SPAIN Law and Practice Contributed by: Antonio Paredes, Carlos Saldaña, Manuel Martínez and Román Mejías, ZADAL
conditions are met; for example, a pledge executed in a notarial policy ( póliza notarial ) rather than a public deed would not generally trigger stamp duty. 4.3 Tax Concerns for Foreign Lenders Application of WHT Benefits The main tax concern in Spanish private credit trans - actions is usually the correct application of WHT benefits. Lenders seek to ensure that treaty or EU exemptions and reduced rates can be applied, which requires meeting strict formal and substance require - ments and demonstrating beneficial ownership. Fail - ure to comply may result in the full 19% withholding being imposed. Stamp Duty Another key concern is the potential impact of Spanish stamp duty (AJD). Although financing is VAT-exempt, security and loan documents executed in public deeds and registrable in public registries may trigger AJD at regional rates. This can increase transaction costs and therefore needs to be carefully assessed and structured in advance. 5. Guarantees and Security 5.1 Assets and Forms of Security Assets Commonly Offered as Collateral and Typical Forms of Security Spanish private credit collateral is typically asset-spe - cific, so lenders take a combination of instruments rather than a single “all-assets” charge. Common col - lateral includes shares, bank accounts, receivables, real estate, and sometimes material contracts/IP and inventory, using share pledges, pledges/assignments over receivables and accounts, and mortgages, sup - ported by guarantees where available. Typical Collateral Package in a Private Credit Deal A standard package (where feasible) usually combines share pledges over key group companies, receiva - bles pledges, account pledges/control arrangements, and – where justified – real estate mortgages, with additional movable-asset security in specific cases. In acquisition financings, packages are often staged because full target security at closing may be con -
strained by financial assistance and closing mechan - ics. Formalities, Perfection and Consequences if Not Completed Perfection is formalistic: mortgages require notarial deed and Land Registry registration; many pledges require control/possession or, for certain assets, notarisation and movable registry registration; and receivables pledges are typically in writing with debtor notice to strengthen priority. Failure to complete these steps can mean loss of priority, weaker enforceability and, in insolvency, being treated as effectively unse - cured, so deals rely on strict CPs and post-closing timetables. 5.2 Floating Charges and/or Similar Security Interests Availability of a Floating Charge or “All-Assets” Security Spanish law does not recognise an English-style float - ing charge or a single universal security interest cover - ing all present and future assets of a company. In rem security must be granted over identified or identifiable assets, and, in practice, lenders build an “all-assets effect” by combining separate pledges/mortgages/ assignments across the relevant asset classes, sup - ported by guarantees where available. Spain does have concepts sometimes labelled “floating” (for example, maximum mortgages securing multiple obligations), but these relate to the scope of secured liabilities, not to a floating security over a changing pool of assets. Strength of Security and Lender Preferences in Practice Spain does not map neatly onto a fixed-v-floating charge framework; instead, “strength” is often driven by formalities (eg, possession/control, notarisation, registration and notice) and how easily priority and enforcement can be evidenced. Private credit pro - viders usually push for the most robust security that is practical, especially for key value drivers such as share pledges and (where justified) real estate mort - gages, and they often prefer structures that give clear - er control and enforcement pathways. That said, they are typically pragmatic where operational burden is high (eg, receivables and inventory), accepting a mix
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