For these reasons, Spanish government recently implemented reforms in the labour market. In general terms, these reforms aim to modify the dismissal procedures and to encourage the contracting of new employees through subsidies and bonuses. Nevertheless, according to the experts, these reforms are much too limited, so there is a significant chance that in the short term further changes will arise.

If desired, Ibersupport is able to provide a detailed explanation of the reforms.

The Basque Government is committed to the utmost to please existing and new entrepeneurs as much as possible. There are several modern and highly developed technological parks, many useful courses and trainings are offered and attractive subsidies are available for companies in various markets. Not surprisingly, Basque Country is -together with La Rioja- Spain´s only state which already climbed out of the recession oficially.

We are sure that Basque Country is developping itself into one of Europe’s most business-friendly regions and that is why we have decided to open here our new office. Our Bilbao office works closely with the regional chambers of commerce and of course we deliver the quality and service as we are used to in the rest of Spain, so foreign entrepreneurs in the Basque Country can now also receive the perfect accompaniment.

If you have any questions, please do not hesitate to contact us,  we would gladly be of service!

Furthermore, we have observed that the authorities are adopting a stricter stance when it comes to regulating the role intercompany accounts play between the enterprise and the shareholders. In cases where companies are not in compliance with the strict rules governing intercompany accounts, these will be construed as loans by the authorities. As such, companies will be required to adhere to the rules that govern loans (contracts, interest, etc.).

Efforts to gain control over these issues will be given top priority by the Spanish tax authorities in 2010.

These measures are being considered because the stimulus packages currently available (subsidies for certain groups and unemployment insurance) are not having the desired effect. The rate of unemployment continues to hover around 18% (38% for the younger population), and is expected to rise even further in the fourth quarter.

One of the measures being taken is the withdrawal of the yearly 400 euro income tax deduction. This deduction was introduced in 2008, and will no longer be available as of 01/01/2010.

Additionally, the rate of VAT (IVA) on goods and services will be raised by two percent. As of 1 July 2010 the VAT will be raised from 16% to 18%. The lower rate of 7% placed on food, restaurants, transportation and property may be raised to 8%, and the lower rate of 4% placed on necessities, will remain unchanged.

The tax rate for small and medium enterprises will be dropped by 5% for companies who are able to maintain their current level of employment (the current 25% for the first 120,000 Euros of profit will drop to 20%).

Finally, capital gains taxes (interest, dividends, sale of property, etc.) will be raised from 18% to 19% for the first 6,000 Euros, and to 20% for amounts above 6,000.

In addition to the balance sheet and profit & loss account, companies are required to provide detailed information on any changes in their own funds. In addition to a more detailed balance sheet, companies are also required to explain the obligated changes in their accounting plan. This means that balance sheet and profit & loss account must refer to the corresponding paragraph in the Annual Report .

Application to this register can be done through Ibersupport. In order to be accepted for this register by the tax authorities the company must not have any outstanding tax obligations. Application to the register for monthly tax returns must be done for a period of at lease 12 months.

This is of particular importance for internationally structured companies where the parent company charges a management fee, or delivers goods and services at cost to the daughter company in Spain.

Ibersupport would be pleased to assist and advise you in this area.