,05%. per 1,000; for the excess amount over EUR • For the excess amount above EUR 6,010,121.04 the fees are determined by 601.012,10 until agreement between the notary and client. 6.010.121,04: The Real Decreto Ley 8/2010, of May 20 2010, modifies the Real Decreto 0,03%.) 1426/1989, of November 17th 1989, establishing notary fees. The 2010 decree establishes a 5% discount for notary fees. According to Royal Decree 45/2007, the notary must issue an authorized copy of the deed on the same or next day and send it to the Registry electronically, unless otherwise requested by the interested party. The documentation shall include: • Power of attorney granted by the seller and ID of the person in favor of whom the power was granted. • Power of attorney granted by the buyer and ID of the person in favor of whom the power was granted. • The public deed that transferred the property, which shall indicate the following information: (i) Company tax identification and registration numbers; (ii) Means of payment used in the transaction; and (iii) Cadastral reference. 4 Payment of the Transfer Tax (ITP) and obtain the confirmation of payment 1 day EUR 74,949.12; (6% at tax authority of purchase price Agency : Autonomous Community of Madrid's Tax Office (ITP)) First transfers of property or transfers made between entrepreneurs are subject to VAT and Stamp Duty. Second and subsequent property transfers are not subject to VAT, but to the Transfer Tax ("Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados", ITP). For the Doing Business case study, as it is assumed that the buyer is a company and the property is in Madrid and has been transferred at least once in the past, the applicable tax should be the Transfer Tax (ITP). The ITP is paid at the relevant tax office within 30 working days after the date of granting of the notarial deed of transfer (a copy of the transfer deed is to be attached to the transfer tax liquidation form). In some autonomias, like Madrid, Catalunya, and Andalucia, the tax may be paid online, although the buyer needs to obtain a stamp from the tax authority confirming the payment for ITP and capital gains tax. However, it has to be noted that under certain circumstances (e.g., that the acquisition of the property is within the scope of the usual activities of the acquiring company), the acquiring company can choose to make the transaction subject to transfer tax or VAT. The VAT paid would become a credit that the company would deduct from subsequent transactions, such as those related to the normal business of the company. Page 26 Doing Business 2019 Spain 5 File and pay the municipal capital gains tax ("Impuesto sobre el Incremento Less than one day, Capital Gains Tax is del Valor de los Terrenos de Naturaleza Urbana") and obtain receipt online not included in the Agency : Municipality of Madrid cost of this procedure In order to register the property transfer in the Property Registry, the parties must attach a receipt to the transfer deed proving that the transaction has been submitted to the Municipal Tax Authority in order to file and clear the Municipal Capital Gains Tax ("Impuesto sobre el Valor de los Terrenos de Naturaleza Urbana"). This procedure can be completed online at the website of the Municipality of Madrid. Notaries can also communicate the transaction to the municipality online. The municipality sends an e-mail to the notary confirming the reception. The tax to be paid for the IVTNU is not used to calculate the cost of this procedure. 6 The public deed is registered at the Land and Property Registry 8 days EUR 423.36; Agency : Property Registry (According to decree The notary submits the public deed to the Land Registry. The Land Registry will 1427, the cost is review and register the transfer within the legal time limit of 15 business days. If calculated as follows: the Procedure takes more than 15 business days, the fees will be reduced by 30%, unless there is an objective reason for the delay. a) property value up With the introduction of technology and online Procedures due to Law 24/2005 of to 6010.12 euros, November 18, in particular section II on electronic registration, the time to 24.040484 euros. register is in the process of being reduced. The average registration time is currently at 8 calendar days. b) 0.175% of the property The documentation to be presented to the Land Registry shall include: (i) Public valuebetween deed; (ii) Proof of VAT or ITP payment (attached to the sale purchase 6.010,13 and agreement); (iii) Proof of stamp duty payment (in the case that VAT applied and 30050.61 euros,. not ITP); and (iv) proof of payment of the municipal capital gains tax. c) 0.125% of the value between 30050.62 and 60101.21 . d) 0.075% of the property value between 60101.22 and 150253.03 euros. e) 0.03% of the property value between 