Madrid Doing Business Guide

8/6/2019 Madrid Doing Business Guide

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Doing Business

in the Madrid RegionA guide to investing, working and living in Madrid


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From the President of the Madrid Regional Government,Esperanza Aguirre

FOREWORD

It is a pleasure to present this practical guide to

investing and doing business in the Madrid Region.

This guide will help you answer the key questions you may

face when establishing a business in a new location

including procedures for setting up a company, operational

costs, business culture, and the political, fiscal and legal

framework.

With this guide we hope to provide a practical illustration of

the ease of investing in Madrid and of the business-friendly

environment that we have strived to create and maintain.

This business-friendly approach is one of our principal

advantages afforded to international business people.

In supporting public-private partnership, the Madrid

Regional Government acts as a partner in your business

endeavours. Through our trade and investmentdevelopment agency, PromoMadrid, the Regional

Government of Madrid is committed to supporting the

business entrepreneur every step of the way, helping to

make the right investment decisions.

As a demonstration of Madrids open and business-friendly

environment, we should mention how Madrid is the first

region in Spain for company set-ups. Today around 4,000 of

all businesses in Madrid are foreign companies and 40% of

all foreign firms in Spain have chosen Madrid as their base.

Needless to say, it is not only this open approach to foreigninvestment that makes us attractive, but several other

attributes. Madrid has experienced a substantial and

sustained growth that today makes it one of the most open,

dynamic and competitive locations for international

business. This together with its recognised expertise in

professional services, availability of international education,

and the fast and efficient logistics and communications

infrastructures, have named Madrid a world-class business

environment for international trade and investment. On top

of this, we enjoy one of the best climates and an enviablequality of life. Where better to invest, work or live?

Come and discover all that Madrid has to offer. Let us be

your host and guide you along the way.


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Index

1. THE MADRID REGION 5

1. Geography and Population 6

2. Political Situation 7

3. Economy 8

2. BUSINESS IN THE MADRID REGION 11

1. Setting-Up 12

1.1. Types of Business Organization 12

1.2. Procedure for Setting Up a Company 15

1.3. Labour Regulations 17

1.4. Financial Support 21

1.5. Accounting, Auditing and Corporate Taxation Regulations 22

2. Banking 25

2.1. General Information 25

2.2. Non-Resident Operations 25

3. Infrastructure 27

3.1. Transport 27

3.2. Industrial and Technological Base 29

3.3. Business Parks and Business Centres 30

3.4. Telecommunications 31

4. Operational Costs 32

4.1. Labour Costs 32

4.2. Utility Costs 33

4.3. Real Estate 35

5. Business Culture 365.1. Business Communication and Behaviour 36

5.2. Social and Business Interaction 36

5.3. Doing Business 36

5.4. Handy Tips 36

5.5. Business Working hours 37

5.6. Public Holidays 37

3. LIVING IN THE MADRID REGION 39

1. Legal Status of Foreigners 40

1.1. Visas 40

1.2. Work Permits 41

1.3. Permanent Residence Permit 42

1.4. Foreigner Identification Card 42

2. Personal Taxes 43

3. Living in Madrid 44

3.1. General Information 44

3.2. Residential Areas 44

3.3. Buying Property 46

3.4. Renting Property 48

4. Education and Health 49

4.1. Education 49

4.2. Health 50

5. Transport Services 51

5.1. Airports 51

5.2. Trains 51

5.3. Underground 51

5.4. Taxis 52

Websites 54

About PromoMadrid 56


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Table

sandMaps

1. Map of Madrid Region 6

2. Madrid Region in Brief 7

3. Composition of GDP in the Madrid Region 8

4. Differences between S.A. and S.L. 13

5. Differences between Autonomous Entrepreneur and Single Shareholder Company 13

6. Differences between a Branch and a Subsidiary 14

7. Social Security Contribution Bases (Euro) 19

8. Social Security Contribution Rates (Percentage) 20

9. VAT Rates 25

10. Main Motorway map of the Madrid Region 27

11. Main Railway Map of Spain 28

12. Map of Main Logistics Centres in the Madrid Region 29

13. Map of Science and Technology Parks in the Madrid Region 31

14. Average Labour Cost in the Madrid Region (Euro per Hour) 32

15. Half-Yearly Electricity Prices for Industry in Spain (Euro per KWh, VAT excluded) 33

16. Gas Prices for Industrial Use in Spain (Euro per Gigajoule, VAT excluded) 33

17. Price of Telephone Landlines in Spain (Euro per 10 Minute Call, VAT included) 34

18. Price of ADSL Packages for Businesses in Spain (Euro per Month) 34

19. Office Rental Prices in the Madrid Region (Euro per Square Metre per Month) 35

20. Industrial Building Prices in the Madrid Region (Euro per Square Metre) 35

21. Business hours in Spain 37

22. Employee Work Permits 41

23. Self-Employed Work Permits 41

24. Special Work Permits 41

25. Map of Residential Areas in Metropolitan Madrid 45

26. Housing Market in the Madrid Region (Euro) 46

27. Rental Market in the Madrid Region (Euro) 48


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GENERAL PROFILE OF

the Madrid Region

DOING BUSINESS IN THE MADRID REGION

Geography and Population

Political Situation

Economy

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Boadilla del Monte

Majadahonda

Las Rozas

Colmenar Viejo

Aranjuez

MADRID Coslada

Legans

Alcorcn

Mstoles

GetafeFuenlabrada

PintoParla

Arganda del Rey

Torrejn de Ardoz

Alcal de Henares

San Sebastin de los ReyesAlcobendas

Tres Cantos

Pozuelo de Alarcn

The Madrid Region, one of the 17 regions

of Spain, is geographically located at the

centre of the country. The countrys

capital, the city of Madrid, has been the

capital since King Phillip II moved the seat

of government there in 1561 to symbolise

the unification and centralisation of the

country and to provide a location from

which he could efficiently communicate

with every corner of the nation.

Today, the Madrid Region has a

population of more than six million

inhabitants. The city of Madrid, together

with more than 40 other medium-sized

towns and cities, make up the

metropolitan area where over five million

people live. The vast, modern city itself

has an ever increasing population of

currently more than three million and

accounts for most of the population andeconomic activity of the region.

Five of the main smaller cities of the

region are located in the south-west of

the region. These are Mstoles, Getafe,

Legans, Fuenlabrada and Alcorcn

whose combined populations add up to

almost a million people. The large towns

of Alcobendas, San Sebastin de los

Reyes, and Tres Cantos are to the nor th

of the city. To the west are the towns of

Pozuelo de Alarcn, Boadilla del Monte,

Majadahonda and Las Rozas. Finally,

Coslada and San Fernando de Henares

are located to the east of the capital, near

Madrid Barajas International Airport.

Motorway, train and, in some cases,

underground connections allow for easy

access to and from Madrid city to these

surrounding areas.

DOING BUSINESS IN THE MADRID REGION > The Madrid Region

Map of the Madrid Region

6

[ 1 ] Geography and Population

Today, the Madrid Regionhas a populationof more than six

million inhabitants


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[ 2 ] Political Situation

Plaza de Cibeles

The Plaza Cibeles is located

in the centre of Madrid city.

In the centre of the plaza is

the famous Cibeles Fountain

and each one of the four

corners of the plaza is

presided by an emblematic

building or palace.

Designed and sculpted in 1782

by the architect Ventura

Rodrguez, it is one of the

most emblematic and

representative points

in the city.

Madrid is recognized worldwide for its

open green spaces, even more of which

are currently being created in both the

capital and surrounding areas. The cityhas 16 square metres of such spaces per

resident, which is higher than both the

European average and the World Health

Organization's recommendation.

Moreover, mountains are easily accessible

only 50 kilometres outside Madrid.

According to the Meteorology Institute of

Spain, Madrid enjoys approximately 2,700

hours of sunshine per year.

Spain is governed by a parliamentary

monarchy. The current Head of State is

King Juan Carlos I. As Head of State he

must appoint the President of the

Government (also known as the Prime

Minister), who is elected by a system of

universal suffrage for terms of four years.

Spain is divided into 52 provinces which

are grouped into 17 regions (Comunidades

Autnomas), each of which has its own

legislative assembly and regional

government.

