SPAIN Law and Practice Contributed by: Álvaro Paniagua Rico and Borja López Pol, Anaford Abogados
2.7 Transfer of Assets: Digital Assets In terms of the transfer of digital assets, there is no significant difference from other assets to be trans - ferred. That said, special attention must be paid to their phys - ical location, as their unique nature may be decisive in determining the applicable legislation. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities We can define both figures as follows. • A trust is a private contract whereby a person (the settlor or grantor) transfers an asset or right to another person (the trustee) to control and admin - ister it for the benefit of third parties (the beneficiar - ies), usually family members or close associates, and which has effects vis-à-vis third parties. The trustee administers the assets on behalf of and in representation of the beneficiaries. • A private foundation is a legal entity created from the donation of the assets of a person or company for specific purposes, which are established in the founding charter. A private foundation has: (a) a specific purpose; (b) legal personality; and (c) legal and economic independence. 3.2 Recognition of Trusts Common Law v Civil Law The trust is a legal concept closely linked to English common law and accepted in most Anglo-Saxon countries, such as the United States and the coun - tries of the Commonwealth (which has more than 50 member countries). It enjoys a high degree of protection and legal cer - tainty in countries where it is recognised. However, in countries whose legislation is based on civil law, it presents more difficulties and legal problems (non- recognition by the courts).
To mitigate these problems, some countries, such as Switzerland, have signed the Hague Convention of 1 July 1985, on the law applicable to trusts and their recognition (Hague Convention on the Law Applicable to Trusts and on their Recognition), which entered into force on 1 January 1992. This convention offers solu - tions to the problems that arise around the concept of trusts in civil law jurisdictions. In addition, other countries in our region, such as France and the Netherlands, have been embracing this Anglo-Saxon concept. However, this has not been the case in Spain. A Spanish citizen can perfectly well create a trust abroad, but its effectiveness and man - agement may be complicated in relation to assets located in Spain or for settling related matters before the Spanish courts. Foundations, however, are based on civil law or con - tinental law, which governs the legal systems of most countries in Europe and Latin America. However, countries such as Spain only recognise foundations of public interest and not foundations of private interest, which, as in the case of trusts, can complicate their effectiveness and management for assets located in Spain. The fundamental difference lies in the fact that com - mon law is based on interpretations and judicial deci - sions, while civil law is based on written rules (which can only be modified by law), making trusts a much more flexible instrument. Trusts are extremely versatile instruments with many possibilities and applications in the private sphere as well as in finance and com - merce. 3.3 Tax Considerations: Fiduciary or Beneficiary Designation In general terms, the status of trustee for Spanish purposes does not mean that they are the owner or proprietor of the assets; it is merely a formal title. Conversely, being designated as a beneficiary does not imply that they are the owner of the trust assets, although it may have tax implications. This statement will depend greatly on how the trust deed is drafted, the beneficiaries’ capacity to use and enjoy the assets, and any possible limitations in this regard.
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