150.253,04 and 601.012,10 euros f) 0.02% for values above 601.012,10 euros. A 5% discount is applicable to the cost. Also, an administrative fee of EUR 9.02 is added to the cost.) Takes place simultaneously with previous procedure. Page 27 Doing Business 2019 Spain Details – Registering Property in Spain – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 7.0 What is the institution in charge of immovable property registration? Registros de la Propiedad de Madrid In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Dirección General del Catastro In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Different 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases but databases? linked Do the immovable property registration agency and cadastral or mapping agency use the No 0.0 same identification number for properties? Transparency of information index (0–6) 3.0 Who is able to obtain information on land ownership at the agency in charge of immovable Only 0.0 property registration in the largest business city? intermediaries and interested parties Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://www.registr adores.org/wp- content/revista/co mocomprarunavi vienda/ Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.registr adores.org/nota_ simple.jsp Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: There is a deadline set by law of 15 days. http://www.mjusti cia.gob.es/cs/Sat ellite/Portal/es/ar eas- tematicas/registr os/registro- propiedad#id_12 15198094252 Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Page 28 Doing Business 2019 Spain Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 69966.0 Who is able to consult maps of land plots in the largest business city? Freely accessible 0.5 by anyone Is the applicable fee schedule for accessing maps of land plots made publicly available— No cost 0.5 and if so, how? Link for online access: https://www.sede catastro.gob.es/ Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 6.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 6.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property First Instance worth 50 times gross national income (GNI) per capita and located in the largest business Judge of Madrid city, what court would be in charge of the case in the first instance? (Juzgados de Primera Instancia) How long does it take on average to obtain a decision from the first-instance court for such a Between 1 and 2 2.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 29 Doing Business 2019 Spain Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 30 Doing Business 2019 Spain Getting Credit - Spain Indicator Spain OECD high Best Regulatory income Performance Strength of legal rights index (0-12) 5 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.7 8 (42 Economies) Credit registry coverage (% of adults) 67.7 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 15.7 65.3 100.0 (25 Economies) Figure – Getting Credit in Spain and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 70.00: Germany (Rank: 44) 64.12: Regional Average (OECD high income) 60.00: Switzerland (Rank: 73) 60.00: Spain (Rank: 73) 45.00: Italy (Rank: 112) 45.00: Portugal (Rank: 112) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Spain and comparator economies 8 7 6 6 6.1 6 Index Score 5 5 4 3 2 2 2 1 0 Spain Germany Italy Portugal Switzerland OECD high income Page 31 Doing Business 2019 Spain Details – Legal Rights in Spain Strength of legal rights index (0-12) 5 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by Yes asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization Yes procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow No the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Spain and comparator economies 8 8 7 7 7 7 6.7 6 6 Index Score 5 4 3 2 1 0 Spain Germany Italy Portugal Switzerland OECD high income Page 32 Doing Business 2019 Spain Details – Credit Information in Spain Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No No 0 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 4,502,000 19,610,000 Number of firms 311,000 1,170,000 Total 4,813,000 20,780,000 Percentage of adult population 15.7 67.7 Page 33 Doing Business 2019 Spain Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value. - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 34 Doing Business 2019 Spain Protecting Minority Investors - Spain Indicator Spain OECD high Best Regulatory income Performance Extent of disclosure index (0-10) 7.0 6.5 10 (13 Economies) Extent of director liability index (0-10) 6.0 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 6.0 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 9.0 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 5.0 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 9.0 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Spain and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 70.00: Spain (Rank: 30) 64.21: Regional Average (OECD high income) 60.00: Portugal (Rank: 64) 58.33: Germany (Rank: 72) 58.33: Italy (Rank: 72) 50.00: Switzerland (Rank: 110) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Spain and comparator economies – Measure of Quality Spain 9 6 7 5 9 6 Germany 7 5 5 6 7 5 Italy 8 4 7 4 6 6 Portugal 8 5 6 6 4 7 Switzerland 7 5 0 5 8 5 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 35 Doing Business 2019 Spain Details – Protecting Minority Investors in Spain – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 6.3 Extent of disclosure index (0-10) 7.