The Madrid Region is comprised only of

the Province of Madrid.

As a result of the last general election in

Spain which took place in March 2008,

the governing party is the Spanish

Socialist Workers Party, or PSOE (169 out

of 350 parliamentary seats). The

opposition is the conservative Peoples

Party, or PP (153 seats). The current

Prime Minister is the PSOEs Jos Luis

Rodrguez Zapatero. The next Spanish

elections will be held in March 2012.

The President of the Madrid Regional

Government is Esperanza Aguirre. She

belongs to the PP and was re-elected in

May 2007. The next elections to the

Regional Government will take place in

2011.

Spain joined the European Union in

January 1986 and is a Founding Member

of the European Monetary Union (1999).

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MADRID REGION IN BRIEF

Area 8,028 km2 (1.6% of national territory)

Population 6,271,638 million (13.59% of population of Spain)

Foreign population 1,005,381 (16.03% of Madrid population)

Number of Municipalities 179

Language Spanish (about 400 million speakers worldwide,

3rd most spoken language in the world)

GDP per capita c32,047 (29% above EU-27 average

and highest in Spain)

Source: National Statistics Institute, Madrid Statistics Institute, Eurostat (2009)



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Spain has the eighth largest economy of

the OECD countries and is one of the

most economically dynamic countries in

the world. The Madrid Region is one of

the most developed regions of Spain.

The region represents 18.7% of Spanish

GDP. Its average annual growth rate since

2000 has been 4%. In 2007 GDP per

capita in Madrid was a32,047 ($43,887*)

at current prices, the highest in the

country and higher than the EU average

(a24,900 or $34,100).

In addition, Madrid is one of the best

performing regions in the EU. The region

has had one of the highest job creation

figures in the EU over recent years.

The Madrid Region accounts for 17% of

Spanish foreign trade. It is the countrys

leading recipient of foreign direct

investment. In 2006 the region received43% of total foreign direct investment

into Spain, and in 2007 that figure rose to

77%. Thanks to Spains EU membership

and the EUs expansion to include more

countries, businesses established in

Madrid have access to the worlds largest


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[ 3 ] Economy

A tunnel cut out of stone, following the passage of the tunneling machine for the M-30 motorway


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single market of more than 450 million

people, accounting for approximately 18%

of world trade and more than 28% of the

world's GDP.

Moreover, Madrid is an access platform to

markets in the Mediterranean Arc with

600 million people. EU membership has

been very beneficial for the Spanish

economy. The Stability and Growth Pact

guarantees a stable economic

environment, while the introduction of

the Euro has simplified transactions,

made access to financial markets cheaperand easier and enhanced Spains

competitiveness.

The region has a modern economy in

which the service sector is the main

creator of wealth and accounts for 77% of

regional GDP. Here more companies than

in the Spanish economy as a whole have

shifted from agriculture and industry to

services.

Financial and business services, transport,

real estate, communications as well as

retail and manufacturing are the most

important sectors. Business servicecompanies are widespread across the

metropolitan, north-eastern and north-

western as well as southern towns; while

financial services are concentrated in the

city centre.

Madrids southern fringe and the nearby

metropolitan area are where industry is

concentrated. In these areas you will find

clusters of important automotive,electronics, paper and metal working

factories. The northern and north-eastern

areas are also industrial hubs of the

region, with chemical, technological and

service companies. In addition, most

Spanish official state agencies and

institutions have their main offices in the

city.

(*) Average 2007 exchange rate: 1 euro equivalent

to 1,3 US dollars

Madrid is one of the bestperforming regions

in the EU. The region hasa modern economy in

which the service sector isthe main creator of

wealth and accounts for77% of regional GDP

COMPOSITIONOF GDP

percentage of GDP

Agriculture 0.2

Construction 11.5

Industry 10.8

Services 77.5

Source: Madrid Statistics Institute (2008)

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BUSINESS IN

the Madrid Region

2 ]


Setting-Up

Banking

Infrastructure

Operational Costs

Business Culture


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1.1. Types of Business Organization

There are several options for a foreign

investor wishing to operate in the Madrid

Region. The main options are:

Creation of a Spanish company.

Opening of a local branch/division.

Association with an already established

business.

Sole Trader

An individual can also own and manage abusiness, providing the capital and

assuming the risk either as an

'Autonomous Entrepreneur' (Empresario

Autnomo)or creating a Single

Shareholder Company (Sociedad

Unipersonal), that can take any of the

three forms mentioned.

DOING BUSINESS IN THE MADRID REGION > Business in the Madrid Region

12

[ 1 ] Setting-Up

MOST COMMON TYPES OF BUSINESS ENTITIES

Sociedad Annimaor S.A. (Public Limited Company or PLC)

Provides for members liability to be limited to their investment in the corporation and

for shares to qualify as publicly tradable securities. Shares in an S.A. may be listed on

the Spanish Stock Exchange.

Sociedad de Responsabilidad Limitadaor S.L. (Private Limited Company or Ltd)

Members liability is limited to their investment in the company, but this form of

business entity does not allow shares to be traded publicly and, therefore they may

not be listed on the Spanish Stock Exchange.

Sociedad Limitada Nueva Empresa(New Business Limited Company)Very similar to Private Limited Company, but has the advantage of faster

incorporation and fewer administrative procedures. There are some restrictions

regarding partners who cannot be legal entities, rather individuals, and cannot be

partners of another New Business Limited Company. There is also a di fference

regarding maximum share capital, which cannot exceed a120,202.


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Traditionally, the PLC (S.A.) has been by

far the most commonly used form.

The Ltd (S.L.) has become increasingly

popular over recent years. The formsmost commonly adopted by foreign

investors are: S.A., S.L., branches and

joint ventures. Some of the salient

features of these forms are

summarised below:

Individuals who want to operate

personally in Madrid can choose to work

as either autonomous entrepreneurs or

to create a single shareholder company.

In the case of the former, there is no

distinction between the entrepreneur and

the business, that is to say, the

entrepreneur is solely responsible and

may have to bear personal liability for

business debts. It is a form often used by

shop owners and some independent

professionals such as lawyers and

doctors.

On the other hand, a single shareholder

company can be either an S.A. (Sociedad

Annima Unipersonal)or S.L. (Sociedad

Limitada Unipersonal), but it must have

only one member.

The legal personality of the entrepreneur

and the company are separate.

The procedure for setting up a singleshareholder company is more complex

and costly than that for autonomous

entrepreneurs.

Individuals who wantto operate personally

in Madrid can choose

to work as eitherautonomous

entrepreneursor to create a single

shareholder company

DIFFERENCES BETWEEN S.A. AND S.L.

Requirements

Shared Capital

Capital Contributors

Debenture

S.A.

Minimum of a60,101 divided

into shares

Minimum payment of 25%

per share upon

incorporation

S.A. can issue debt as a

means of raising funds

S.L.

Minimum of a3,005 divided

into shares

Must be fully paid-up at the

time of incorporation

S.L. cannot issue debt as a

means of raising funds

DIFFERENCES BETWEEN AN AUTONOMOUS ENTREPRENEUR

AND A SINGLE SHAREHOLDER COMPANY

Legal Personality

Minimum capital

Liability for debts

Tax on Profits

Source: Madrid Regional Government

Autonomous entrepreneur

No separate personality for

entrepreneur and companyNo minimum

Unlimited

Personal Income Tax (IRPF)

Single Shareholder Company

Entrepreneur and company

are different entitiesa3,005 (S.L. minimum)

Limited to the contribution to

capital

Corporate Income Tax

(Impuesto de Sociedades)

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Single shareholder companies have to

comply with the same regulations as

those for an S.A. or S.L., with a few

differences: All documents, correspondence and

announcements from the company

must state that it is a single

shareholder company.

Contracts between the company and

the sole member must be in written

form.

The decisions of the sole member must

be included in the corporate minute

book (the same as if there were aBoard).

A foreign investor may also operate in

Madrid through a local branch

(or division) that is an entity with

permanent representation and a certain

degree of management autonomy,

but without legal personality in Spain.

As regards foreign investment, the branch

must have a representative who is legally

appointed by the company's head office.

Finally, foreign investors may decide to

operate in Madrid through the creation of

a joint venture with a local company. The

joint venture may take any of the legal

forms set out above (usually an S.A. or an

S.L.).


