The International Capital Markets Review: Spain


i Overview

Over the past 12 months, the Spanish capital markets have proved to be resilient and there has been continued activity. In line with other jurisdictions, this activity has had to cope with the demands of the current environment and legislative changes. Nevertheless, data shows that Spanish issuers are continuing to tap the capital markets, and the aggregate amount of debt outstanding has increased.

The current environment has been significantly affected by the covid-19 pandemic, which has generated some modifications to the legislative regimes, as well as by Brexit. For example, the Spanish foreign direct investment regime has suffered changes, impacting public takeovers. In addition, Brexit has led to an effective duplication of financial regulation impacting the capital markets, particularly around MiFID related matters. This has led to more bureaucracy and the need to comply with new and additional regulation. It has not, however, significantly affected market operation, and even less so for institutional investors.

Some of the key legislative changes relate to the continued rise of green and sustainable finance, changes in the securitisation regime, and some limited changes to the tax regime. There has, however, been no substantial change to the Spanish capital market framework. Future legislative developments are on the horizon, including for SPACs, and we will need to carefully watch developments to ensure that the Spanish capital market infrastructure is competitive in an increasingly global marketplace.

ii Structure of the law

The principal law applicable to the Spanish capital markets is Royal Legislative Decree 4/2015 of 23 October, which enacted the restated text of the Securities Market Act (SMA). This law provides the framework under which the majority of the laws and regulations applicable to the capital markets are developed. As Spain is an EU Member State, the SMA reflects the implementation of numerous EU directives in the Spanish legal system. This means that, in general, the laws and regulations applicable in Spain are aligned with those applicable in other EU jurisdictions. Accordingly, since the SMA entered into force on 13 November 2015, there have been a number of relevant amendments, primarily to implement EU directives coming into force since that date.

Other relevant legislation includes:

  1. Royal Decree 878/2015,2 which sets out (1) the legal regime applicable to securities depositories and central counterparties, and (2) the transparency requirements applicable to issuers with securities listed on official secondary markets;
  2. Royal Decree 1362/2007,3 which regulates disclosure obligations related to the ownership of, and certain transactions over, securities;
  3. Law 10/2014,4 which sets out the capital requirements for banks and the tax treatment of debt securities of Spanish issuers meeting certain requirements; and
  4. Royal Legislative Decree 1/2020,5 which establishes the insolvency regime applicable to Spanish entities.

Some EU legislation is directly applicable in Spain and so forms part of the body of law applicable to capital market activities. The most relevant is as follows:

  1. Prospectus Regulation,6 which sets out the requirements for prospectuses where there is a public offer of securities or the listing of securities on a regulated market in the EU;
  2. Regulation 596/20147 on market abuse (MAR);
  3. Regulation 575/20138 (CRR), which sets out the capital requirements for banks; and
  4. Regulation 648/20129 (EMIR), which aims to increase transparency in the derivatives markets and to reduce credit and operational risks.

Finally, and in line with other jurisdictions, capital market practice in Spain is impacted by guidance issued by relevant authorities: the Spanish Securities Market Commission (CNMV) in respect of Spanish legislation and the European Securities and Markets Authority (ESMA) in respect of EU legislation. Market practice, often as formulated by trade bodies such as the International Capital Markets Association (ICMA), the International Securities and Derivatives Association and the Association for Financial Markets in Europe (AFME), is also relevant.

iii Regulatory authorities

The key institution for the Spanish capital markets is the CNMV. By virtue of the SMA, the CNMV is the entity with primary responsibility for the regulation of the capital markets and it has a supervisory role in respect of entities and individuals carrying out securities and investment services in Spain. It is empowered to sanction breaches, including through the issue of fines. It also issues circulars that are intended to provide guidance on certain aspects of the capital markets.

Other entities relevant for the operation of the capital markets in Spain include:

  1. The Bank of Spain, whose role includes the management and operation of the public debt issued by Spain and (in its capacity as an agent of the European Central Bank (ECB) in Spain) reviewing certain capital market issues by Spanish financial institutions to ensure that they meet capital requirements;
  2. Bolsas y Mercados Españoles, SA (BME), a privately owned entity, which is the operator of all stock markets and financial systems in Spain, including the four Spanish stock exchanges (Madrid, Barcelona, Bilbao and Valencia) and the multilateral trading facility (MTF) BME Growth, in respect of equities; AIAF and the Alternative Fixed-Income Market (MARF) in respect of debt securities; and MEFF in respect of financial derivatives, futures and options; and
  3. BME also owns and operates the principal settlement and clearing systems in Spain: BME Clearing (which is the Spanish stock exchanges' central counterparty) and Iberclear (which is authorised under the Central Securities Depositories Regulation (CSDR)10 to provide settlement services in Spain).