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of 2.0 directors excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 6.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if negligent 1.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) Yes 1.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 6.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the No 0.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 7.7 Extent of shareholder rights index (0-10) 9.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Page 36 Doing Business 2019 Spain Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 5.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 9.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 37 Doing Business 2019 Spain Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The Total tax and contribution rate (% of commercial machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 38 Doing Business 2019 Spain Paying Taxes - Spain Indicator Spain OECD high Best Regulatory income Performance Payments (number per year) 9 11.2 3 (Hong Kong SAR, China) Time (hours per year) 147.5 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 47.0 39.8 26.1% (32 Economies) Postfiling index (0-100) 93.60 84.41 None in 2017/18 Figure – Paying Taxes in Spain and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 87.66: Switzerland (Rank: 20) 84.58: Spain (Rank: 34) 83.75: Portugal (Rank: 39) 83.32: Regional Average (OECD high income) 82.11: Germany (Rank: 43) 66.32: Italy (Rank: 118) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Spain and comparator economies – Measure of Quality 97.67 100 93.60 92.71 83.21 84.41 80 Index score 60 52.39 40 20 0 Spain Germany Italy Portugal Switzerland OECD high income Page 39 Doing Business 2019 Spain Details – Paying Taxes in Spain Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 1.0 online 84.0 29.9% gross salaries 35.74 paid - Social security contributions Corporate 1.0 online 33.0 15% taxable profit 10.59 income tax Tax on 0.0 jointly 19% interest 0.49 not included interest income Property tax 1.0 0.51% cadastral 0.41 value (estimated in 40% of property cost for these purposes) Tax on 1.0 3.7% Number of 0.12 property years and transfer cadastral value Tax on 1.0 6% insurance 0.06 insurance premium contracts Transport tax 1.0 EUR 532 type of truck 0.04 Environmenta 1.0 various rates cadastral 0.03 l tax value Fuel tax 1.0 included in 0.00 small amount fuel price Employee 0.0 jointly 6.35% gross salaries 0.00 withheld paid - Social security contributions Value added 1.0 online 30.5 21% value added 0.00 not included tax (VAT) Totals 9 147.5 47.0 Page 40 Doing Business 2019 Spain Details – Paying Taxes in Spain – Tax by Type Taxes by type Answer Profit tax (% of profit) 10.6 Labor tax and contributions (% of profit) 35.7 Other taxes (% of profit) 0.7 Page 41 Doing Business 2019 Spain Details – Paying Taxes in Spain – Measure of Quality Answer Score Postfiling index (0-100) 93.60 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 25% - 49% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 0.0 100 Time to obtain a VAT refund (weeks) 16.5 74.42 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 1.5 100 Time to complete a corporate income tax correction (weeks) No tax audit per 100 case study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 42 Doing Business 2019 Spain Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual • Covers all documents required by law and in procedure took 24 hours. practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 43 Doing Business 2019 Spain Trading across Borders - Spain Indicator Spain OECD high Best Regulatory income Performance Time to export: Border compliance (hours) 0 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 0 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 1 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 0 35.2 0 (20 Economies) Time to import: Border compliance (hours) 0 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 0 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 1 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 0 24.9 0 (30 Economies) Figure – Trading across Borders in