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A foreign investor mayalso operate in Madridthrough a local branch

DIFFERENCES BETWEEN A BRANCH AND A SUBSIDIARY

Minimum capital

Legal personality

Shareholders liability

Branch

No minimum capital

Same legal personality as

parent company

No limit on parent

companys liability

Subsidiary

Depends on business type:

a3,005 (S.L.) or a60,101 (S.A.)

Separate legal personality

Liability limited to the amount

of capital contribution

Madrid at night

La Puerta de Alcal and

Calle Alcal


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1.2 Procedure for Setting Up a

Company

Spain operates a very accessible and

unrestricted system for foreigninvestment and there are almost no

mechanisms for the control or

authorisation of investments before

they are made.

The only exceptions are investments

related to the defence sector and

investments from tax havens. Other types

of investment that may be subject to

specific regulations relate to certainsectors such as air transport, television,

radio, gambling, raw materials,

telecommunications and arms

manufacture.

The procedural formalities necessary to

create a company (whether an S.A. or

S.L.) with the required legal status and

capacity to start any economic activity in

the Madrid Region are listed on thefollowing page. In some cases additional

steps may be required.

>> see chart on next page

An easy way to go through the process is

to go to the Ventanilla nica Empresarial

the one-stop-shop for businesses.

There, the administrative process is made

much simpler since local, regional and

national institutions are all represented

under one roof.

Another alternative is sub-contracting

these procedures. Local law firms provide

a company-creation and registration

service at limited cost. It is advisable to

use the services of a Spanish lawyer to

set up a business.


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An easy way to set up acompany is to go to the

Ventanilla nica

Empresarial,the one-stop-shopfor businesses for

setting up a company

Coslada Dry Port

The loading docks at the Dry

Port of Coslada, the largest of

its kind in Europe


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STEPSFOR SETTING-UP A COMPANYIN THE MADRIDREGION

1st) NIE: If the company is to be established by a non-resident foreigner, he or she will

need to apply for the Foreigner Identification Number (Nmero de Identificacin de

Extranjero, NIE)in order to undertake the other formalities.

2nd) Company name registration: One must apply for a certificate issued by the

Mercantile Registry (Registro Mercantil), confirming that the name intended for use is

not already registered.

3rd) Share capital: Deposit the share capital in a bank account in the company's name.

The amount of capital will depend on the type of company to be set up (e.g. for a

private limited liability company, the minimum deposit will be a3,005.06).

4th) Power of attorney: The granting of a power of attorney is required for the

incorporation of the company if the individual or representative of the legal entity

cannot be present in Madrid to complete the other formalities.

5th) Deed of incorporation: the founding members sign the company's Deed of

Incorporation before a notary that includes explicitly the appointment and acceptance

of the company directors. At that time, the name certification and bank receipt,

confirming that the appropriate deposit has been made, will be required.

6th) NIF:Application for a company Tax Identification Code (NIF)at the local Tax

Office (Delegacin de Hacienda).

7th) Stamp duty: Payment of stamp duty at the local Tax Office. The Deed of

Incorporation and NIF will be required. This must be done within 30 business days of

incorporation.

8th) Company registration: Registration of the company with the Mercantile Registry.

Deed of Incorporation will be required, and the registration needs to be made within 2

months after the Deed is granted. Any company interested in doing business with a

Spanish company may consult the Company's Registry in order to seek accurate

information about that company.

9th) Declaration of foreign investments: Foreign investments used for the setting-up

of a company in the Madrid Region must be declared to the Spanish Investments

Register (Registro de Inversiones)of the Ministry for Industry, Tourism and Trade(Ministerio de Industria, Turismo y Comercio). The declaration must be made ex-post,

unless the investment source is considered a tax haven by the Spanish legislature.

Investors may be required to present additional documentation.

10th) Economic Activity Tax: Registration with the Tax Office for Economic Activity

Tax (Impuesto de Actividades Econmicas). The Spanish Tax Office (Agencia

Tributaria, AEAT)will ask for certain company details: a description of the activity to

be carried out, the start date of the activity, a description of the business premises,

etc. An official activity code will be allocated to enable the company to pay this tax.

11th) VAT: Registration for Value Added Tax (IVA).

12th) Business Opening Licence: Application for the business opening license to the

Town/City Council (Ayuntamiento). The company will be required to present the floor

plan of its business premises and its general location, a description of the company

activity and the receipt for local tax payment.

13th) Social Security Authority: Registration of the company with the Social Security

Authority (Tesorera General de la Seguridad Social).

14th) Opening of the work place: Communication of the opening of the workplace or

resumption of economic activity must be filed with the Regional Labour Authority

(Direccin General de Trabajo)within the first 30 days of the start of activities andthe opening of the workplace.


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Cuatro Torres Business Area (CTBA)

The Four Towers Business Park is located just by the Paseo de la Castellanas north end.

The business park is formed by the four tallest buildings in Madrid and, in fact, in all of Spain:

Torre Caja Madrid (250 m.), Torre de Cristal (249 m.), Torre Sacyr Vallehermoso (236 m.)

and Torre Espacio (223 m.).

same throughout Spain), regional and

local holidays. In addition, workers have

the right to an annual paid vacation

period of at least thirty calendar days.

Possible vacation dates should be

confirmed at least two months in advance

(most of the vacation is usually taken

during the summer period).

RECRUITMENT

Employment contracts may be signed for

fixed or indefinite terms. Unfair termination

of contract entitles the worker to receive

compensation. Temporary contracts need tobe justified under certain circumstances

established by law. Temporary contract

without this justification would be deemed

permanent. Temporary employees generally

become permanent after working 24 months

in a period of 30 months. There are two main

types of temporary contract:

Training contracts: work experience

contracts (for people with degrees or

other qualifications) and traineecontracts (for people without

qualifications).

Other temporary contracts: contracts

for a specific project or service,

contracts due to production overload

and substitution contracts.

The law grants incentives to companies

that give permanent contracts, especially

when the worker belongs to specific

groups: women, young people, people

over 45, people with disabilities, etc.

Temporary recruitment is possible

through a Temporary Job Agency

(Empresa de Trabajo Temporal, ETT).

ETTs select and provide temporary

workers to other companies. A work

contract exists between the ETT and the

worker, not between the client company

and the worker.

Employment contracts are usually full-

time, but part-time contracts are possible.

Part-time workers have the same rights

as full-time workers, which are defined

considering the hours worked.

DISMISSAL

Legislation regulates three principal

causes for the dismissal of an employee:

Collective redundancy: when thedismissal affects a large number of

workers in a determined frametime (the

minimum number depends on the size

of the enterprise).

A collective redundancy requires

consultation with workers'

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representatives and an administrative

procedure to obtain approval from the

labour authorities.

Objective causes: these include

incapacity, economic or production

reasons, workers prolonged

absenteeism, etc. The dismissal

requires prior written notice of at least

30 days.

Disciplinary action: this includes

serious absenteeism, insubordination,

misconduct, bad faith, etc. The

dismissal requires written notice.

A dismissal fulfilling the criteria for legal

reasons is a justified dismissal. If there is

no legal cause or the dismissal

procedure is incorrect, it is considered

an unjustified dismissal:

In case of a justified dismissal for an

objective cause, the worker may be

entitled to severance pay, consisting of

20-days salary per year worked, up to

12 months' salary. In case of a justified dismissal for

disciplinary reasons, the worker is not

entitled to severance pay. The

employer can either reinstate the

worker or terminate the contract,

making a severance payment higher

than in a justified dismissal (45-days

salary per year worked, up to 42-

months salary).

In some serious cases (that is violation

of fundamental rights), the dismissal

will be declared null and the employer

will be required to immediately

reinstate the worker and pay any

unpaid salaries.

MINIMUM WAGE

Spanish legislation establishes a

minimum wage for all workers regardless

of their job, called Inter-professionalMinimum Wage (Salario Mnimo

Interprofesional). Its amount is raised

annually, in line with inflation and the

labour policy of the Government.

In 2009, the minimum wage was a8,736

per annum for a full-time worker. This

figure should be adjusted according to

the hours worked in the case of part-

time employees.

