diciembre 14, 2016

Sublimation of creativity

Filed under: bancos,English — Etiquetas: , — legisconsulting @ 10:25

Spanish are a creative people, but Spanish banks creating abusive clauses represent the sublimation of creativity. Perhaps in not so poetic but definitely more effective terms,  the Spanish Supreme Court expressed its decision to void clauses that are now being claimed by clients under Consumers Protection Rules.

These clause that have been standardly used by financial banks and institutions in the mortgage market, have recently brought massive actions of consumers against banks that have made the Supreme Court limit the retroactivity of what these banks and institutions have to pay back under the excuse that to pay back all that money could jeopardize the stability of banks.

These clauses are still considered null and void by the Spanish Supreme Court, but when null and void means that every amount perceived unduly by banks should be returned with interests to the consumers, the Spanish Supreme Court created a limitation when it decided that in abusive clauses containing interest rates with ground limit, the period to return the money paid will be from May 9, 2013 onwards, and not any amount unduly paid before that date.

But even with the refund limit in this specific clause, the consumers claims mean a lot of money for them and a lot of money to be paid by the banks, especially when most «common» Judges at street level are considering with their decisions on this field that, after being ‘recued’ by the State,  it is now fair that the banks pay back to the consumers all the money they unduly collected due to abusive clauses (plus interests).

In a standard mortgage from last years can be found over 10 or 12 abusive clauses. Most of them have no direct economic implications until something goes wrong, but some others do even before the mortgage loan. There are many different ones, but these are the most common and harmful ones:

  • Obligation to pay all constitution expenses clause: Notary (notario), Registration Office (Registro) and part of the taxes (Impuesto sobre Actos Jurídicos Documentados) every consumer paid should have been paid by the bank
  • Rounding-up clause: the bank is entitled to always round up an interest rate to the nearest full percentage point.
  • Ground Clause: In mortgages at variable interest rates this interest rate have always has to stay within preset margins (minimum and maximum) always too high to be equitable and fair.
  • Default interest rate clause: specifies a default interest rate more than three times the (official) legal interest rate, which is a legal limit in Spain.
  • Early termination clause: triggers the early termination of a loan for failure to pay less than three installments.

All these clauses are going to be declared abusive, and this is a big concern for the consumers, but that does not mean the end of the contract: the contract lives on without the “abusive” provision as if it never existed. The same contract with a lower cost.

Let us study your mortgage and get a free legal opinion on your mortgage conditions.

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junio 24, 2016

Time to manage your personal BREXIT

Filed under: Actualidad,Economía,English — Etiquetas: , , — legisconsulting @ 09:21

It is calculated that there must be nearly a million British with interests in Spain. Most of them living with us, but some others with properties, investments, businesses or even credits to be claimed.

British decided to leave the EU and all the relations with the UK, with UK citizens or the relations of the UK citizens with the countries of the Union are going to change as well as the relations with EU citizens with UK. To be honest we cannot know yet how or when these changes are going to come but for sure it will be soon.

People dedicated to a business involving the sale of goods will obviously have specific concerns about border tariffs or the increase of the bureaucracy, but also common transfers like money for community fees, supplies, lease incomes or even dividends from Business will need to change in a way that improves efficiency as much as possible.

But also rights of credits to be claimed  should be claimed as soon as possible. British affected by ‘frauds’ like never finished properties where around 100.000.- UK investors lost their money, or abusive bank clauses that the Spanish Supreme Court already decided that should be paid back by the Banks involved should be claimed as soon as possible, because even when the cost of all the judicial process will be probably assumed by the bank with no cost for the British citizen anyway, the whole process takes time and transferring the money (plus interests) back to the owner in the UK will in the near future probably have a cost that is non-existing at the moment.

Get ready and start immediately managing your personal BREXIT.

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abril 28, 2011

Taxi drivers, Accountants & Consultants

Filed under: English — Etiquetas: , , , , , , , — legisconsulting @ 11:25

First post in English of what I hope will be a long and interesting list… And it is about services we do not provide.

Settling abroad

I am aware, by my own experience of the problems of a Company settling abroad, and I’m aware of the situation of a foreign Company that settles in Spain

A company in a foreign market depends much more on local accountants and management consultants to guide, advise and inform them than the that same company in its home country where it knows the rules an the market. And this is why I think the relation between client and accounting firm has to be much closer and more proactive and efficient.

