Spain.com.es

Author: David Fernández García

  • Distribution or agency? Spanish courts decide, not your contract

    Field note · Doing business

    A foreign manufacturer terminates its Spanish distributor with exactly the notice the contract required, and receives a claim for goodwill compensation it had never budgeted for. The contract said “distribution”. That turns out not to settle the question.

    Spain regulates agency by statute — Act 12/1992 on the agency contract — and does not regulate distribution at all. The gap between the two is where the money is, and it is the single most common unpleasant surprise for foreign principals leaving the Spanish market.

    What the statute gives an agent

    Article 28 of Act 12/1992 gives an agent, on termination, compensation for goodwill where the agent brought new customers or appreciably increased business with existing ones, the principal continues to derive substantial benefit from that, and the compensation is equitable in the circumstances. The ceiling is the average annual remuneration of the last five years.

    For a genuine agency this is close to non-negotiable in advance: the protective provisions of the Act are mandatory, and a clause by which the agent waives goodwill compensation before the relationship ends is not worth the paper.

    Why the label on your contract does not decide

    Spanish courts characterise the relationship by how it was actually performed, not by what the parties called it. The questions that decide it:

    • Who bears the risk? An agent does not take the commercial risk of the transactions it promotes. A distributor buys the goods, owns the stock and carries the risk of not selling it.
    • In whose name are contracts concluded? An agent acts in the name and on behalf of the principal. A distributor contracts with customers in its own name.
    • Who sets the price? A distributor sets its own resale price and earns a margin. An agent earns a commission on a price it does not set.
    • Who owns the customer relationship? Whose invoices do the customers receive, and whose brand do they believe they are dealing with?

    A contract labelled distribution, performed with the supplier setting prices, taking the stock risk and invoicing the end customers, is at real risk of being read as an agency — with the mandatory statutory regime attached.

    And if it really is distribution?

    Then the position is genuinely uncertain, and any adviser who tells you otherwise is overselling.

    The Supreme Court accepts that article 28 can be applied by analogy to distribution, but it is not automatic and it is not a right the distributor simply has. The distributor has to prove that it actually created or appreciably increased a customer base, that the customer base passes to and continues to benefit the supplier after termination, and that compensation is equitable. Courts have refused the claim where the distributor could not show that.

    Where compensation is awarded, the calculation base is settled: the Supreme Court fixed it as the net margin rather than the gross margin — the profit the distributor actually made after its own costs, not the difference between purchase and resale price. That distinction usually cuts the exposure substantially, and it is worth knowing before you negotiate a settlement.

    More recent case law has put the weight back on characterising the contract correctly in the first place, because the characterisation decides the method: average commissions for an agency, average net profit for a distribution relationship. This remains a moving area. It is a genuinely arguable point on both sides, and it is priced accordingly in any negotiation.

    Notice, and the cost of getting it wrong

    For an indefinite-term agency the statute requires one month’s notice for each year the contract has run, capped at six months. Courts have applied the same yardstick by analogy to long-running distribution relationships. Terminating a fifteen-year Spanish distributor on thirty days’ notice, because the contract said thirty days, is how principals end up paying damages for the notice period on top of any goodwill claim.

    Post-contractual non-compete

    It can be agreed, and it is worth agreeing, but it is confined. Under the agency statute it must be in writing, it is limited to the geographic area and the class of goods covered by the contract, and it cannot exceed two years from termination. A five-year Spain-wide restriction drafted under another country’s habits is unlikely to survive.

    Five things to check before signing for Spain

    1. Does the performance match the label? Write the contract so the day-to-day reality will match it, then run the business that way.
    2. Notice. Set a period that a Spanish court would recognise as reasonable for the length of the relationship, not the shortest one your template allows.
    3. Exclusivity and targets. Define the territory and the customer segments precisely, and make minimum purchase obligations objective and measurable, so that termination for failure to meet them is defensible.
    4. Stock and equipment on termination. Say what happens to remaining stock, demonstration equipment and spare parts. Silence here produces its own dispute, separate from the goodwill claim.
    5. Governing law and forum. Choosing another law does not reliably switch off Spanish mandatory rules where the activity is in Spain, and choosing a distant forum makes the claim more expensive for you as well as for them.

    The practical point

    The cost of a Spanish distribution exit is decided by how the relationship was documented and run at the start, not by how it is terminated at the end. By the time notice is given, the exposure is already fixed.