SOCIAL SECURITY CONTRIBUTIONS

Under the general system, both

employer and employee contribute to

Social Security. Employees are classified

according to a number of professional

and job categories for the purpose of

determining their social security

contributions. Each category has

maximum and minimum contribution

bases, reviewed annually. Each year the

minimum bases are increased according

to the professional categories and

contribution groups, by the samepercentage increase in the minimum

inter-professional wage.

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SOCIALSECURITY CONTRIBUTION BASES (EURO) 2009

EUROS PER MONTH

Engineers and Graduates

Qualified Technicians and AssistantsClerical and Workshop Supervisors

Unqualified Assistants

Clerical Officers

Messengers, etc.

Clerical Assistants

EUROS PER DAY

Foremen Classes 1 and 2

Foremen Class 3 and Craftsmen

Labourers

Workers Under 18 Years of Age

Source: Ministry for Labour and Immigration (2009)

Minimum Base Maximum Base

1,016.40 3,166.20

843.30 3,166.20733.50 3,166.20

728.10 3,166.20

728.10 3,166.20

728.10 3,166.20

728.10 3,166.20

24.27 105.54

24.27 105.54

24.27 105.54

24.27 105.54



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The social security contribution is

calculated by applying certain rates to the

appropriate base. Rates are calculated by

the adding together of several different

amounts (see chart).

In July 2008 the contribution rate for

unemployment under the General Rule

rate was lowered from 7.30 to 7.05.

The employer's contribution to Social

Security may be increased for labour

accidents and professional sickness

contingencies, depending on the

company's activity.

EMPLOYEE REPRESENTATION

Trade unions represent workers interests

territorially and sectorially. At company

level, staff are represented by workers

committees or other representatives that

may or may not be associated with a

trade union. The right to elect employee

representatives is as follows: Companies between 6 and 10

employees: all employees must

unanimously choose to be represented.

Companies between 11 and 30

employees: there is an automatic right

to elect a staff representative.

Companies between 31 and 49

employees: employees have the right to

elect up to three staff representatives.

Companies with 50 or more

employees: the workers are represented

by a workers' committee of a mimimum

of 5 representatives.

COLLECTIVE BARGAINING

AGREEMENTSCollective bargaining agreements are

negotiated between employers or

employers associations and employee

representatives, and the parties are legally

bound by the agreement. They have

industrial (governing a certain industry)

and functional (they may be negotiated at

the State level, territorial level or at

company level) application. Collective

bargaining has become a decisive factor in

the reform of Spanish labour legislation.

Such agreements are generally for a term

of one or two years, although they can be

extended to longer periods.

ACQUISITION OF A BUSINESSWhen an entrepreneur sells his or her

business to another entrepreneur, both

will be liable for the next three years for

the labour obligations of the business at

the time of sale. The new owner takes

over Social Security rights and

20

SOCIAL SECURITY CONTRIBUTION RATES (PERCENTAGE)

General Contingencies

Unemployment:

- General Rule*- Temporary Contracts

- Part-time Temporary Contracts

Professional Training

Salary Guarantee Fund

Total Contribution:

- General Rule*

- Temporary Contracts

- Part-time Temporary Contracts

*The General Rule includes mainly indefinite contracts.


Employer Employee Total

23.60 4.70 28.30

5.50 1.55 7.056.70 1.60 8.30

7.70 1.60 9.30

0.60 0.10 0.70

0.20 - 0.20

29.90 6.35 36.25

31.10 6.40 37.50

32.10 6.40 38.50Prototype of a payload

adaptor for the European

Space Agencys Arianne 5

rocket at the National

Aerospace Technology

Institute, Torrejn de Ardoz



23/59

obligations from the former proprietor,

and all commitments regarding pensions

and further social protection matters.

The buyer and seller have an obligation

to provide all relevant information to

employees which includes the

consequences and planned measures

relating to the employees. There is a

mandatory period for discussion of these

measures with employees'

representatives.

1.4 Financial Support

PROGRAMMES

In addition to a national general

programme of financial incentives, the

Madrid Region offers attractive incentives

and tax credits for companies located in

the region. The two most relevant

regional incentive programmes are the

Business Innovation Plan (PIE)and

Regional Plan for Scientific Research and

Technological Innovation (PRICIT).

Furthermore, there are four specific

incentive programmes for the IT,

Biotechnology, Aerospace and Renewable

Energy industries, these being a priority

for the economic policy departments of

the Madrid Regional Government.

Many incentive programmes apply to

Small and Medium Enterprises (SMEs) and

offer them better conditions than those

applying to large companies.

RESEARCH AND DEVELOPMENT

(R&D) INCENTIVES

At regional level, R&D incentives form the

main part of the PIE and PRICIT

programmes and have been developed to

foster the creation of technology-based

companies and to improve the quality of

human resources.

The PIE programme offers finance for

three types of project: the creation of a

business, externalising R&D and locating

R&D in-house. Only the latter is available

to large companies, the other two being

aimed exclusively at SMEs. These

incentives can be offered in the form of

non-refundable grants, reimbursable cash

advances and soft loans. Up to a300,500can be granted to a project under this

programme.

The PRICIT programme promotes the

integration and coordination of the

regional R&D network which includes,

inter alia, universities, public research

institutions, foundations, administrative

institutions and companies. Projects of

regional interest, cooperation among

different agents and the training of

researchers may be subsidised under this

programme.

The regional government provides

incentives for R&D in its strategic sectors

- the IT, biotechnology and aerospace

industries, by way of non-refundable

grants of up to a500,000. The grants may

provide finance at percentages rangingfrom 25% to 100% for industrial research,

feasibility studies and prototypes. Medium

sized enterprises have the advantage of a

10% bonus in these programmes and

small enterprises a 20% bonus.

These incentives complement the existing

R&D incentives at national level under the

National R&D Plan. This Plan is a set of

long-term programmes focused on thecreation and improvement of

infrastructures, human resources, R&D

projects, institutions, technology transfer

and the internationalization of Spanish

R&D; the priority sectors being health and

biotechnology, energy, nanotechnology as

The Madrid Region offersattractive incentives andtax credits for companies

located in the region

21



24/59

well as new industrial processes,

telecommunications and IT companies.

The Plan covers the period between

2008 and 2011, and represents a

complete renewal and reorganization of

the previous R&D support schemes with

the purpose of making them more

efficient and comprehensive.

BUSINESS CREATION INCENTIVES

At regional level, there are incentives for

business creation under the PIE

Programme (developed to foster the

creation of technology-based companies)to support start-ups with a focus on

research as well as the technical and

academic fields.

This programme is complemented at

national level by the Neotec Programme,

which includes interest-free seed loans of

up to a400,000 for technology-based

start-ups, as well as investment in venture

capital funds that invest in technologicalcompanies.

There is also the CEIPAR Programme which

supports the creation of companies within

technology parks and incubators providing

up to a100,000 to the new company.

EMPLOYMENT PROMOTION

INCENTIVES

The Torres Quevedo Programme, which

is run by the Ministry for Science and

Innovation (Ministerio de Ciencia e

Innovacin), is aimed at new R&D

projects and promotes the recruitment

of skilled scientists in entities that

require specialised personnel. Through

this programme, businesses can receive

a subsidy of up to 75% of the cost of

recruiting individuals with PhDs and

technologists (who are university

graduates with at least 1 yearsexperience in R&D activities). For SMEs,

subsidy rates are: 60% for industrial

research projects, 75% for feasibility

studies prior to research, 35% for

technological development and 50% for

feasibility studies prior to development.

1.5 Accounting, Auditing, and

Corporate Taxation Regulations

ACCOUNTING REQUIREMENTS

The accounting principles and

requirements in Spain, which are based

on the Fourth EU Directive, are very

similar to international standards.

The most significant differences with

other countries relate to: treasury stock,

treatment of exchange differences, R&D

expenses, recording of leased assets,

investment valuation and adjustments

for preceding years.

As a general rule, all companies must

record all transactions in a book which

must be legalized by the Mercantile

Registry within four months of the end

of the tax year. Under Spanish

regulations, companies also have to file:

Annual Balance Sheet.

Profit and Loss account. Supplementary Notes (Memoria).

Statement of changes in equity.

Cash flow statement.