The year in review

i Developments affecting debt and equity offerings

Amendments to the Spanish Companies Act

Law 5/2021 of 12 April amended the Spanish Companies Act (SCA) in order to implement Directive 2017/82811 and came into force (with certain exceptions) on 3 May 2021.

Pursuant to the amendments, listed companies may now opt to include in their articles of association 'loyalty shares', which grant double voting rights to stable shareholders (i.e., those who have held the shares for at least for two years, counting from the moment that they register their shares for such purposes in a new specific corporate record book). These additional voting rights will be taken into account to determine the existence of control in relation to takeover bid regulations, among other matters.

Law 5/2021 has also developed the rights of listed companies to have information on the identity of their shareholders, and has also introduced their right to have information on the identity of the ultimate beneficial owners of its shareholders.

The amendments also include the option for listed companies not to publish quarterly financial statements and a brief regulation of the role of proxy advisors. Finally, and in the context of a wider amendment of the SCA provisions on conflicts of interest and related party transactions, new approval and transparency rules will apply to these transactions for listed companies.

EU Recovery Prospectus

Regulation 2021/33712 entered into force on 18 March 2021, introducing certain adjustments to the Prospectus Regulation, including a temporary EU Recovery Prospectus regime. This regime revolves around a simplified prospectus to make it easier for issuers to raise equity capital to recover from the impact of the covid-19 pandemic. The measure will initially remain in force only up to 31 December 2022.

Spanish foreign direct investment restrictions

The screening system for foreign direct investments in Spain (introduced in March 2020 by means of Royal Decree-Law 8/202013) continues to be applicable for non EU-European Free Trade Association residents, having become part of the Spanish Foreign Investment Law.14

On 17 November 2020,15 restrictions were extended, to a certain degree, to EU-European Free Trade Association residents. In particular, the regime was declared applicable when a particular investment affects Spanish listed companies; or non-listed companies where the value of the investment exceeds 500 million euros. This additional screening regime has a temporary nature. Initially, it was envisaged to be in force up to 30 June 2021, although in June 202116 it was extended up to 31 December 2021.

All of these restrictions must be taken into account by non-Spanish investors participating in a takeover bid for, or acquiring a significant stake in, a Spanish listed company.

Brexit: passporting issues and trends in governing law

The Brexit transition period ended on 31 December 2020, and therefore issuers under debt programmes (both updates and new establishments) and standalone debt issues are now obliged to consider the consequences of Brexit. One trend has been for issuers to consider whether local law should govern debt issuances, particularly for regulatory entities such as banks in Spain and other EU countries. However, English law mostly remains as the predominant governing law for agreements entered into in connection with such programmes and issuances, with New York law applicable for high yield bonds.

The full entry into force of the European Union (Withdrawal) Act 2018 has brought other regulatory and contractual changes in the debt capital markets field. Notably, the replication of many regulatory provisions in prospectuses, information memorandums and agreements (including, without limitation, those relating to MiFID-UK MiFIR, PRIIPs, Blocking Regulation, and UK and EU retail investors selling restrictions). Furthermore, it is important to note the relevancy of the inclusion of certain additional contractual clauses such as the EU bail-in and EU stay rules recognition language in programme and issue agreements, when such agreements are subject to English law (or any other non-EU law) and are entered into by credit institutions and investment firms based in the European Union.

Finally, with the United Kingdom exiting the European Economic Area, rules on passporting of prospectuses, which aim at facilitating the use of prospectuses prepared and registered with EEA authorities in other EU countries, are no longer applicable to the United Kingdom. These rules will no longer be in force for prospectuses registered in the United Kingdom, and therefore certain market players are now registering their prospectuses in other EU countries.

Discontinuation of LIBOR and development of risk-free rates

The transition away from the LIBOR and other benchmark interest rates towards risk-free rates is firmly under way. On 5 March 2021, the Financial Conduct Authority announced17 that all LIBOR settings would cease to be provided by any administrator or will no longer be representative:

  1. immediately after 31 December 2021, in the case of all LIBOR settings other than US dollar settings that are not one-week and two-months US dollar; and
  2. immediately after 30 June 2023, in case of US dollar settings other than one-week and two-months US dollar.

With respect to EONIA, the European Money Markets Institute has said that EONIA will cease to be published from 3 January 2022.