    This is general information on Spanish law as at 31 August 2026, not advice on your contract, and the case law on goodwill compensation in distribution continues to move. If you are appointing a Spanish distributor, or thinking about ending an arrangement with one, submit your project and you will have an answer within two working days.

  • Inheriting Spanish property: the six-month clock

    Field note · Private clients

    Families abroad almost always believe the clock starts when they find a lawyer. It starts on the day of death, and it has already been running for weeks by the time most people write to us.

    Spanish inheritance tax is self-assessed and it is due within six months of the date of death. Nobody sends a reminder. There is no filing that happens automatically because a notary or a bank is involved. If the six months pass, the position gets worse every month, and it gets worse in two different taxes at once.

    The six months, and the one extension

    The ordinary period is six months from death. An extension of a further six months can be granted — but it has to be applied for within the first five months. Not the sixth. Miss that window and the extension is simply not available, whatever the reason.

    The extension is not free. Late-payment interest runs on the tax from the end of the ordinary six-month period. What it buys is time to gather documents without the surcharge regime biting, which for a foreign family is usually what is actually needed.

    What has to be gathered, and how long it really takes

    The list looks short. From outside Spain it is not.

    • Death certificate. If the death occurred abroad, it needs an apostille and a sworn translation into Spanish. Both take longer than the family expects.
    • Certificate from the Central Register of Wills (Registro General de Actos de Última Voluntad), which cannot be applied for until fifteen working days have passed since the death. That is a fixed delay built into the start of the process.
    • The will, and an authorised copy of it. If there is a foreign will, it has to be examined against the Spanish assets and, depending on the case, an act of declaration of heirs may be needed instead.
    • A Spanish tax identification number (NIE) for every heir. Individually applied for, from abroad usually through the consulate or by power of attorney. This is the single most common cause of delay.
    • Powers of attorney if the heirs are not travelling to Spain, again apostilled and translated.
    • Bank certificates of balances at the date of death, land registry information, and valuations for each asset.

    None of this is difficult. All of it is sequential, and several steps run through foreign consulates and registries whose timetables you do not control. Six months is not a generous period. It is a tight one.

    Why the region changes the bill

    Spanish inheritance tax is state law with substantial regional variation. The same estate, the same heirs and the same relationship can produce very different tax depending on which autonomous community’s rules apply — the difference between regions is frequently measured in tens of thousands of euros, not percentage points.

    Which rules apply depends on the facts, not on choice. Where the deceased was not resident in Spain, the rules of the autonomous community in which the greatest value of the Spanish estate is located apply. Where the deceased was resident in Spain, it is the rules of the community where they were resident.

    One point that still surprises foreign heirs: since the reform made by Act 11/2021 of 9 July, non-resident heirs can apply the regional rules whether or not they live in the European Union. The old discrimination against residents of third states, which the Court of Justice condemned in 2014 and the Spanish Supreme Court dismantled afterwards, is gone from the statute. If an estate was settled on the old basis, there may be tax to reclaim.

    What happens if the deadline passes

    If you file late but before the tax authority asks you to, the surcharge under article 27 of the General Tax Act is 1% plus a further 1% for each complete month of delay, up to twelve months. From twelve months, it is 15% plus late-payment interest.

    If the authority gets there first — if a formal request arrives before you file — you are no longer in the surcharge regime. You are in the penalty regime, which is a different and worse conversation.

    The second clock nobody mentions

    Municipal capital gains tax on urban land, the plusvalía municipal, is a separate tax with its own separate deadline: six months from the death, extendable to one year on request. It is charged by the town hall where the property sits, it has nothing to do with the inheritance tax filing, and it is missed constantly because families assume one filing covers everything.

    Two properties in two municipalities means two filings, on two sets of municipal rules.

    The practical point

    If someone has died and there are assets in Spain, the useful first step is not valuing the estate. It is starting the NIE applications and ordering the certificates, on day one, in parallel, before anyone has decided anything about who takes what. Everything else can be done later. Those cannot.

    This is general information on Spanish law as at 31 August 2026, not advice on your situation, and regional rules change frequently. If a death has already occurred and there are Spanish assets, the clock is running: submit your project and say when the death occurred, and you will have an answer within two working days.

  • Does your Spanish acquisition need government approval?

    Field note · Investing

    Spain screens certain foreign investments before they are allowed to complete. Most buyers are not caught. The ones who are tend to find out late, and by then the authorisation sits between them and a completion date they have already promised.