These financial statements must be

prepared and approved by the board of

directors within three months of the end

of the financial year and then approved

by the shareholders within the first six

months of that financial year.These documents, along with a

certificate confirming the shareholders'

approval of the financial statements and

their proposal for the distribution of the

company's profit, must then be filed with

the Mercantile Registry.

Consolidated annual financial statements

are required for companies that own a

given percentage of another companys

shares, have a majority of votes relating

to the other companys shares, have

power to elect the majority of the other

companys board of directors, or have

elected the majority of the other

companys board for two years prior to

preparation of the statements.

AUDITING

Every company in Spain must be audited

and file the audit report and financial

statements with the Mercantile Registry

if any of the following conditions apply:

Its shares are traded on the Spanish

Stock Exchange.

It issues bonds for sale to individuals.

It conducts financial intermediation.

It is involved in private insurance

(as defined by the corresponding law).

It receives subsidies from the public

sector, or provides goods or services

to the public sector.

Public Limited Companies (Sociedades

Annimas)and Private Limited

Companies (Sociedades Limitadas)must

be audited, except those that meet two

of the three following requirements:


22


25/59

Assets below a2.85m.

Net sales not exceeding a5.7m.

The maximum average number of

employees is 50.

However, if a company meets all these

criteria, other factors may mean auditing

is still required, for example, at the

shareholders request or companies

within certain sectors.

CORPORATE INCOME TAX

The Spanish Government reformed

Corporate Income Tax (Impuesto deSociedades)recently, and new legislation

came into effect on 1 January 2007.

This reform provides for a reduction in tax

rates and the progressive simplification of

incentives and deductions, streamlining

the calculation of the tax.

With the reform, the general tax rate

from 2008 is 30%. For SMEs the rate is

25% for the first a120m of taxable baseand 30% for the remainder.

There are several tax credits related to

R&D:

R&D expenses: 25% of expenditure on

R&D in the tax period. If investment

exceeds the average amount invested in

the preceding two years, the tax credit

will be increased to 42% of the excess

amount. R&D and technological

expenditure in other EU and European

Economic Area member states qualifies

for this tax credit.

R&D personnel expenses: 17% for

personnel assigned exclusively to R&D

activities.

R&D investments: 8% of investments

made in certain assets relating to R&D.

Among other activities, technological

innovation in industrial design and

process engineering: 8%.

In particular cases, the tax base for this

tax credit is reduced by 65% of any

subsidies received to encourage such

activities.

A new law was approved in July 2007

giving a new incentive to R&D. As of 1

January 2008, companies only pay tax on

50% of the profit arising from patent

assignment. The limit is six times the cost

of the assets created by the company

granting the patent rights.

23

Bolsa de Madrid

The Bolsa de Madrid, the Spanish Stock Market,

located in La Plaza de la Lealtad, Madrid



26/59

Spanish legislation also provides tax

incentives to promote the internationali-

zation of companies. These incentives

make Spain an adequate platform for

multinational enterprises to invest in

third countries.

Among these incentives, it is worth

highlighting the participation exemption

regime, the special tax regime provided

for foreign-securities holding entities

(Spanish holding companies, also known

as ETVEs), the recognition of losses

incurred by foreign branches andsubsidiaries, the amortization of

financial goodwill arising from the

acquisition of participations in foreign

entities, the export-related investment

credit (all of which are included in

Spanish Corporate income tax

legislation) or the incentives for workers

assigned abroad (e.g. Spanish personal

income tax legislation establishes a large

exemption for salary income earned byemployees who work abroad, but who

remain tax residents in Spain).

There are other tax credits that can be

briefly summarised as follows: tax credits

related to labour (training, retirement

plans and the recruitment of workers with

disabilities); tax credits related to cultural

investments (works of art, cinema and

book publishing); other tax credits (ICT in

small companies, environment, navigation

devices for vehicles, foreign subsidiaries

and reinvestment).

Generally, tax credits are limited to 35%

of the gross tax payable (minus tax

allowances and tax credits relating to

domestic and international double

taxation). Companies that have already

deducted the maximum amount for thecurrent fiscal year will be able to carry

over these credits for ten or fifteen

years.

REMITTANCE OF PROFITS

The distribution of dividends may be

taxable by non-resident income tax

(Impuesto sobre la Renta de No

Residentes), depending on the

following: If the parent company is EU resident,

the remittance or distribution is

generally exempt.

If the parent company is non-EU

resident and from a country that has a

double taxation treaty with Spain, the

dividend will be taxable at the reduced

rate set out in the treaty.

If the parent company is non-EU

resident and from a non-treaty

country, the dividend will be taxable at

the standard rate of 18%.

In the case of Spanish holding

companies, remittance of dividends to

foreign entities is not subject to tax

(except for dividends remitted to a tax

haven). Spain has one of the most

competitive regimes in Europe for

holding companies.

VALUE ADDED TAX

VAT (IVA, Impuesto sobre el Valor

Aadido)is an indirect tax on

consumption that does not generally

imply any cost to traders or

professionals, but only to end-

consumers, since VAT is added to the

final price of products and services. All

supply of products, provision of services,

importing of goods and intra-EUpurchases of goods are subject to VAT, if

they are undertaken by professionals or

companies.

A foreign company with a permanent

establishment in Spain (such as a

subsidiary or branch) will be subject to

VAT. Traders are generally entitled to

offset VAT paid against VAT charged.

Spanish VAT legislation implements the

EU Directives on the tax, whose main

rules are harmonised in the different

member states.

Companies must submit a VAT

declaration either every month if the

company has a turnover above

a6,010,121.04 or every three months in

all other cases.


24


27/59

[ 2 ] BankingMercamadrid at 4 a.m.,

distributing fish throughout

the region and neighbouring

provinces

2.1 General Information

The city of Madrid is the financial centreof Spain, and most major national and

international banks have their Spanish

headquarters and many branches here.

These include Citibank, BNP Paribas,

Societ Gnrale, HSBC; investment

banks such as Merrill Lynch and JP

Morgan; and others. The centre of the city

is a hub for financial activities, especially

along the main north-south axis of the

city (Paseo de la Castellana).

Most banking transactions incur a charge.

Withdrawing cash from one of your banks

own ATM machines with a debit card is

exempt, and many banks also allow

withdrawals without commission from any

ATM machine belonging to the same

network (there are three ATM networks in

Spain, each one serving a group of

banks). The Central Bank of Spain (Banco

de Espaa), with headquarters also in

Madrid, provides information about the

commissions charged on all transactions

by every bank.

The most common methods of payment

in Spain are bank transfers and bank

cheques. Other forms of payments arebankers drafts, promissory notes and

cash. Paying utility charges and rent is

usually done by direct debit. The use of

credit cards is not as extensive as in

other countries, but it is increasing.

Small traditional shops such as grocers,

butchers, etc., often only accept cash, but

larger and more upmarket establishments

accept credit cards.

2.2 Non-Resident Operations

In the context of banking, a resident is a

person who usually resides in Spain or a

company which has its headquarters in

Spain or the Spanish subsidiaries of a

foreign entity.

The concept of usual residence inSpain, as defined by tax law, means

being in Spain for more than 183 days a

year, maintaining ones main economic

interests and activities in Spain, or when

ones spouse and minor children have

their usual residence in Spain.


25

VAT RATES

Main affected products

16% (general) Most products and services

7% (reduced) Foodstuffs (except alcoholic beverages), water, cultural activ ities, housing, transport, hotels and restaurants,

veterinary medication, etc.

4% (super-reduced) Staple foods, medication, books and periodicals, some state housing, some products for disabled people.

0% (exempt) Health services, official education, insurance, house rental, exports, intra-EU delivery of goods.

Source: Ministry for Economy and Finance


28/59

Non-residents can open any type of bank

account in registered Spanish financial

entities. A passport and non-residence

certificate (which can be obtainedthrough the bank) are required.

Bank accounts for residents and non-

residents are distinguished from each

other with different names and cheque

books. Otherwise, banking transactions

for residents and non-residents are

identical.

Operations and transactions that imply

flows of capital to and from Spain are

subject to few restrictions, and no

authorisation is necessary.These operations include inward and

outward flows or transfers of means of

payment, bank transfers, payments and

receipts and changes in financial

accounts.

However, flows of capital are recorded for

statistical reasons in order to be able to

produce a balance of payments.


