According to Barómetro del Clima de Negocios en España 2023, taxation, bureaucracy and regulatory complexity are the main challenges for multinational companies. Iberian lawyers discussed the issue with Mr. Cuatrecasas, Mr. Uria Menendez and Mr. Baker McKenzie.
Experts: David López Velázquez, attorney Uría Menéndez. Joan Hortalà, Transfer Pricing Partner at Cuatre Casas. Heidi López Castro, partner at Urria Menéndez. Antonio Morales, head of Baker McKenzie’s public law practice. and Ester Navas, Compliance Partner at Baker McKenzie.
Written by Ilaria Iaquinta
Spain remains one of the top destinations for foreign direct investment thanks to its infrastructure, market size and human capital. This follows the “Barometro del Clima de Negocio en España 2023” published by Spain’s ICEX Invest in September, alongside the Spanish Chamber of Commerce and Industry and the Foro de Marcus Lenonbradas of Spain. ”. However, despite these strengths, the report highlights significant challenges. This means taxes, bureaucracy, a slow judicial system and energy costs are major concerns for multinational companies already operating or considering doing business in the country.
Taxes: A big burden on businesses
Multinational companies consider Spain’s tax burden to be high. More than 30% of foreign companies surveyed considered this a serious obstacle, with 50% saying it hindered investment and directly affected profitability. The main concerns revolve around corporate tax, social security contributions and value added tax.
João Ortala, Transfer Pricing Partner at Cuatrecasas, said that although taxation across Europe is broadly similar thanks to EU and OECD initiatives, Spain’s tax burden remains high but on par with other European countries, including tax audits. It is pointed out that “The real challenge lies in implementation. Bureaucracies are large, complex and time-consuming, and there is often a lack of cooperation from tax authorities, especially in terms of speed. Another big challenge is the time-consuming nature of resolving tax disputes, which can take years,” he emphasizes.
To reduce the tax impact, Ortala emphasizes the importance of proper planning in advance. “Once certain investments and decisions are made, it is difficult to adjust their tax implications.” Spain’s tax system makes it more attractive for certain activities, such as patent boxes and expatriate schemes. Although it offers benefits, it is important to prepare your investment carefully and ensure that supporting documentation is in place to avoid practical problems. It is also becoming increasingly common for taxpayers to purchase tax insurance to minimize exposure to identified risks. ”
Bureaucracy and the judicial system: an endless maze