As a result, a number of risk-free rates are being developed as alternatives to certain rates, for example, SONIA (a risk-free rate for sterling LIBOR), SOFR (a risk-free rate for US dollar LIBOR) and €STR (a risk-free rate for EONIA). Given the discontinuation of traditionally used rates, these risk-free rates have now started to appear in debt capital markets' documentation to substitute the wording of traditional rates and the documentation of new programmes in the 2021 updates. SONIA and SOFR are the ones that are the most frequently used at the moment, although it is expected that, over the coming years, new risk free rates will be developed and included within debt issuances documentation. The inclusion of these new rates needs to comply with Regulation 2016/1011.18

Other trends and developments

Takeover activity

Takeover activity in the Spanish market has increased slightly. The main recent deals are the takeover bids launched by EQT over Solarpack, IFM over Naturgy (partial), Masmovil over Euskaltel and Kerry over Biosearch.

Owing to the covid-19 pandemic, the CNMV has deemed that voluntary takeover bids in this period are subject to the provisions of Articles 137.2 and 137.3 of the SMA. Under these provisions (following circumstances that exceptionally affect the market), voluntary bids have to be made at an equitable price that is supported by an independent expert's report. On 28 July 2021, CNMV published a questionnaire clarifying that this pricing restriction will initially cease to apply to voluntary bids (because of the pandemic) as from 12 March 2022.

In addition, pursuant to Law 5/2021, the requirements to delist a company without a subsequent bid, following a voluntary one, have been hardened, with the SMA now requiring the bidder to acquire at least 75 per cent of the target's shares in the initial bid to be able to opt for the fast-track delisting.

Listings on foreign markets

Recently, Spanish companies pursuing an initial public offering (IPO), whether in a regulated market or a MTF, are increasingly exploring the possibility to do so in foreign markets (mainly, other European markets, but also in the United States). Pursuant to Law 5/2021, which amended the SCA, the provisions of the SCA previously applicable only to Spanish companies listed on a Spanish regulated market became applicable also, to a certain extent, to Spanish companies listed on other EU regulated markets or other equivalent markets in third countries. The ambiguity of the regulation may lead to certain complexities in these IPO processes, in particular in relation to the Commercial Registries, which have not issued any guidance on the matter so far, in particular about the equivalence criteria to consider for those purposes.


As in other European countries, the interest in SPACs has increased in Spain, with certain Spanish sponsors being involved in European and US deals of this type. The market consensus is that a typical SPAC structure would be difficult in Spain without legislative amendments. The Spanish government has announced its intention to pursue such reforms to permit SPAC domestic activity although no binding decision has yet been taken.19

Supervisor criteria

Owing to the application of the Prospectus Regulation, and in particular Article 21(3), supervisors require the publication of the documents incorporated by reference on the web page of the issuer, of the financial intermediaries placing or selling the securities or of the regulated market where admission to trading of the securities is sought. Additionally, if such documentation is made available by means of hyperlinks, such links must be available and functional for a period of at least 10 years. Although supervisors did not (generally) apply this requirement strictly right after the Prospectus Regulation entered into force, during the last months supervisors have started to take a stricter interpretation. As a result, issuers have been obliged to facilitate such documentation or otherwise find other solutions, such as documentation hubs offered by some market administrators and clearing systems.

In addition, supervisor criteria have changed due to new developments in Spanish legislation. Owing to the amendment to the SMA by Law 5/2021, the independent expert report previously required for convertible bonds is no longer necessary. Although some issuers have opted to make it available voluntarily, it is envisaged that, for certain instruments such as Additional Tier 1 instruments that are only anticipated to convert in a distress scenario, this report will finally disappear. Owing to the amendments to the Spanish Insolvency Law, Additional Tier 1 and Tier 2 instruments now have the condition of fully subordinated credits, both as principal and interest, and therefore they now rank below any other liabilities, even those that have the condition of subordinated credits.

Green, social and sustainability bonds

There has been an exponential increase in the number of programme documents and standalone bond issuances referred to as 'green, social and sustainable' (GSS) bonds. In Spain, market players have focused on the issue of green and social bonds, which limit the use of proceeds of the issue to specific purposes and include certain reporting obligations. However, in Spain, there has been an increase in the use of sustainability-linked loans, where the interest rate may vary depending on the degree of compliance with certain sustainability-driven KPIs, but the use of sustainability-linked bonds is – in line with other EU countries – less developed.

