Credit Management October 2018

COUNTRY FOCUS
AUTHOR – Adam Bernstein
PEQUEÑAS Y MEDIANAS EMPRESAS/PYME
Small and medium-size businesses (pequeñas
y medianas empresas/PYME) make up –
according to Spain’s Ministry of Industry,
Tourism and Commerce – 99 percent of Spanish
businesses, and the Government encourages
both their formation and growth. As a result,
many PYMEs qualify for grants, incentives and
reduced corporate tax rates.
There are three sub-categories: Mediana
Empresa – a ‘medium-size’ business, with
between 50 and 250 employees and an annual
turnover of up to €50 million; Pequeña
Empresa – a small business, with between 10
and 49 employees and an annual turnover of up
to €10 million; and Micro Empresa – a ‘microenterprise’,
with fewer than ten employees and
an annual turnover of up to €2 million.
BUSINESS SECTORS
Of the business sectors important to Spain,
tourism is probably the most obvious.
According to Caixa Bank, in 2015 it employed
2.5 million representing 13 percent of the
working population; add in those employed
indirectly and it’s reckoned that 16.2 percent
are employed in tourism catering for more
than 75 million tourists (2016 figures). Tourism
adds €119 billion to Spanish GDP and involves
some 400,000 different companies.
Just as important is the industrial sector.
Caixa Bank believes that in 2014 the industry
employed 1.9 million (11.5 percent of the
working population) and generated €572
billion. Key industries include food (15.6
percent of the sector’s total turnover) especially
gourmet and premium products; motor
vehicles (10.1 percent); and the production and
distribution of electricity (12.2 percent).
In terms of energy, there are opportunities
for companies in Latin America through Spain’s
global energy companies; energy efficiency
in buildings, smart metering and smart grid
solutions/lighting; energy storage; carbon
reduction solutions; nuclear (construction of a
temporary centralised storage facility for spent
fuel); and wind turbine repowering.
Spain’s Aerospace sector is the fifthlargest
in Europe in terms of sales and jobs,
employing nearly 40,000 people. The largest
sub-segments in terms of production in this
industry are aircraft and systems (70 percent
of all production), followed by engines (11
percent), equipment (ten percent) and other
(nine percent).
The market for British education and
related products is huge in Spain and
the country has the second largest
number of British schools outside the
UK in the world. However, there is a
significant skills gap in English language
proficiency, ranking Spain near the
bottom of the EU. The demand for
special needs products is rising in both
the education and healthcare sectors; almost
one third of children with disabilities attend
regular schools without dedicated support
according to UK Government information.
Healthcare is a natural magnet for
commerce as Spain has some 750 public
hospitals, 300 private hospitals and seven
million private health policy owners. That said,
exporters will have to deal with the regions as
healthcare is devolved to them. Those involved
with R&D should target opportunities in
Catalonia as it’s a major centre in southern
Europe for this activity.
Agriculture is central to the Spanish
economy and makes up 15.5 percent of total
exports. Opportunities are arising where farms
are passed down to younger generations who
are changing practices and bringing in new
technologies. Fertilisers and pesticides, quick
diagnostic kits for use in meat production, and
water purification products are high on the list
of desired purchases.
And then there is the Spanish defence
market. With a new centralised approach
to purchasing, opportunities include cyber
security particularly for the private sector;
protection of critical national infrastructure
(physical protection as well as cyber);
smart border technologies; and riot police
equipment.
TAXATION
VAT in Spain is known as IVA. The standard
rate is 21 percent, but reduced rates of 10
percent and four percent apply to products
such as food, drink, some educational material
and medical aid.
Corporate income tax in Spain is 25
percent. Newly created companies are taxed
at a 15 percent tax rate for both the first tax
period in which they obtain a profit and the
following tax period. This tax rate does not
apply to companies that are considered equity
companies or to newly created companies that
are part of a national or international group.
Personal income tax applies to tax-residents
in Spain. This includes those resident for more
than 183 days per year in Spain and those with
business and economic interests based in
Spain. The rates depend on a combination of
the national rate and the regional rate. They
are banded and the rates until 31 December
2018 range from 19 percent on the first €12,450
to 45 percent on income above €60,000.
There is clearly much more that can be
written about Spain. It is plain to see that the
key to success is to engage knowledgeable
advisors fluent in Spanish with both the
contacts and industry understanding required.
Adam Bernstein is a freelance
business writer.
The Recognised Standard / www.cicm.com / October 2018 / PAGE 33