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China Desk Newsletter | July 2023

| Publications | Corporate Law and M&A

Andersen's China Desk team analyzes the most relevant judgments in tax, real estate, corporate and M&A matters
Section A: Notarial:

New changes in the Spanish notarial proceedings: The recent law 11/2023, of May 8, on the transposition of European Union Directives on the accessibility of certain products and services, migration of highly qualified persons, taxation and digitalization of notarial and registry proceedings has introduced the following new changes regarding the notarial materials:

  • This law allows the notarization through videoconference of, for example, the granting of commercial policies, letters of payment and cancellation of guarantees, testimonies of legitimization of signatures, minutes of general meetings, incorporation of companies, appointments, powers of attorney and revocation of powers of attorney (except general or preventive powers), granting of powers of attorney for procedural representation and for actions before public administrations, among others, allowing the regulation of additional acts and legal business.
  •  The interested parties may appear electronically to provide background information, in those cases where it is required, or to request the issuance of simple and authorized copies.
  • Notaries will issue the authorized copies with their qualified electronic signature under the same conditions as the paper copies, making the electronic copies valid for any desired purpose.
  • The electronic notarial protocols will be kept by the notary in their electronic deposit in the General Council of Notaries.

Corporate income tax: The double taxation deduction is applicable if it is proved that the transferor has been taxed for non-resident income tax:

The Spanish Corporate Income Tax Law sets out a right to apply a tax deduction amounting to 100% of the gross tax liability payable on dividends which correspond to shares in companies which are residents in Spain acquired before 1 January 2015. In this regard, one of the essential conditions to apply the above-mentioned deduction is that the taxpayer should provide the proof(s) of that an amount equivalent to the dividends has been included in the taxable income for the Spanish Corporate Income Tax or Spanish Personal Income Tax, as income obtained by the successive entities or persons owning the shares on its transfer.

A recent resolution issued by the Valencia Regional Economic-Administrative Court has analysed a similar case. In the concrete case, although the entity which transferred the shares was a non-resident entity and the income obtained was subject to the Spanish Non-Resident Income Tax, the court applied a finalist interpretation of the applicable rule, concluded that the deduction could be applied in this case since the deduction established by the Spanish Corporate Income Tax Law aims to avoid the double taxation.

Individual taxation in Spanish Personal Income Tax:

In general, the option for joint or individual personal income taxation regulated under the Spanish Personal Income Law cannot be modified once the period for filing the self-assessment has ended.

However, the Spanish Central Economic-Administrative Court in a recent resolution considered that due to the incomplete, deficient, and inaccurate information provided by an officer of the Spanish Tax Administration, a taxpayer's declaration of intention was vitiated. Hence the taxpayer had the right to change individual taxation to joint taxation, after the spouse of the taxpayer has been requested to ratify the joint taxation.

The Spanish Central Economic Administrative Court has also considered in a separate resolution that the option for joint income taxation could be changed in those cases where there is a substantial change in the circumstances that initially led to the exercise of the option that is out of the control of the taxpayer.

Therefore, with these resolutions the Spanish Central Economic Administrative Court establishes a more flexible interpretation in favor of the taxpayer regarding the potential change of the option for joint or personal income taxation.


The new housing law regarding the large housing holders: 

The new Law 12/2023, of 24 May, on the right to housing has included the following main changes in relation to the “large housing holders”:

The law defines the “large housing holders” as below:

  • the law defines it as "the natural or legal person who owns more than ten urban properties for residential use or a built-up area of more than 1,500 m2 for residential use, excluding in any case garages and storage rooms".
  • Notwithstanding, the above criteria could be reduced when a stressed residential market environment is declared, in which case "those owners of five or more urban properties for residential use located in that area" may also be considered large housing holders.

The legal consequences to be considered as a large housing holder are the following:

  • The large housing holder should accept an extraordinary extension (under the same terms and conditions) for a maximum period of one year if the lessee proves the social and economic vulnerability situation.
  • When the property is located in a stressed residential area, the rent agreed at the beginning of the new contract cannot exceed the last rent of the habitual residence rental contract that had been in force in the last five years in the same property, once the annual rent update clause of the previous contract has been applied, or the maximum limit of the price applicable according to the reference price index system.
  • The law also stipulates that, during 2023, rent increases agreed by large housing holders in habitual residence rental contracts cannot exceed the result of applying the annual variation of the Competitiveness Guarantee Index, taking as the reference month for the update which corresponds to the latest index published on the date on which the contract is updated.

Corporate sustainability reporting:

The recently Corporate Sustainability Reporting Directive (CSRD) adopted in the UE has set up the aim to improve the accountability of companies by means of imposing the obligation to report regularly regarding the impact of their activities on people and the environment. The main purpose of the CSRD is to promote sustainability reporting in line with financial reporting, allowing the public to access reliable and comparable data.

In this regard, the following types of companies are affected by the CSRD and will be required to publish a sustainability report:

  • All companies listed on EU regulated markets, including SMEs unless they are micro-enterprises. That is, companies that, at balance sheet closing, do not exceed two of these three thresholds:
  1. 10 employees on average during the year.
  2.  total of balance of €350,000 or,
  3. net turnover of €700,000.
  • The rest of the large companies, understood as those companies that, on the date balance sheet, exceed two of these thresholds:
  1. 250 employees.
  2.  total of €20M balance sheet or,
  3.  €40M net turnover.
  • Companies from third countries with a significant activity in the territory of the EU. That is, companies that:
  1.  have a net turnover of more than €150M and,
  2.  have in the EU (i) a subsidiary company that meets the requirements of an EU reporting company (i.e., being a listed company—except microenterprise—or a large company that meets the thresholds at which we referred to above) or (ii) a branch with a higher net turnover to €40M.
  • Small and non-complex financial institutions (as defined in article 4, paragraph 1, point 145, of Regulation 575/2013/UE9 and insurance and captive reinsurance (as defined in Directive 2009/138/EC).

Gender equality on boards of directors:

The new Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on a better gender balance among directors of listed companies and related measures, has regulated a new normative framework in relation to the gender equality on boards of Directors in listed companies. In this regard, the new directive requires that the UE Member States should establish a target to obtain the result of that the members of the under-represented sex on the boards of directors of listed companies should occupy at least 40% of non-executive members.

For further information, please contact:

Juan Ignacio Alonso - Andersen Partner
| China Desk Coordinator

Wenbo Zhou - Andersen Associate
| China Desk Coordinator

You can download the full PDF file and its tranlation in Chinese here.

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