26

Operations and

transactions that implyflows of capital to and

from Spain are subject tofew restrictions, and no

authorisation isnecessary

FLOWS OF CAPITAL

Payments and receipts in cash or by bank cheques (either in euro or a foreign currency) between residents and non-residents must

be declared by the resident if the amount exceeds a6,000.

Non-residents who want to use cheques or cash for an international transfer or a payment to a non-residents bank account in

Spain must prove the origin of the funds.

Outward transfers of cash, bank cheques and other means of payment are unrestricted but must be previously declared if the

amount exceeds a6,000 per person. Inward transfers of means of payment are subject to the same rule.


29/59

3.1 Transport

Over the last decade Spain has upgraded

most of its transport infrastructure. The

Government plans to continue investing

heavily in the future, focusing on inter-

city and urban transport, water supply

and the environmental infrastructure.

The Madrid Region has developed its own

Infrastructure Programme, the aim of

which is to provide spaces for production

network operations that respond to its

needs, including: innovation, globalisation,

competitiveness, environmental and

knowledge management.

MOTORWAYS

The motorway network in Spain has a

radial design, with the city of Madrid in

the centre. The city is the nucleus of

merchandise distribution in Spain.

The maximum distance from the city to

any other place on the Iberian Peninsula

(including Portugal) is 700 kilometres and

the travel time (by road) to the South ofFrance, Northern Morocco or any place on

the Iberian Peninsula is less than 12

hours.

In the Madrid Region, the motorway

network is made up of six radial national

motorways (A-1 to A-6), four ring roads (M-

30, M-40, M-45 and M-50) and four radial

toll highways (R-2 to R-5), which make

travel to and from the rest of Spain highly

convenient and efficient. Several projects

(such as the construction of the M-45 and

M-50) have resulted in a considerable

improvement of communications among

logistics centres in the region.

RAIL

There is a railway network of over 15,000

kilometres in Spain. It is centralised in

Madrid so that most routes that cross

Spain north-south or east-west go

through Madrid. The development of a

high-speed railway network is also

centralised in Madrid. As of early 2008,

there are approximately 1,500 kilometres

of high-speed lines in Spain (Madrid-

Barcelona, Madrid-Cordova-Seville,Madrid-Cordova-Malaga and Madrid-

Valladolid). Spain boasts the second

largest network in Europe af ter France.

According to plans, by the year 2009

Madrid will be connected by high-speed


27

[ 3 ] Infrastructure

MADRID

CUENCA

GUADALAJARA

SEGOVIA

VILA

TOLEDO

R-4

M-45

R-5

R-3

R-2

M-30

M-50

M-40

M-607

A-5

A-42

A-4

A-3

A-2

A-6

A-1

Main Motorway Mapof the Madrid Region


30/59

train to the French border and by 2010 it

will be connected to the Eastern

Mediterranean coast. There are more

construction plans in the longer term,

which will provide further connections to

most large Spanish cities and also to

Portugal, thereby building one of the

largest and most comprehensive

networks in the world.

AIRPORT

Madrid Barajas International Airport is

the main port of entry into Spain,

managing 50% of international and 74%

of national air passenger traffic.

With over 50 million passengers, 469,740

operations and 328,985 tons of cargo in

2008, it is the largest airport in Spain.

In terms of passengers, it is the fourth

largest airport in Europe and the tenth

largest airport in the world. Barajas has

become a huge transport hub for Europe,

Latin America, and Northern Africa.

In 2006, thanks to the construction of

the new T-4 terminal, Barajas has

become the second largest airport in

Europe in terms of capacity, which has

been increased to handle up to 70

million passengers a year.

There is a trend for logistics facilities to

be located in or near the airport area,

which increases synergies between

different modes of transport and favours

multi-modal transportation of

merchandise.

LOGISTICS CENTRES

The region has become the most

important logistics platform in Southern

Europe, thanks to several projects that

have been carried out to improve Madrid

as a competitive alternative to other

European regions. The logistics

platforms have been coordinated and

integrated to provide a competitive

service for inter-modal transport by the

different transportation centres in the

region.

There are many logistics centres in the

region but most of them are located in

three main areas: the Henares Corridor

to the east, the southern metropolitan

area and the Barajas-Coslada logisticsplatform.

The most important of these three is the

Barajas-Coslada logistics platform,

whose infrastructure includes the

Barajas airport air cargo centre and a

dry port. It is also close to the Coslada

Transport Centre. The Coslada dry port

is a hub for distribution activities, since

it receives freight trains from the four

main Spanish seaports (Valencia,Barcelona, Bilbao and Algeciras).

Existing logistics services are set to

increase in the near future, with seven

logistics centres currently under

construction and a further fifteen

projected. Nine of these projected

centres are included in the new Regional

Plan for the Development of Logistics

Infrastructure.

This plan includes the creation of the

biggest inter-modal platform in

Southern Europe, with a surface area of

15 million square metres, to be located in

Arganda del Rey, as well as the

expansion of the Barajas air cargo


28

Main Regular Lines

Fast Lines(plus 200 km/h max)

High Speed(plus 300 km/h max)

High Speed(under construction)Alicante

Valencia

Tarragona

Barcelona

Huesca

Bilbao

Zaragoza

Valladolid

La Corua

Vigo

Madrid

Sevilla

Crdoba

Jan

Cdiz

Mlaga

Main Railway Map of Spain


31/59


32/59

There are currently fourteen Universities

in the region plus two distance-learning

universities, almost all of them offering

engineering degrees (Universidad

Politcnica, Universidad de Alcal,

Universidad Carlos III, Universidad

Complutense, Universidad Autnoma,

Universidad Rey Juan Carlos, Universidad

Pontificia Comillas, Universidad Europea

de Madrid, Universidad Alfonso X el

Sabio, Universidad Antonio de Nebrija,

Universidad Camilo Jos Cela,

Universidad CEU San Pablo, Universidad

Francisco de Vitoria, Universidad

Pontificia de Salamanca, UNED,

Universidad a Distancia de Madrid).

The findings of R&D undertaken in

Madrids universities are disseminated

nationwide by the Offices for the Transfer

of Research Results (RedOTRI).

Their mission is to match industry needs

with research being done in university

departments.

The gap between science and industry is

bridged by Technology Centres. These

are private sector, non-profit institutions,

which assess and support companies,

especially Small and Medium-Sized

Enterprises, with technological

innovation. There are currently four

Technology Centres in the region, all

members of FEDIT (Spanish Federation of

Innovation and Technology Entities),

which specialise in the building materials,

welding, wood and paper industries.

Science and technology parks are

infrastructures designed to provide

business premises for high tech

companies. They provide access to areas

with business accommodation for

industries committed to technological

innovation. Universities and public

research agencies and institutes also

have a presence in these parks,

encouraging contacts and synergies with

businesses. In 2009 at the time of press,

six technology parks are partially or

completely built with four more under

construction in Madrid.

Almost all technology parks have a

business incubator. Business incubatorsare aimed mainly at start-ups with a

technological base or significant R&D

activity, university spin-offs, start-ups

created to market research findings, etc.

Besides providing office space and related

services (meeting rooms,

communications, etc.), the incubators

focus on offering the means for carrying

out R&D, mainly by providing access to

high-technology equipment for research.

They also provide business consulting

services, helping entrepreneurs to

elaborate their business plan, assisting

them in the process of creating the

company, etc.

3.3 Business Parks and Business

Centres

The Madrid Region has developed a

significant number of business parks over

the past few years, offering companies

both premises and services concerned

with business development (technology

transfer, venture capital, marketing etc.).

The business parks try to attract both

service and manufacturing companies.

They are intended to have maximum

flexibility regarding the use of land, so

that they are able to adapt to the needsof business. Most of them are located

near major roads with hubs such as

Alcobendas (A-1 road), Getafe (A-42),

Fuenlabrada (A-42 and M-50) and Pozuelo

de Alarcn (A-6 and M-40). Business

centres are smaller than business parks,


30

The Madrid Region hasdeveloped a significantnumber of business parks

over the past few years,offering companies both

premises and servicesconcerned with business

development


33/59

and instead of offering land and buildings,

they offer office premises for rent. They

are usually aimed at small businesses and

start-ups. The centres offer extra services

such as meeting rooms, restaurants,

telephone lines and internet access,

security, cleaning, and, in some cases,

business consulting. Most centres limit

the maximum time that companies can

stay to between three and five years.