Spain and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 94.21: Regional Average (OECD high income) 91.79: Switzerland (Rank: 39) 91.77: Germany (Rank: 40) 100.00: Spain (Rank: 1) 100.00: Italy (Rank: 1) 100.00: Portugal (Rank: 1) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Spain – Time and Cost Time (hours) Cost (USD) 1.2 1.2 1 1 1 1 Time (hours) Cost (USD) 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0 0 0 0 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 44 Doing Business 2019 Spain Details – Trading across Borders in Spain Characteristics Export Import Product HS 87 : Vehicles other than railway or HS 8708: Parts and accessories of motor tramway rolling-stock, and parts and vehicles accessories thereof Trade partner France France Border Spain- France border crossing Spain- France border crossing Distance (km) 474 474 Domestic transport time (hours) 8 8 Domestic transport cost (USD) 638 638 Details – Trading across Borders in Spain – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 0.0 0.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 0.0 0.0 Import: Clearance and inspections required 0.0 0.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 0.0 0.0 Page 45 Doing Business 2019 Spain Details – Trading across Borders in Spain – Trade Documents Export Import Packing List Packing List Commercial invoice Commercial invoice CMR waybill CMR waybill Intrastat Intrastat Page 46 Doing Business 2019 Spain Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 47 Doing Business 2019 Spain Enforcing Contracts - Spain Standardized Case Claim value EUR 48,009 Court name Madrid Court of First Instance City Covered Madrid Indicator Spain OECD high Best Regulatory income Performance Time (days) 510 582.4 None in 2017/18 Cost (% of claim value) 17.2 21.2 None in 2017/18 Quality of judicial processes index (0-18) 11.5 11.5 None in 2017/18 Figure – Enforcing Contracts in Spain and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 70.90: Spain (Rank: 23) 70.39: Germany (Rank: 26) 67.91: Portugal (Rank: 35) 67.65: Regional Average (OECD high income) 64.09: Switzerland (Rank: 55) 54.79: Italy (Rank: 111) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Spain – Time and Cost Time (days) Cost (% of claim value) 1200 1120 30 Cost (% of claim value) 1000 23.1 24.0 25 21.2 Time (days) 800 755 20 17.2 17.2 14.4 582.4 598 600 499 510 15 400 10 200 5 0 0 Germany Italy OECD Portugal Spain Switzerland high income Page 48 Doing Business 2019 Spain Figure – Enforcing Contracts in Spain and comparator economies – Measure of Quality Spain 3 2.5 2.5 3.5 Germany 3 1.5 1.5 4.5 Italy 3 4 3 3 Portugal 2.5 5 2.5 3.5 Switzerland 2.5 1 2.5 4.5 OECD high income 2.5 3.1 2.3 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Spain Indicator Time (days) 510 Filing and service 50 Trial and judgment 280 Enforcement of judgment 180 Cost (% of claim value) 17.2 Attorney fees 12.7 Court fees 4.5 Enforcement fees 0 Quality of judicial processes index (0-18) 11.5 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 2.5 Court automation (0-4) 2.5 Alternative dispute resolution (0-3) 3.0 Page 49 Doing Business 2019 Spain Details – Enforcing Contracts in Spain – Measure of Quality Answer Score Quality of judicial processes index (0-18) 11.5 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 2.5 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to Yes 1.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for No 0.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for No 0.0 use by lawyers? Court automation (0-4) 2.5 1. Can the initial complaint be filed electronically through a dedicated platform within the yes 1.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 0.5 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 Page 50 Doing Business 2019 Spain 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 51 Doing Business 2019 Spain Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 52 Doing Business 2019 Spain Resolving Insolvency - Spain Indicator Spain OECD high Best Regulatory income Performance Recovery rate (cents on the dollar) 77.3 70.5 None in 2017/18 Time (years) 1.5 1.7 0.4 (Ireland) Cost (% of estate) 11.0 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 1 .. .. Strength of insolvency framework index (0-16) 12.0 11.9 None in 2017/18 Figure – Resolving Insolvency in Spain and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 90.12: Germany (Rank: 4) 80.01: Portugal (Rank: 16) 79.10: Spain (Rank: 19) 77.28: Italy (Rank: 22) 75.21: Regional Average (OECD high income) 62.67: Switzerland (Rank: 46) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Spain – Time and Cost Time (years) Cost (% of estate) 3.5 25 22.0 3.0 3.0 3 Cost (% of estate) 20 Time (years) 2.5 2 1.8 15 1.7 1.5 11.0 1.5 1.2 9.3 9.0 10 8.0 1 4.5 5 0.5 0 0 Germany Italy OECD Portugal Spain Switzerland high income Page 53 Doing Business 2019 Spain Figure – Resolving Insolvency in Spain and comparator economies – Measure of Quality Spain 6 3 1 2 Germany 6 3 3 3 Italy 5.5 3 2 3 Portugal 5.5 3 3 3 Switzerland 4 3 4 1 OECD high income 5.3 2.8 2.2 1.