As the proposal by the EU Commission to create an EU Green Bond Standard has not yet been implemented,20 ICMA's Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines, which are voluntary process guidelines for GSS bond issuances, remain the most relevant provisions in this field.

In addition, as financial institutions have increasingly used GSS bonds during recent years, authorities and institutions, such as the ECB or AFME in Europe, have issued certain recommendations that have had an impact on the disclosure made by issuers in their prospectuses. In particular, issuers have included clarifications in their prospectuses in connection with the following:

  1. breach of green provisions not giving rise to an event of default;
  2. the fact that GSS bonds are qualified as 'green' does not affect the loss capacity of the instrument (and thus that such loss capacity is not limited to green assets); and
  3. the ranking of GSS bonds not being affected (either positively or negatively) by the fact that they have GSS conditions.

These clarifications have been usually included in a GSS-specific risk factor in the prospectuses for relevant issuances.

Upcoming regulation

Draft bill amending the Spanish Securities Markets Act

On May 2021, the Spanish Government released for public consultation a proposed draft bill for the amendment of the SMA. This amendment aims to improve and simplify capital markets' regulations and to implement five relevant EU directives that affect:

  1. the taking-up and pursuance of the business of insurance and reinsurance (Insolvency II Directive21);
  2. certain MIFID II provisions (Directive 2020/150422 and Directive 2021/33823), such as the information requirements, product governance and position limits; and
  3. the prudential supervision of investment firms (Directive 2019/203424).

The proposal of the draft bill also sets out the required amendments for the implementation of the EU digital finance package. It includes a proposal for a regulation on markets in crypto assets, a proposal for a regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT) and a proposal for a regulation on digital operational resilience for the financial sector. Finally, the proposal also contemplates an amendment of the SCA to recognise and regulate SPACs, considering their peculiarities, in particular with regard to investors' right to the reimbursement of the invested capital.

Having finalised the public consultation period and after receiving comments from different market players, institutions and other stakeholders, the Government is expected to approve a final version of the bill and submit it for approval by Parliament.

Commission proposal for a European green bond standard

On 6 July 2021, the European Commission published its proposal for a European regulation on green bonds (EU GB Standards Regulation), aimed to set out 'a voluntary standard of help to scale up and raise the environmental ambitions of the green bond market.' The EU GB Standards Regulation purports to create a useful tool for both issuers and investors, allowing the former to prove that they are funding legitimate green projects and the latter to rely and ensure that their funds are specifically being used for green purposes. The EU GB Standards Regulation is linked to the Taxonomy Regulation,25 as it uses the defining criteria envisaged therein to determine whether a specific activity (and thus, a specific investment) can be classified as green.

Once the EU GB Standards Regulation is in force, issuers may voluntarily issue European green bonds (EuGB), in which case the provisions of the EU GB Standards Regulation will bind them. The issue of EuGB implies the mandatory compliance by the issuer with certain substantive and formal requirements in the EU GB Standards Regulation, a breach of which may lead to sanctions imposed by supervisors.

Another objective of the EU GB Standards Regulation is to regulate the activity of the external reviewers (i.e., entities that are in charge of ensuring that the obligations of the issuer arising from the issue of EuGB are complied with). These entities will be considered regulated entities, obliged to obtain an authorisation and be registered with, and supervised by, ESMA. Additionally, the EU GB Standards Regulation provides for certain rules on internal management processes and corporate governance with which these external entities must comply.

Covered bonds

In November 2019, Directive 2019/216226 on the issue of covered bonds and covered bond public supervision was published. The main purpose of this Directive is to regulate the conditions under which credit institutions can issue covered bonds as a financing tool, by setting out the product requirements and establishing specific product supervision to which credit institutions are subject. Member States had until 8 July 2021 to transpose the Directive and their national measures must apply from 8 July 2022 at the latest. The implementation of the Directive into Spanish law is still at the draft bill stage.

ii Developments affecting derivatives, securitisations and other structured products

Securitisations - notification to consumers in certain Spanish regions

Under Spanish law, notice to the underlying debtors is not a requirement for the validity or perfection of the transfer of a credit right (and therefore, for the securitisation of loans). As a result, traditionally, the practice in Spanish securitisations has been not to notify the transfer of the receivables to the securitisation fund, unless certain triggers have occurred (mainly, replacement of the servicer and, more recently in certain residential mortgage-backed securities (RMBS) transactions and due to certain first instance court rulings, where necessary, to facilitate the enforcement of the security).