    The regime lives in article 7 bis of Act 19/2003 on capital movements and foreign economic transactions, and its detail is in Royal Decree 571/2023 on foreign investment. It is not a formality. An acquisition that needed authorisation and did not get it has no legal effect and cannot be registered, and the buyer cannot exercise the economic or voting rights attached to the shares until the position is regularised. Fines are available on top of that.

    What follows is the decision tree we run at the start of a deal. It takes twenty minutes. Run at the end of a deal, the same question takes six months.

    Step one — are you a foreign investor for these purposes?

    Broader than most people expect. The regime reaches:

    • Residents outside the European Union and the European Free Trade Association.
    • Residents inside the EU or EFTA whose ultimate beneficial owner sits outside it. A Luxembourg or Dutch holding company owned from outside Europe does not solve this.
    • Investors directly or indirectly controlled by a foreign government, including sovereign wealth funds and state-owned enterprises.
    • Investors with a record of activity affecting security or public order in another Member State, or against whom there is a serious risk of criminal or illegal activity affecting the sectors listed below.

    There is also a separate transitional regime that catches EU and EFTA investors. It applies where the investment gives a stake of 10% or more in a Spanish listed company, or in an unlisted company where the investment exceeds 500 million euros, and the target operates in one of the protected sectors. It has been extended four times. As things stand it runs until 31 December 2026, under Royal Decree-Law 1/2025 of 28 January. If you are reading this after that date, check whether it was extended again before relying on the answer.

    Step two — does the investment reach the threshold?

    Authorisation is triggered where the operation results in a stake of 10% or more of the share capital, or in acquiring control of the company, whether wholly or in part. Control is assessed by substance, not only by percentage: shareholders’ agreements, board appointment rights and veto rights count.

    Step three — is the target in a covered sector?

    The list in article 7 bis is long and drawn widely. Among others:

    • Critical infrastructure — energy, transport, water, health, communications, media, data processing and storage, aerospace, defence, electoral and financial infrastructure, and sensitive land and property.
    • Critical and dual-use technologies — artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technology, nanotechnology and biotechnology.
    • Supply of essential inputs, energy, raw materials and food security among them.
    • Access to sensitive information, particularly personal data, or the ability to control such information.
    • The media.

    If the target operates in none of these, the sectoral regime generally does not apply. That is a real answer, and it is the answer for most transactions.

    Step four — is there an exemption?

    Two matter in practice, both in article 17 of Royal Decree 571/2023.

    Size. Investments are exempt where the turnover of the target company did not exceed five million euros in the last closed financial year — but not where the target operates in technologies of interest to Spain.

    Energy. Energy is carved out separately and on its own terms: an investment in the energy sector is exempt regardless of amount only where the target does not carry out regulated activities, the investment does not create a dominant position, the installed capacity share stays below 5%, and any retail supply is to fewer than 20,000 customers. The practical consequence catches people out: a small renewables target can still need authorisation.

    If authorisation is needed

    The application goes to the Directorate-General for International Trade and Investment. Under article 14.8, that Directorate-General decides investments up to five million euros and the Council of Ministers decides above that figure. Article 14.9 sets a maximum period of three months.

    Budget more than three months. The clock only starts when the file is complete, and requests for further information stop it. A Council of Ministers decision also has to find its way onto an agenda.

    Two consequences for the transaction itself:

    1. Put it in the contract. The authorisation should be a condition precedent to completion, with a long-stop date that reflects a Council of Ministers timetable rather than an optimistic one, and a clear allocation of who bears the risk if it is refused or conditioned.
    2. Check it before you spend money on due diligence, not after. This is the cheapest question in the deal and the most expensive one to answer late.

    What is coming

    The European framework is being rebuilt. Regulation (EU) 2026/1386, published in the Official Journal on 26 June 2026, replaces the 2019 screening regulation and applies from 17 January 2028. It makes a national screening mechanism compulsory in every Member State, sets minimum common sectors that all Member States must screen, and — the change that matters most for structuring — expressly extends screening to investments made through EU-established subsidiaries of non-EU investors.

    Spain already screens more widely than the current European minimum, so the direction of travel is not a surprise here. But anyone structuring a European holding chain on the assumption that an EU entity is a clean entry point should stop doing that now rather than in 2028.

    This is general information on Spanish and European law as at 31 August 2026, not advice on your transaction, and the position changes. If you are looking at a Spanish target, submit your project and you will have an answer within two working days on whether the regime applies to it.