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Spain and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 77.3 80.4 80 70.5 65.2 64.5 60 46.8 40 20 0 Spain Germany Italy Portugal Switzerland OECD high income Page 54 Doing Business 2019 Spain Details – Resolving Insolvency in Spain Indicator Answer Score Proceeding reorganization Mirage will file for insolvency proceedings (declaración de concurso) and would seek to reach a reorganization agreement with its creditors. One of the main advantages of this option is that once the “concurso” commences, all enforcement actions against the debtor would be automatically suspended for at least a year. The Insolvency Act provides a unitary form of insolvency proceedings (procedimiento concursal) which has a common phase and two possible outcomes: (i) reorganization (convenio de acreedores) or (ii) liquidation. The law will also set forth all assumptions on which the reorganization proceeding could be converted into liquidation. Outcome going concern The hotel will continue operating as a going concern given the financial well-being and viability of the company. While most insolvency proceedings (concursos) in Spain ended up in liquidations, in the case at stake a liquidation proceeding would not make much sense since the market value of the operating business is much greater than the value of its assets sold separately. Therefore, the possibilities to fetch market value in a reorganization proceeding are greater than in a liquidation proceeding. Time (in years) 1.5 An abbreviated insolvency proceeding before the commercial Court of Madrid will last 1.5 years (art. 190 LC). Once the insolvency proceeding commences, the appointment of the insolvency administration and the publication of the procedure will last about 1 month. After that, the preparation of creditors’ claims and the report of insolvency administration will happen in a period of 6 months (the creditors have a month to submit their claims and the insolvency administration must review the documentation and accept or reject the claims). This estimate includes the time spent by the insolvency administration in resolving all challenges. Following publication of the report by the insolvency administration, it will take approximately 3-6 months for the debtor to prepare and negotiate the reorganization agreement with the creditors, which will be voted a month after it is admitted by the Commercial Court. Assuming that the agreement is approved by the creditors' meeting, the court would ratify the agreement and the secured creditor would start receiving payments. Cost (% of 11.0 The costs associated with the reorganization proceeding would amount to approximately 11% of estate) the value of the estate according to our estimate. The main component of this expenditure would be the attorney’s fees (4 - 7%), Insolvency representative fees (3.5%), Trustee (0.5%) cost of service and publication in the Official Gazette (0.2%). Recovery rate 77.3 (cents on the dollar) Page 55 Doing Business 2019 Spain Details – Resolving Insolvency in Spain – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 12.0 Commencement of proceedings index (0-3) 3.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 6.0 Does the insolvency framework allow the continuation of contracts supplying essential goods Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over 1.0 ordinary unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 2.0 Which creditors vote on the proposed reorganization plan? (c) Other 1.0 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, Yes 1.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 56 Doing Business 2019 Spain Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 57 Doing Business 2019 Spain Labor Market Regulation - Spain Details – Labor Market Regulation in Spain Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 36.0 Maximum length of fixed-term contracts, including renewals (months) 48.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 974.6 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 6.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.5 Premium for night work (% of hourly pay) 6.6 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 0.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 22.0 Paid annual leave for a worker with 5 years of tenure (working days) 22.0 Paid annual leave for a worker with 10 years of tenure (working days) 22.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 22.