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Mexico targets Spain for its investments because of the country's fiscal and legal attractions

| News | Tax / Corporate Law and M&A

Spain has a special tax regime for posted workers and for entities holding foreign securities, which includes important exemptions on dividends and profits

Spain has a series of tax and legal benefits that have put the country at the centre of Mexican investments, as they find it very easy to launch and develop their projects and manage to maximise the profitability of their assets.

This was made clear in the webinar organised by Andersen in Spain and SKATT, a firm that collaborates with Andersen Global in Mexico, under the title 'Fiscal and Legal Attractiveness of Mexican Investment in Spain' and in the framework of the Mexico-Spain Desk that both firms have promoted to highlight the value of the links between the two countries and to strengthen the synergies they generate for the economy and companies.

During the event, which was attended by Jaime Olleros and Jaime Rojas, managing partners of Andersen in Spain and Skatt, respectively, César Gámez, partner of Skatt, and Andersen's partners in Spain Jaime Espejo, Miguel Blasco and Miguel Ángel Galán, the main taxes and tax incentives in the Spanish tax system were analysed, as well as the Reciprocal Investment Protection Treaty between Mexico and Spain and the Treaty to avoid double taxation, obtaining the Golden Visa and the impact of a change of tax residence.

Miguel Ángel Galán referred to the special tax regime applicable to workers posted to Spanish territory. He explained that "this special regime may be an incentive for workers, since it allows the taxation of income from work at very attractive rates, particularly for high incomes". "Similarly, he said, it can be used by employers to pay net salaries to workers, in the knowledge of the exact cost of any taxes they may wish to pay". However, he pointed out that "it will always be necessary to analyse the tax implications of the application of such a regime prior to the posting of the worker to Spanish territory”.

Miguel Blasco agreed that "Spain offers favourable taxation for companies, including newly created companies, special regimes for the transfer of intangibles, investment in R&D, and holding companies". In the area of personal taxation, Blasco pointed out that "there are currently significant reductions in Wealth Tax and Inheritance and Gift Tax for family businesses, in addition to the virtual absence of these taxes in the Community of Madrid". 

He also stressed that "Spain offers a special tax regime for Foreign Securities Holding Companies (ETVEs) which combines a total exemption on dividends and capital gains from shares and holdings, with an exemption for dividends distributed to non-resident partners, which allows for the creation of tax-efficient investment structures in Spain".

Tax Residence

For Jaime Rojas, the bilateral relationship between Mexico and Spain "allows that, under an adequate approach, business reasons and substance, the residents of both countries benefit from the treaty to avoid double taxation concluded in tax matters, with an adequate protection of their assets and investments made in the other country". He also stressed that "for those residents of Mexico who wish to invest or change their tax residence to Spain, as long as it is done with adequate tax compliance and appropriate structure, they will be able to benefit from a tax system with lower tax rates than the Mexican ones".

On this point, César Gámez recalled that Mexican investors wish to change their tax residence to Spain, "because of the fact that they have Mexican nationality, the presumption of tax residence in Mexico is applicable to them, for which reason it will be essential to present a notice of suspension of activities due to a change of tax residence, designating a legal representative in Mexico".

During his speech, Gámez also referred to the many agreements that Mexico and Spain have concluded and, in particular, the Treaty on the Promotion and Reciprocal Protection of Investments (TBI or APPRI) through which they provide legal certainty to investors that their investments will not be affected by state policies and that if expropriation, nationalisation or an equivalent measure is necessary for reasons of public utility, they will be entitled to receive compensation at fair market value".

For his part, Jaime Espejo addressed the requirements and benefits of obtaining the Golden Visa or residence permit in Spain for Mexican investors under the law on entrepreneurs, and explained that it does not involve tax residence for personal income tax purposes and that, with it, "Mexican investors and their closest relatives can reside and work in Spain, in addition to having freedom of movement in the Schengen area.

At the meeting, Jaime Olleros stressed that Spain and Mexico "have a lot to offer investors, companies and traders, given the long and successful history of economic and commercial activity between the two countries". "That is why," he continued, "Andersen and Skatt have integrated staff and capacities from both countries into the Mexico-Spain Desk to put knowledge and experience at the service of clients who, in addition, have at their disposal a comprehensive service throughout the world through the more than 200 Andersen Global locations".

Andersen Global is an international association of legally separate, independent member firms comprised of tax and legal professionals around the world. Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global now has more than 6,000 professionals worldwide and a presence in over 203 locations through its member firms and collaborating firms.

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