However, the Spanish autonomous regions of Andalusia (Articles 1–4 of Decree 175/2020 of 27 October), Castilla-La Mancha (Article 91 of Law 3/2019 of 22 March), Extremadura (Article 29 of Law 6/2019 of 20 February) and Valencia (Article 26 of Legislative Decree 1/2019 of 13 December) have recently enacted regulations that require financial institutions (as originators) to communicate the securitisation of their consumer loans to the relevant consumers, resident in such regions. Other regions (e.g., Catalonia and Navarre) have also approved regulations providing for certain notification obligations in case of direct transfer of mortgage loans, but these would not apply in the case of securitisations as these are generally not effected through a direct transfer.

For practical purposes, as of 1 September 2021, these notification obligations are only applicable in the regions of Valencia and Andalucía (and, for the latter, only for mortgage loan securitisations). In Extremadura, the Spanish Constitutional Court declared the obligation null and void (ruling 72/2021 of 18 March 2021) and in Castilla-La Mancha, there is only a general obligation subject to regulatory development that has not yet been approved (and therefore, in practice, the provision is not yet applicable). It is also important to note that other regions may implement similar regulations in the future and that the Spanish Constitutional Court will make further decisions on their conformity with the Spanish Constitution.

While these regulations have added an additional layer of complexity (or at least of administrative burden) on securitisations and the market view is that a common (and clearer) legal framework would have been desirable, it is important to highlight that none of the regulations enacted, to date, expressly establish that the breach of the notification obligation will affect the validity of the transfer of the receivables to the securitisation vehicle. However, it may imply either monetary or non-monetary sanctions, or both, to the entity obliged to notify (normally, the financial entity originator of the receivables).

NPLs Securitisation Reform

On 6 April 2021, the European Union published Regulation 2021/557,27 amending the STS Regulation28 and Regulation 2021/558,29 amending certain provisions of the EU CRR securitisation framework. These new regulations have introduced, among others, the new STS framework for synthetic securitisations and a special regime for non-performing loan (NPL) or non-performing exposures (NPE) securitisations. Regarding the latter, these regulations intend to remove from the STS Regulation former regulatory barriers that affect the securitisation of NPLs/NPEs.30

The most relevant amendments relate to risk retention and credit granting standards. Regarding the latter, Regulation 2021/557 sets out an adjusted application of this requirement for NPEs by not applying the general credit granting standards requirements in relation to exposures that were non-performing exposures at the time the originator purchased them from a third party. It instead requires, in these circumstances, that 'sound standards shall apply in the selection and pricing of the exposures'. With respect to investor due diligence provisions, Regulation 2021/557 also replaces credit granting standards diligence requirements with the requirement to verify the application of the referred sound standards regarding portfolio selection and pricing.

Risk retention requirements have also been amended and provide for a special risk retention regime for securitisations that meet the NPE securitisation definition. In particular, Article 6 is amended to provide, in the context of NPE securitisations, for the 5 per cent risk retention in respect of exposures that are non-performing to be calculated based on the discounted value of the exposures transferred to the securitisation SPV (i.e., deducting the non-refundable purchase price discount (NRPPD)). Therefore, the net value of a non-performing exposure shall be calculated by deducting the NRPPD agreed:

at the level of the individual securitised exposure at the time of origination or, where applicable, a corresponding share of the non-refundable purchase price discount agreed at the level of the pool of underlying exposures at the time of origination from the exposure's nominal value or, where applicable, its outstanding value at the time of origination.

It is explicit that, for the purpose of the risk retention calculation, the NRPPD can be established on a per exposure basis, or portfolio basis, and that the NRPPD includes purchase price discounts in the first sale to third party investors where the issuance is initially subscribed by the originator.

In addition, in the case of traditional (i.e., non-synthetic) NPE securitisation, the risk retention requirement may also be fulfilled by the special asset servicer, rather than the original lender, originator or sponsor, and may be a permitted retention holder, provided that it has sufficient expertise (this is similar to requirements for servicers in STS securitisations).

iii Cases and dispute settlement

There have been a number of noteworthy cases relating to the Spanish capital markets over the past 12 months.

Claims in respect of initial public offerings

Various civil proceedings have been brought against a financial entity by institutional investors in relation to the subscription of shares during the IPO of that entity, seeking a ruling that the share subscription be annulled, claiming mistaken consent arising from misinformation in the IPO prospectus. In 2019, the entity brought a final appeal to the Spanish Supreme Court. To rule on the appeal, the Supreme Court requested a preliminary ruling from the Court of Justice of the European Union (CJEU), seeking to establish:

  1. whether an action for damages arising from a public offer is available to institutional investors too; and
  2. if so, whether it is possible to assess the extent to which the institutional investors had, based on their existing relationships with that issuer, knowledge of the economic situation of the issuer beyond what was disclosed in the prospectus.

