SPAIN Trends and Developments Contributed by: Antonio Paredes, Carlos Saldaña, Manuel Martínez and Román Mejías, ZADAL
consider the cost acceptable in light of priority and enforcement options. For non-real-estate assets, pledges and assignments require attention to steps such as notices to debt - ors and acknowledgements by account banks. The details depend on asset type and on the structure chosen. The key point is to map collateral early and sequence the steps around the closing timetable. Enforcement Considerations Enforcement strategy in Spain depends on the facts of the case. The route that makes sense for a share pledge is not the same as for a mortgage or a receiv - ables pledge. Time, cost, and value impact vary by asset and by process. In restructurings, lenders often explore solutions that preserve business value, including control changes and negotiated outcomes. In other situations, a sale of collateral or a foreclosure route may be the tool that fits the objective. The decision should be aligned with intercreditor terms and with the stage of the distress. Financial Assistance Constraints Spanish corporate law imposes limits on financial assistance in connection with acquisitions of a com - pany’s own shares. This affects when and how a target and its group can give guarantees or security linked to the acquisition financing. The constraint shapes where leverage sits and how the security package is built. In practice, acquisition financings often require plan - ning for post-closing steps and for a structure that respects corporate constraints. Lenders look for col - lateral at levels where guarantees and security are available. Sponsors and borrowers need a structure that does not create avoidable challenges later. Payment Flows and Transaction Charges In the case of payments to Spanish resident lend - ers, withholding tax generally applies at 19% unless the lender is a Spanish credit institution, a registered branch of a foreign credit institution, or a Spanish securitisation fund. Where interest is paid to a non- Spanish lender, the Spanish borrower acts as with - holding agent unless an exemption or a reduced rate applies.
Interest may be exempt under EU rules when the ben - eficial owner is resident in another EU member state and the conditions for that exemption are met. Treaty relief may apply where the lender is resident in a juris - diction with a double tax treaty in force with Spain, subject to conditions and documentation. In practice, structures are designed so that residence certificates can be provided and beneficial ownership questions can be addressed in the payment chain. From an indirect tax perspective, financing agree - ments are generally exempt from VAT. Stamp duty may apply when the transaction is documented in a public deed, has economic content, and is eligible for registration in a Spanish public registry, and rates depend on the Autonomous Community. Market prac - tice often allocates this cost to the borrower, even if the lender is the statutory taxpayer. Regulatory Perimeter Corporate lending into Spain is generally not a reserved activity that requires a banking licence, pro - vided the lender is not carrying out deposit-taking or similar reserved activities. This has supported the entry of non-bank lenders into corporate and sponsor finance. The practical constraints for foreign lenders tend to be transactional and procedural rather than licensing. In consumer credit, the direction is toward more for - mal supervision. Spain is moving toward a regime that brings professional consumer credit providers under authorisation, registration, and supervision by the Bank of Spain, following the EU consumer credit framework and national legislative work. If imple - mented as planned, this would change how consum - er lenders operate, while corporate lending remains under the existing approach. Restructuring Plans and Court Practice Spain’s pre-insolvency regime has changed since the 2022 reform, and restructuring plans are now a central tool. These plans can address liabilities and, in some cases, equity measures, and they can be confirmed through class voting mechanics. The formation of classes is a key step, because it drives voting thresh - olds, negotiation leverage, and cramdown analysis.
248 CHAMBERS.COM
Powered by FlippingBook