There are also private companies that

offer services similar to business centres.

Many towns near Madrid have business

centres, including Alcobendas, San

Sebastin de los Reyes, Alcal de

Henares, Coslada, Legans and Alcorcn.

3.4 Telecommunications

The Madrid Region is the centre of the

telecommunications industry in Spain,

with the most important production and

service companies based here. The region

receives more than half of all business

investment in telecommunications.

All the principal global operators in

telecommunications-related industries

have a presence in Madrid, whether as

hardware/software suppliers, data

warehouses, data-mining companies,


31

Map of Science and Technology Parksin the Madrid Region

Mstoles Tecnolgico

Mstoles

Montegancedo

Boadilla del Monte

Ae BS ICT En O

Ae BS ICT

ICT En O

ICT In Nt Ae ICT En InAe En Au Nt

Parque TecnolgicoCiudad de Madrid

Madrid - Villaverde

rea Tecnolgica del Sur

Getafe

Legans Tecnolgico

Legans

Madrid

O

Campus Sur Vallecas

Madrid - VallecasAu In O

Tecnoalcal

Alcal de Henares

Ch ICT BS

Parque Cientficode Madrid

Madrid-CantoblancoBS ICT En Ev Nt

Ciudad del Conocimiento

Colmenar ViejoParque Tecnolgico

de Madrid

Tres CantosAe BS ICT In

En Energy

Ch Chemicals

In Industry and Engineering

Au Automobile

Nt Nanotechnology and Materials

O Other

Ev Environment

AerospaceAe

Science and Technology Park

Park under construction

ICT Information and Communication Technologies

BS Biotechnology and Life Sciences

Parks associated to a university


34/59

[ 4 ] Operational Costs

4.1 Labour Costs

The official minimum wage is established

by the Government each year, and in

2009 it stood at a8,736 for employees

over 18. However, the minimum wages for

each type of job category are usually

negotiated and set out in collective

bargaining agreements.

Salaries are paid on a monthly basis. At

least two extra salary payments must be

paid each year, one at Christmas and theother on the date stipulated by the relevant

collective bargaining agreement (generally

before the summer vacation period).

Thus, an employee's gross annual salary is

usually divided into 14 payments with

employees receiving a 'double' payment at

least twice per year. However, payment in

12 equal monthly instalments can be

negotiated in collective bargaining

agreements.

The average labour cost in the Madrid

Region during the second quarter of

2008 was a19.33 per hour.

knowledge management, remarketing,

telemarketing, personnel planning or HR

management companies.

Landline telephone penetration is high (in

2008 88% of homes had a landline),

while mobile telephone penetration is

even higher (95%). The percentage of

homes with broadband Internet access is

58%. These figures are significantly

higher than the Spanish average.

Telecommunications operators with

licenses in Madrid include, among others,

BT, Colt Telecom, Ibercom, Jazz Telecom,

Ono, Orange (France Telecom) and

Telefnica. The telecommunications

market has been fully deregulated since

1998.


32

The minimum wages foreach type of job category

are usually negotiatedand set out in collectivebargaining agreements

AVERAGE LABOUR COST IN THE MADRID

REGION (EURO PER HOUR)

Labour CostIndustry 25.88

Services 19.06

Construction 18.95

Total Average 21.76

Source: National Institute of Statistics (third quarter

2008)


35/59

4.2 Utility Costs

One of the most important prerequisites

for industrial activity is reliable access to

utilities, at limited cost. Today, the Madrid

Region can offer utility services at

competitive rates as a result of a process

of deregulation and the arrival of new

technologies.

ELECTRICITY

The table to the right shows electricity

prices for industrial use in Spain.

WATER

The price of water for industrial and

commercial use in the region in 2008

varies between a1.1777 and a2.5158 per

cubic metre depending on consumption,

the diameter of the water metre and the

season, plus a fixed rate for the service.

NATURAL GAS

Strong price competitiveness for natural

gas supply compared with other fuels,combined with the creation and the

expansion of storage sites, transport and

distribution, is driving demand for natural

gas in Spain. Deregulation of the market

was completed in 2003 and consumption

has steadily increased since then.


33

HALF-YEARLY ELECTRICITY PRICES FOR INDUSTRY IN SPAIN

(Euro per Kilowatt-hour, VAT excluded)

Consumption Price

Less than 20 MWh 0.1372

20 MWh - 500 MWh 0.1168500 MWh - 2,000 MWh 0.0961

2,000 MWh - 20,000 MWh 0.0838

20,000 MWh - 70,000 MWh 0.0713

70,000 MWh - 150,000 MWh 0.0595

More than 150,000 MWh 0.0443

Source: Eurostat (first half 2008)

GAS PRICESFOR INDUSTRIAL USE IN SPAIN

(Euro per Gigajoule, VAT excluded)Consumption Price

Less than 1,000 GJ 9.1980

1,000 GJ - 10,000 GJ 8.0340

10,000 GJ - 100,000 GJ 7.6410

100,000 GJ - 1,000,000 GJ 7.1370

1,000,000 GJ - 4,000,000 GJ 6.6030

More than 4,000,000 GJ 6.1980

Source: Eurostat (first half 2008)


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TELECOMMUNICATIONS

The number of telecommunications

operators in Spain has increased over

recent years, leading to more intense

competition.

The following prices of internet access

have been compiled from several ISPs.

They refer mainly to package offers

including ADSL plus one or more

telephone landlines. Since commercial

offers change frequently, the table is

intended to be merely indicative.


34

AVERAGE PRICE OF TELEPHONE LANDLINES IN SPAIN

(Euro per 10 minute call. VAT excluded )

Type of call Price

Local 0.19

National calls 0.85International calls to USA 1.53

Source: Eurostat (latest available data, 2006)

PRICE OF ADSL PACKAGES FOR BUSINESSESIN SPAIN

(Euro per month)

Internet Servide Provider Download Speed (Mbps) Telephone Lines Price

Ono 12 2 75

Ono 12 8 180

Jazztel 20 2 50

Jazztel 20 8 125

Orange 4 1 23

Orange 10 1 30

Ibercom 2 1 98

Ibercom 8 1 163

Telefnica 6 1 40

Telefnica 10 1 44

Source: PromoMadrid, complied from several ISPs (January 2009)

NASA

National Aeronautics and

Space Administration (NASA)

deep-space satellite tracking

station at Robledo de Chavela


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4.3 Real Estate

OFFICE SPACE

Madrid is the major business city in Spain.

According to data compiled by CB Richard

Ellis, the average total occupancy cost of

office space per year in Madrid is lower

than Paris, London, Moscow or Dublin.

Madrid is the sixth best city in Europe in

terms of availability of office space (and

the best in Spain), behind only Berlin and

four UK cities, according to the 2008

Cushman & Wakefield European Cities

Monitor survey

INDUSTRIAL BUILDINGS

Industrial areas in the Madrid Region are

usually located near the radial motorways

that begin in the city.


35

OFFICE RENTAL PRICES IN THE MADRID REGION

(Euro per Square Metre per Month)

Average Rental Price Maximum Rental Price

Central business district 35.20 40.50

Secondary central 16.50 30.00

A-1 Motorway (North) 15.70 24.00

A-2 Motorway (North-east) 14,80 22.00

A-6 Motorway (North-west) 15.90 17.50

Outskirts 11.90 14.00

Average 18.90 n/a.

Source: Atisreal (third quarter 2008)

INDUSTRIAL BUILDING PRICES IN THE MADRID REGION

(Euro per Square Metre)

1 year rent Sale Land(min-max) (min-max) (min-max)

Madrid City 78 - 126 1,400 - 2,300 800 - 1,250

Colmenar Viejo - Tres Cantos 54 - 78 950 - 1,600 400 - 800

A-1 Motorway (North) 52.40 - 120 950 - 2,200 350 - 1,300

A-2 Motorway (North-east) 34.80 - 105 500 - 1,800 125 - 1,200

A-3 Motorway (South-east) 51.60 - 108 900 - 2,000 340 - 1,200

A-4 Motorway (South) 54 - 99.50 600 - 1,800 200 - 950

A-5 Motorway (South-west) 72 - 144 1,200 - 2,700 500 - 1,300

A-6 Motorway (North-west) 72 - 240 1,650 - 3,000 n/a.