On 3rd June 2021, the CJEU issued a decision establishing that an investor who has participated in an IPO may legitimately rely on the information given in the published prospectus and is therefore entitled to bring an action for damages on the grounds of that information, whether or not the prospectus was issued for that investor. Although qualified investors may have access, by their own means, to the information necessary for their investment decisions (other than through the prospectus), in a public offering for the subscription of shares that is addressed to both retail investors and qualified investors, an action for damages on the grounds of the information in the prospectus may be brought also by qualified investors.

However, if it is so established in the national law, the investor was, or ought to have been, aware of the economic situation of the issuer, based on their relations and otherwise than through the prospectus, this should be taken into account whenever it is not impossible or excessively difficult to bring an action for damages.

Following the CJEU's decision, the Supreme Court will make a final ruling on the entity's appeal.

Claims in respect of the equitable price of delisting takeover bids

Spanish courts have issued two relevant rulings that affect delisting takeover bids.

In the first case, the Spanish Supreme Court decided on the appeal related to a claim brought by a minority shareholder, who challenged the equitable price of a delisting bid on the grounds of a potential conflict of interest of the independent expert issuing a report that supported the equitable price calculation for the board of directors of the target company. The claim also questioned the application of a single valuation method instead of combining other alternative methods admitted by the Spanish takeover bid regulations. The Supreme Court decided against the minority shareholder, considering that:

  1. since the board of directors of the target is responsible for the content of the report on the equitable delisting price, it is irrelevant that the expert may be affected by a conflict of interest, due to other commercial or professional relations that it may have with the bidder; and
  2. Spanish takeover bid regulations do not require the use of certain valuation methods or a minimum number of them (and so the CNMV cannot request it), nor do they set out a closed list of valuation methods.

In the second case, the High Court rejected the claim brought by a fund manager against the CNMV's authorisation of a delisting takeover bid. The fund manager was not a shareholder in the target but a financial investor through the subscription of some equity swaps indexed to target shares and settled in cash, and therefore the fund manager had an economic interest in the delisting price. However, the court rejected that financial investors, such as the claimant, were entitled to challenge or participate in the takeover bid since the subscription of a financial instrument did not entitle them to any right over the target's shares. Therefore, such an investor lacks standing as claimant to challenge the takeover bid or the offer price accepted as equitable by the CNMV.

iv Relevant tax and insolvency law

Tax treatment in the Spanish capital markets

The tax treatment in the Spanish capital markets has not been subject to recent amendments. The key features of the regime are as follows.

Income obtained by non-Spanish resident investors from a Spanish company is considered Spanish source income and is therefore subject to taxation in Spain under non-resident income tax (NRIT), generally by way of withholding tax (NRIT WHT).

Capital gains on the disposal of shares and units issued by Spanish resident entities or undertakings for collective investment (UCITs) are subject to NRIT, currently at 19 per cent. The paying entity is not obliged to apply NRIT WHT except for gains arising from an investment in a Spanish UCIT. Spanish tax legislation provides a full exemption for capital gains:

  1. upon the disposal of shares obtained by EU residents or by residents in a EEA Member State if certain legal requirements are met; and
  2. on transfers of shares of Spanish companies or reimbursement of units in a Spanish UCIT carried out on a Spanish official secondary securities market if they are obtained by residents of countries that have entered into a convention for the avoidance of double taxation (DDT) with Spain that includes an exchange of information clause.

Dividend payments obtained by a non-resident from a Spanish company are subject to NRIT, currently at 19 per cent, and the paying entity is obliged to apply NRIT WHT. However, under the provisions implemented in Spain in line with the Parent–Subsidiary Directive,31 dividends distributed by a Spanish subsidiary to its EU parent company or its EEA parent company (with some additional requirements) are exempt from taxation in Spain to the extent that certain legal conditions are met (including the anti-abuse provision). In any case, DDTs must be considered to determine whether reduced tax rates or a full exemption may apply.

