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Acquisition of equity of an existing business.

Whether you are buying an operating business or a shelf-company, there are certain formalities that you must follow to successfully transfer ownership.  The following information covers those aspects, in following chapter, we will discuss on how to perform a due diligence process and other operational aspects when buying an ongoing business.

Transfers of shares in a limited liability company  (participaciones) must, in all cases, be attested to by an authenticating officer (i.e. a Spanish Notary); transfers of shares in Spanish Corporations  (acciones) must be attested to by an authenticating officer where so required by law or if so agreed on by the parties. For transactions  on private companies  is highly recommended.  The Notary will require evidence of the following:

  1. the identity of the parties involved and, if applicable,the related powers of attorney (if one or both of them act onbehalf of another individual or entity);
  2. the seller’s title to the shares and any form required to declare the foreign investment to the  Foreign Investment Register.
  3. Payment of transfer tax, when applicable:transfers of shares of companies whose assets consist mainly of Spanish real estate are, in certain cases, subject to a transfer tax of 7% (be aware of your local Community exact rate).
  4. Declaration of the acquisition to the DGCI (foreign investments authority) is required (in some cases prior reporting might be necessary).

In the case of a notary public, the fees applicable for the incorporation of a subsidiary or the formation of a branch is also applicable here. There is a minimum fee for amounts below €1,202, while rates range from 1% down to 0.05% for amounts in excess of €300,506. No transfer tax applies to this transaction, except as stated above.

Acquisitions of shares of Spanish companies between nonresidents that have already taken place abroad may be formalized before a Spanish authenticating officer.

 MORE ON THIS SUBJECT: Non resident persons and entitites must get IDs before buying or incorporating a company in Spain. More on the subject: here

 

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