On the other hand, I know a foreign company in the Spanish Market needs explanations, details, time and work (without extra cost) that local companies don’t. But if you have ever been on the other side, it’s easily understandable.

Being abroad they need to place more confidence in the consultants than in the advisers who know their own market.

Did you ever live this situation?

You are a foreigner arriving at a new airport. You take a taxi to go somewhere that you do not know is just 500 meters away. And the driver takes two hours to drive you there after a full tour through the bordering provinces.

Unsuspecting (business) tourists

I recently met –the first and only one in my professional live– a quite big Spanish Accountants & Consultants firm that just reminds me this situation

Their main market seems to be foreign companies wishing to establish offices or branches in Spain. Most of them big enough to settle abroad. And even some multinational companies with limited presence in Spain

They have the obligations of

  • Bookkeeping: that with the racked and chaotic accounts I found they obviously didn’t do
  • Tax compliance and treasury management: I couldn’t see that part, but, how can you do that with such accounts?
  • Provide advice on local law; and what I saw was some absolute obvious illegal advice. Probably only because of simply ignorance
  • Provide a proactive help to their clients: and under a judicial claim they simply didn’t help at all.

Unfortunately these firms –of which I met only one but I guess could exist more– are ‘formally legal’; Maybe not right; maybe not efficient; maybe not qualified enough; maybe no proactive work; maybe not ethical; maybe simply ‘not service’… But legal!

Like you, taking a taxi in a foreign country, those companies do not know the instruments and ways to achieve their goals and simply trust the ‘driver’.

But what happens with such drivers?

Risks, costs and ‘excuses’

As I mentioned previously, local advisers have more ‘power’ and less ‘control’. And even in cases like this in which the clients were medium/big companies and have their own control systems they couldn’t –and still can’t– have an overview of the real situation. And this unfair management generates risks that will undoubtedly result in costs:

  • The absence of strict accounting:
    • Tax office claims
    • Clients and providers claims
    • Administrative liabilities
  • The absence of strictly legal HHRR proceedings
    • Social Security claims
    • Tax office claims
    • Employees and contract staff claims
    • Labour authority claims
  • The absence of exact and professional qualified tax advice
    • Tax office claims
  • The absence of proper advice on management or administrative action
    • General costs increase
    • Legal uncertainty

Unfortunately, the firms like the one origin of this post do not fulfil their basic obligations. And the worst part is how easy it seems to find excuses to justify these costs or claims when the recipient of the explanations does not know the law, the rules and the market.

Fences, cliffs and ambulances

It is quite clear that when they get complaints, we (lawyers) also get work. But I do not think this is an ethic way to get clients, work or cases at the courts.

Richard Susskind, a very important law firms consultant, often pronounces a phrase that I fully endorse and assume as the centre of my professional values “they (the clients) would rather have a fence at the top of the cliff than great ambulance service at the bottom”.

Myself –like most lawyers and accountants in Spain– strongly prefer the fence to the ambulance and this is what I try to do with this post: build a fence that protects foreign investors in Spain from the large sinkhole that these firms mean.