Interest payments obtained by a non-resident from a Spanish company are subject to NRIT, currently at 19 per cent, and the paying entity is obliged to apply NRIT WHT. However, EU residents are entitled to an exemption on interest obtained in Spain provided that interest is not obtained through a tax haven jurisdiction, a permanent establishment located in Spain, or in a country or jurisdiction that is not an EU Member State. Notwithstanding the above, there is a special tax regime for income derived from preference participations and debt instruments issued by a Spanish issuer.32 This provides that non-resident taxpayers shall not be subject to NRIT or NRIT WHT in Spain to the extent that the information procedures in the format required under Law 10/2014 and the applicable regulations33 are duly fulfilled. These procedures no longer require information to be provided on the identity and country of residence of the investors.

New tax developments


Directive 2018/88234 (DAC6) provides for the mandatory disclosure to tax authorities of information on 'potentially aggressive tax planning arrangements' by intermediaries or, if there is no intermediary or the intermediary is protected by privilege, by the taxpayer. As far as capital market transactions are concerned, it seems that only a limited number of cross-border IPOs may be affected, when the proceeds are ultimately remitted to a non-cooperative jurisdiction.

Although the first notifications under DAC6 were not due until August 2020, the disclosure rules cover reportable transactions implemented from 25 June 2018. Because of the recent covid-19 pandemic, the European Commission approved a deferral of the time limits, whereby the first notifications should have been filed by 28 February 2021.

As regards the status of the implementation of DAC6 in Spain, on 30 December 2020, the Spanish Official State Gazette published Law 10/2020 of 29 December, which implements in the Spanish domestic legislation the provisions foreseen under DAC6 (Law 10/2020), including two Additional Provisions in the Spanish General Tax Law,35 which refer to mandatory disclosure of information on reportable cross-border arrangements and obligations between individuals (intermediaries and taxpayer) derived from such mandatory disclosure of information.

Similarly, on 7 April 2021, the Spanish Official State Gazette published Royal Decree 243/2021 of 6 April, modifying the Spanish General Regulations on Tax Audits and Proceedings,36 which complements and develops the transposition of the DAC6 into the Spanish domestic legislation operated by Law 10/2020 (Royal Decree 243/2021).

This regulation develops, among other issues:

  1. the requirements that a cross-border arrangement should meet for it to be considered as reportable;
  2. the figure of intermediaries on which the main reporting obligation falls; and
  3. the information (data) that should be included in the relevant reporting forms.

It also establishes the rules on the triggering of the obligation to report and the deadline for reporting.

Spanish financial transactions tax

On 15 October 2020, Law 5/2020 regulating the Spanish financial transactions tax (FTT) was approved and, on 16 January 2021, it came into force. According to the Law, the FTT applies at a rate of 0.2 per cent to certain acquisitions of shares listed on a Spanish regulated market and issued by Spanish companies whose market capitalisation exceeds €1 billion,37 regardless of the jurisdiction of residence of the parties involved in the transaction. Debt instruments are not subject to the FTT.

Insolvency: draft bill amending the Insolvency Law to transpose the Directive on preventive restructuring frameworks

In August 2021, the government published a draft bill, for public consultation, to amend the Spanish Insolvency Act.38 This amendment would implement Directive 2019/102339 on preventive restructuring frameworks in Spain. Although the proposal does not address any specific reform that affects the capital markets, the impact and implementation of the directive are relevant elements of the proposed European capital markets union, since the directive will contribute to further harmonisation of minimum insolvency standards across Europe. The reform will also help facilitate more predictable and orderly outcomes and will introduce specific measures to handle pre-insolvency, especially in the case of very complex negotiations that involve many and varied creditors or even shareholders, as is likely to be the case for large listed companies.

v Role of exchanges, central counterparties and rating agencies

BME was delisted on September 2020 after the takeover bid successfully launched by the Six group. The impact of the change of ownership is still to be seen, since the Six Group undertook to not carry out certain changes within specific time frames.

The Proposal for a Regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based on DLT is about to begin the EU trilogue. There are still discussions on aspects (such as the maximum thresholds), which are going to be key on how useful this pilot regime is going to be. There is a clear increased interest on the use of the DLT for the registration of securities. In Spain, the proposal of the draft bill amending the SMA will address that implementation. In this regard, the result of the Basel Committee on Banking Supervision consultation on prudential treatment of crypto asset exposures may be crucial for the development of DLT-based transferable securities.

Outlook and conclusions

This has been a year of consolidation, and market participants have dealt successfully with the changes that have been forced upon them by the covid-19 pandemic and Brexit. The market has continued to grapple with some of the bigger issues affecting the markets, particularly around green and sustainable finance, and has fared well in this regard. Further changes are on the horizon and, as indicated above, it will be key to ensure that the Spanish capital market's infrastructure is able to compete on the global stage.