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 2.1 Notice period for redundancy dismissal for a worker with 5 years of tenure 2.1 Notice period for redundancy dismissal for a worker with 10 years of tenure 2.1 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 2.1 Severance pay for redundancy dismissal for a worker with 1 year of tenure 2.9 Page 58 Doing Business 2019 Spain Severance pay for redundancy dismissal for a worker with 5 years of tenure 14.3 Severance pay for redundancy dismissal for a worker with 10 years of tenure 28.6 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 15.2 Job quality Equal remuneration for work of equal value? Yes Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 112.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? No Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Page 59 Doing Business 2019 Spain Business Reforms in Spain In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2018 Enforcing Contracts: Spain made enforcing contracts easier by reducing court fees for filing a claim. DB2017 Getting Electricity: Spain made getting electricity easier by upgrading Madrid’s electrical grid, thereby allowing more customers to connect to the low-voltage network. Furthermore, the approval process to obtain a new commercial connection was streamlined. Paying Taxes: Spain made paying taxes less costly by reducing the property tax rate, vehicle tax rate, tax on property transfer, and abolishing the environmental fee. Spain made paying taxes easier by introducing a new electronic system for filing social security contributions. Enforcing Contracts: Spain made enforcing contracts easier by introducing a mandatory electronic filing system for court users. DB2016 Protecting Minority Investors: Spain strengthened minority investor protections by requiring that major sales of company assets be subject to shareholder approval. Paying Taxes: Spain made paying taxes less costly for companies by reducing rates for corporate income, capital gains and environment taxes—and made it easier by introducing the online Cl@ve system for filing VAT returns. At the same time, Spain reduced the amount allowable for depreciation of fixed assets and raised the ceiling for social security contributions. DB2015 Starting a Business: Spain made starting a business easier by introducing an electronic system linking several public agencies and thereby simplifying business registration. Registering Property: Spain made transferring property easier by reducing the property transfer tax rate. Paying Taxes: Spain made paying taxes less costly for companies by reducing the statutory corporate income tax rate. Resolving Insolvency: Spain made resolving insolvency easier by introducing new rules for out-of-court restructuring, introducing provisions applicable to prepackaged reorganizations and making insolvency proceedings more public. DB2014 Starting a Business: Spain made starting a business easier by eliminating the requirement to obtain a municipal license before starting operations and by improving the efficiency of the commercial registry. Labor Market Regulation: Spain reduced the maximum cumulative duration of fixed-term contracts and increased the minimum wage. DB2013 Trading across Borders: Spain reduced the time to import by further expanding the use of electronic submission of customs declarations and improving the sharing of information among customs and other agencies. Resolving Insolvency: Spain strengthened its insolvency process by making workouts easier, offering more protections for refinancing agreements, allowing conversion from reorganization into liquidation at any time, allowing reliefs of the stay under certain circumstances and permitting the judge to determine whether an asset of the insolvent company is necessary for its continued operation. Labor Market Regulation: Spain temporarily allowed unlimited duration of fixed-term contracts. DB2012 Starting a Business: Spain eased the process of starting a business by reducing the cost to start a business and decreasing the minimum capital requirement. Page 60 Doing Business 2019 Spain DB2011 Trading across Borders: Spain streamlined the documentation for imports by including tax-related information on its single administrative document. Resolving Insolvency: Spain amended its regulations governing insolvency proceedings with the aim of reducing the cost and time. The new regulations also introduced out-of-court workouts. Labor Market Regulation: Spain reduced the notice period applicable in case of redundancy dismissals. DB2010 Paying Taxes: Spain made paying taxes easier and less costly for companies by improving efficiency in the electronic filing and payment system and reducing the corporate income tax rate. DB2008 Paying Taxes: Spain made paying taxes less costly for companies by reducing the corporate income tax rate. Page 61 Doing Business 2019 Spain Page 62