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septiembre 26, 2007

Homes in Spain’s sun have never looked so tempting

Filed under: English — legisconsulting @ 16:17

Published by Financial Times: August 3 2007

If you have ever sat on a Spanish beach dreaming of owning your own place in the sun, this could be the time to make it happen.Recent tax rule changes that allow UK individuals to purchase property abroad through a company, combined with a strong British pound, are boosting sales of foreign property. And of all the destinations available it is the sunny climes of Spain that usually attract the most interest.But stories of scandalous corruption in the Spanish property market have scared off many prospective investors and cut demand for sea view apartments on the Mediterranean coast.With hundreds of thousands of properties still due to be built in Spain this year, the country is turning into a buyers’ market Stuart Law, managing director of Assetz Finance, the property investment advice group, believes.“You have the opportunity to buy for a good price in Spain, with little chance of prices going down,” he says.Law points to particular developments in Marbella where some investors have withdrawn from buying apartments off plan and lost their deposits. Developers are now willing to sell these off at discount prices. While the chances of finding an undiscovered area are few and far between, the country benefits from its close proximity to the UK and a greater degree of certainty regarding weather and infrastructure than emerging countries.The decade-long housing boom may have passed but the predicted property crash, which led thousands of investors to sell up, has not yet emerged. This, says Law, has blown some of the froth from the market and opened up opportunities for new investors. “You can still buy properties for competitive prices,” he says. “There are two-bedroom apartments overlooking golf courses near the coast for £120,000 (€178,000). Even if European mortgage rates increase, this is still a good deal.”Mortgage rates in Spain are lower than UK rates since the European base rate is 4 per cent compared with the UK rate of 5.75 per cent. European rates are however expected to increase in coming months.Spanish banks lend money based on their valuation of the property, not the price you pay, and with the depression in property prices it is possible to find that you have paid less than the bank estimates the property to be worth.But, bargains aside, buying a home abroad is not without its risks. The popularity of Spanish property as holiday or retirement homes for the British, French and Germans has led to serious over-development along the Spanish Mediterranean coast. Regions such as Valencia, Murcia and Andalucia are replete with concrete apartments and golf courses, some of which should never have been built.The fact that real estate stocks in Spain returned an average of 48 per cent a year over the past five years makes it easy to see why property developers were so keen to keep building. But it is feared that some 30,000 buildings were put up illegally – many of which were bought by Britons – and now face demolition.In July two former mayors of Marbella and 20 former town councillors were charged with bribery, embezzlement and fraud. According to the judge presiding over the case, developers gave out millions of euros in bribes. Property managers and advisers say that people should still tread carefully as some of these cases may not yet have come to light. It is essential to hire a good lawyer and not accept the local Spanish notary recommended by your estate agent. Simon Conn, managing director at overseas mortgage specialists, Conti Financial Services, says that if buyers are careful they can largely avoid these problems.“People rushed out to buy without taking advice,” he says. “But there are some reasonably priced new sites in Barcelona, Valencia and what is called the Spanish Algarve between Portugal and Gibraltar.“There are also some good bargains to be had inland, where you will find prices are up to a third less than they are on the coast. We expect there to be a 10 per cent reduction in prices but not a huge drop. The market is settling itself out.”When panic set in regarding a possible Spanish property crash, investors ran to dump shares in property-related industries such as construction. The problems began after Astroc Mediterraneo, a development company based in Valencia, lost 80 per cent of its value following financing concerns. Following this the largest groups lost €7bn of market capitalisation in the second half of April.Because such a large proportion of the country’s gross domestic product is centred on the construction industry, the sell-off triggered concerns about the economy.The Spanish economy has the second highest current account deficit after the US and is spending vast amounts of borrowed money and some feared the housing market could be subject to a correction. However, three months on and the Spanish economy is looking fairly healthy. Growth may have slowed from last year, but the market is not widely expected to crash.Although the housing market has slowed, it is still growing. In Seville prices have gone up 6.2 per cent in the past year, and in Granada they have risen by 10 per cent. Other areas such as Barcelona and Alicante have seen prices go up more slowly, 5.2 per cent and 2.1 per cent respectively. The Royal Institution of Chartered Surveyors says there does not seem to be a real risk of major price falls. “House prices still rose 5.8 per cent in the year to the end of the second quarter,” says David Stubbs, senior economist at Rics. “And any market rising at close to 6 per cent cannot be said to be stalling.”Miranda John at Savills Private Finance says the number of destinations is increasing. “There are now encouraging signs for clients looking for a bargain in cities such as Granada and Barcelona,” she says.It still pays to be cautious when buying abroad, however good the prices are, Leonie Kerswill, tax partner at PricewaterhouseCoopers says. Tax rules in Spain are different to those of the UK and you will be subject to charges such as local government taxes and VAT on new purchases. You should allow at least 10 per cent of the price of the property to cover fees. In addition to this, expect to pay 7 per cent in property transfer tax and 1.5 per cent in land registry fees. Setting up utilities also incurs charges.However, it is not uncommon to be able to
get a property for 85 per cent of the price the seller asks for. You will need to pay a deposit of between 10 and 15 per cent, which you will lose if you renege on the deal.
There are a few things you can do to reduce your tax bill if you have a holiday home abroad. If you elect your holiday home as your principal primary residence a few weeks before you sell it, you will get the last three years of value growth free of UK tax. Spanish assets left to a husband or wife are also liable for Spanish inheritance tax. You can reduce the bill by remortgaging the property and putting the capital into alternative investments held jointly.  


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