A-42 Motorway (South) 66 - 102 1,000 - 1,750 350 - 700Source: Atisreal (fourth quarter 2008)

Madrid from Cerro de los

ngeles, Getafe


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5.1 Introduction

Knowing a little bit about Spanish

business culture will enable you to make

a smooth transition into Spanish life and

make the most of your business and

investment plans. Here are some cultural

guidelines to help you integrate into

Spanish society and open the lines of

communication between you and your

Spanish collaborators or business

partners.

5.2 Social and Business Interaction

The Spanish culture is very warm and

sociable. Spaniards are known for being

very friendly and welcoming.

In conversation Spaniards communicate

using a lot of body language, gestures

and physical contact, such as a pat on

the arm.

A friendly greeting between either two

women or a woman and a man is to give

each other a kiss on each cheek (left

cheek first). However, in more formal

situations, such as business interactions,

a handshake is more commonly used.

Madrid enjoys an outdoor culture where

people spend a lot of time outdoors,

playing sports and attending social events

outside their homes. The city is also well-

known for a lively nightlife.

5.3 Doing Business

In a business context, personal attributes

and character are often valued as much

as technical ability, experience or

professional competence. Having a wide

and strong social network is important in

order to be successful in the Spanish

business world.

Businesses have centralised decision-

making systems where executives make

decisions that are best for the company

as a whole. Hierarchies are important in

Spanish businesses; it is therefore

important to know the status and position

of the people with whom you are

negotiating.

Spanish businesspeople generally stick to

safe and secure business decisions. Meals

are often an important part of business

negotiations, and are good way to

establish and enhance personal and

business relationships. The business

discussion is usually left until the end of

the meal. When paying the bill, a tip is not

always necessary, but an acceptable

amount is around 5% in restaurants.

5.4 Handy Tips

It is wise to have a double-sided

business card (one side in Spanish and

the other in English).

When presenting an idea, product, or

service, it is best to provide samples,

demonstrations, and information about

your company as well as a written

summary of the presentation.

When invited to the home of a Spanish

person, it is advisable to bring the host

a gift such as chocolates, wine, or

flowers as a polite gesture. If you want

to give a gift to a business partner, it is

usually done after negotiations have

been carried out. When given a gift, it is

polite to open it in front of the giver.


36

[ 5 ] Business Culture

The Spanish culture isvery warm and sociable.Spaniards are known for

being very friendlyand welcoming


39/59

5.5 Business Working hours

A table of the most common business and

shop opening hours in Spain is presented

to the right. The information is

approximate. However, many offices have

started adopting working hours similar to

those in Northern Europe and shops often

extend their opening hours to include

lunch time and later in the evening,

especially in tourist areas and zones with

very high commercial activity. The Madrid

Region has the most liberalised regulation

concerning retail opening hours of any

region in Spain.

5.6 Public Holidays

There are a maximum of fourteen public

holidays a year. The Central Government

sets those that are common to all of

Spain; while the rest are set by the

regional governments because they are

typically related to regional and local

history and customs. There are also two

local public holidays in the city of Madrid. National holidays: January 1; Good

Friday (different date each year, usually

in April); May 1 (Labour Day); August 15

(the Assumption); October 12 (National

Holiday); November 1 (All Saints Day);

December 6 (Constitution Day);

December 8 (Immaculate Conception);

December 25 (Christmas Day).

Madrid Regional holidays: January 6

(Epiphany); Holy Thursday (different

date each year); May 2 (Madrid Region

Day).

Local holidays: Vary according toMunicipality. For the city of Madrid

these dates are: May 15 (San Isidro) and

November 9 (Virgin Almudena).


37

BUSINESS HOURS IN SPAIN

Offices

Retail Stores

Banks

Government Offices

Source: ARHOE (2005)

Monday - Friday

9 a.m. 6 p.m.

(Summer: 8 a.m. 3 p.m.)

10 a.m. 2 p.m.4.30 p.m. 8 p.m.

(Hours often vary during

high tourist seasons. Retailers

such as supermarkets and

others, often do not close at

lunch time.)

9 a.m. 2 p.m.

9 a.m. 2 p.m.

Weekends

Do not open

Sat: 10 a.m. 6 p.m.Sun: some retailers can open

without restriction, such as

those selling cultural products,

newspapers, bread, gas,

convenience stores and small

retailers. Others are restricted

to a number of Sundays a year

determined by the regional

government.

Sat: 9 a.m. 1 p.m.

Sun: Do not open

Do not open

IFEMA

IFEMA is the number one Trade

Fair Center in Spain, and

according to the latest reportspublished by the European

Trade Fair Observatory

(Universidad Bocconi), it is

ranked amongst the first five

locations in Europe for fair

organizers


40/59


41/59

LIVING IN

the Madrid Region

[ 3 ]


Legal Status for Foreigners

Personal Taxes

Living in Madrid

Education and Health

Transport and Services


42/59

1.1 Visas

A visa may be necessary to enter Spain

depending on country of origin and

length of stay. There are several different

types relating to the purpose and

duration of the trip. Visas can be obtained

before the trip at Spanish consulates or

embassies abroad.

A foreigner who has chosen a short-term

stay visa may visit Spain for a maximum

of ninety days within a six-month period.

After that, the foreigner may obtain an

extension that lasts a further ninety days;

this extension should be requested at a

police station (Comisara de Polica)or an

Office for Foreigners (Oficina de

Extranjera). A visitors country of origin

will determine the need for a visa:

EU citizens do not need a visa and can

enter, leave and move within Spain

without restrictions. This also applies to

citizens of Switzerland, Norway, Iceland

and Liechtenstein.

There are other countries whose

citizens are not required to have a visa.

However, they need a valid identification

document and require documents that

prove the reasons for the trip and

sufficient financial resources. Among

the countries in this group we find the

USA, Canada, Japan, South Korea, and

most Central and South American

countries.

Citizens from other countries need a

visa (plus the above documents).

A foreigner who wants a long-term stay

in Spain may also need a visa depending

on the country of origin:

EU, Switzerland, Norway, Iceland and

Liechtenstein citizens do not need a

visa for long-term stay in Spain.

Citizens of other countries need to

apply for a long-term visa.

The types of long term visa are the

following:

Residence visa: allows residence in

Spain without working, for a period

longer than ninety days and shorter

than five years. Proof of financial means

to live during the period of residence

will be required.

DOING BUSINESS IN THE MADRID REGION > Living in the Madrid Region

40

[ 1 ] Legal Status of Foreigners

6 a.m.: hot chocolate and churros at the Chocolatera San Gins


43/59

Work visa: allows residence and work in

Spain. The work visa includes the initial

work permit (see below). Renewals of

work permits are obtained in Spain.

Student visa: allows a stay in Spain for

courses, education, research, etc. for

the duration of the studies.

1.2 Work Permits

Nationals from EU countries and

Switzerland do not need a work permit,

either to be employed or self-employed.

Under Spanish labour legislation, non-EU

nationals intending to work in the MadridRegion must obtain a special work visa

and a work and residence permit. The

Spanish labour authorities grant different

types of work permit depending on the

type of work and its duration.

Work permits for foreigners are

considered only after taking into account

the employment of Spaniards for the

same employment. However, there arecertain preferred categories of foreign

workers including workers with family

ties in Spain, executives in companies

investing or creating jobs in Spain,

researchers and scientists as well as

prestigious artists.

DOING BUSINESS IN THE MADRID REGION > Living in the Madrid Region

41

EMPLOYEE WORK PERMITS

Permit type

Initial permit

RenewalSource: Ministry for Labour and Immigration (2009)

Scenario

First time permit restricted to a specific

geographical area or type of activity.

Renewal of initial permit. Unrestricted.

Duration

One year

Two years

SELF-EMPLOYED WORK PERMITS

Permit type

Initial permit

Renewal


Scenario

It may be restricted to a specific activity

and geographical area

Renewal of initial permit. Unrestricted

Duration

One year

Two years

SPECIAL WORK PERMITS

Permit type

Cross-border

workers

Temporary

relocation

Traineeship and

internship

Work and

service

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