1 Charles Poole-Warren, Salvador Ruiz Bachs and Juan Hormaechea are partners, Teresa Méndez and Alfonso Gutiérrez are counsels, and Álvaro Rojo is a senior associate at Allen & Overy. The authors gratefully acknowledge the assistance of Fernando Torrente (partner), Ishtar Sancho (counsel), Cristina de Zavala (associate) and Mónica Represa (head of knowledge) at Allen & Overy.

2 Royal Decree 878/2015 of 2 October.

3 Royal Decree 1362/2007 of 19 October, implementing Securities Market Act 24/1988 of 28 July, with regard to the transparency requirements of issuers whose securities are listed on an official secondary market or on another regulated market of the European Union.

4 Law 10/2014 of 26 June, on the organisation, supervision and solvency of credit institutions.

5 Royal Legislative Decree 1/2020 of 5 May that approves the consolidated text of the insolvency law.

6 Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market.

7 Regulation 596/2014, of the European Parliament and of the Council of 16 April 2014 on market abuse.

8 Regulation 575/2013, of the European Parliament and of the Council, of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation 648/2012.

9 Regulation 648/2012, of the European Parliament and of the Council, of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.

10 Regulation 909/2014, of the European Parliament and of the Council, of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation 236/2012.

11 Directive 2017/828 of the European Parliament and of the Council of 17 May 2017, amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement.

12 Regulation (EU) 2021/337 of the European Parliament and of the Council of 16 February 2021, amending Regulation (EU) 2017/1129 as regards the EU Recovery prospectus.

13 Royal Decree-Law 8/2020 of 17 March (subsequently amended by Royal Decree-Law 11/2020 of 31 March), of extraordinary urgent measures to tackle the economic and social impact of covid-19.

14 Law 19/2003 of July 4 on the legal regime of capital movements abroad and foreign economic transactions abroad and on certain measures to prevent money laundering.

15 Pursuant to the sole Transitory Provision of Royal Decree-law 34/2020, on urgent measures to support solvency and the energy sector, and on tax.

16 By means of Royal Decree-law 12/2021 of 24 June, adopting urgent measures in the field of energy tax and energy generation, and on regulatory canon and tariffs for water use.

18 Regulation 2016/1011, of the European Parliament and of the Council, of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds.

19 Please see section on the Proposal of draft bill to amend the Securities Markets Act below.

20 Please see the Section 'Upcoming regulation – Commission proposal for a European green bond standard' below.

21 Directive (EU) 2019/2177 of the European Parliament and of the Council of 18 December 2019, amending Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance.

22 Directive (EU) 2020/1504 of the European Parliament and of the Council of 7 October 2020, amending Directive 2014/65/EU on markets in financial instruments.

23 Directive (EU) 2021/338 of the European Parliament and of the Council of 16 February 2021, amending Directive 2014/65/EU as regards information requirements, product governance and position limits, and Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help recovery from the covid-19 pandemic.

24 Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU.

25 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, amending Regulation (EU) 2019/2088.

26 Directive 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issue of covered bonds and covered bond public supervision.

27 Regulation (EU) 2021/557 of the European Parliament and of the Council of 31 March 2021, amending Regulation (EU) 2017/2402, which lays down a general framework for securitisation and creats a specific framework for simple, transparent and standardised securitisation to help recovery from the covid-19 pandemic.

28 Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017, laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation.

29 Regulation (EU) 2021/558 of the European Parliament and of the Council of 31 March 2021, amending Regulation (EU) No 575/2013 as regards adjustments to the securitisation framework to support the economic recovery in response to the covid-19 pandemic.

30 NPE securitisation means a securitisation backed by a pool of non-performing exposures and it requires no less than 90 per cent of the pool's nominal value at the time of origination and, at a later time, where assets are added to, or removed from, the underlying pool due to replenishment, restructuring or any other relevant reason, to have been non-performing within the meaning of (existing) Article 47a EU CRR.

31 Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States.

32 Under the First Additional Provision of Law 10/2014.

33 Royal Decree 1065/2007 of 27 July, as amended.

34 Council Directive (EU) 2018/822 of 25 May 2018, amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

35 Law 58/2003 of 17 December, as amended.

36 Royal Decree 1065/2007 of 27 July, as amended.

37 A list of these companies will be published on the Spanish tax authorities' website before 31 December each year.

38 Royal Legislative Decree 1/2020 of 5 May that approves the consolidated text of the insolvency law.

39 Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt.

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