In this article, we will explain everything you need to know about the Form D-8, Form D-6 and Form D-4: the rules, who should submit it, under what conditions it is mandatory, the points associated with it, etc. At GMTax Consultancy, we are always at your service.
Both foreign investment in Spain and Spanish investment abroad are regulated by Royal Decree 664/1999 of 23 April 1999 on Foreign Investment and the Order of the Ministry of Economy of 28 May 2001, which establishes the procedure for registering and regulating foreign investment and the submission of annual reports and approval documents.
Form D-8
Form D-8 is an annual report on the development of foreign investments. This Form D-8 is used to present an annual report on the evolution of Spanish investments in foreign companies in the Investment Register.
Who must submit Form D-8?
Resident investors are required to submit this annual report when they make investments:
- In foreign companies whose net assets exceed € 1,502,530.27 or the equivalent in the currency in which the balance sheet is expressed and the investor’s share in the capital or the total amount of voting rights is 10% or more: and/or
- In foreign companies whose business consists of holding stakes in the capital of other companies, regardless of the size of the investment; and/or
In foreign branches, regardless of the amount of investment.
What documentation must be submitted?
In particular, the following data will be requested for Form D-8:
- Investor data such as the company’s core business and CNAE (Clasificación Nacional de Actividades Económicas), foreign ownership percentage and other economic data.
- Details of the investee company or foreign subsidiary.
It will be necessary to provide certain additional obligatory documentation that will accompany the Form D-8:
- Copy of the annual accounts (balance sheet, income statement and annexes or additional notes) for the respective fiscal year of the foreign company in which the investor has an interest and for the year in which the foreign company has an interest.
- Copy of the DNI or NIE.
Where and how Form D-8 is presented?
Spanish investments abroad and their settlement must be declared in the Investment Register of the Ministry of Economy and Finance and this communication must comply with the following rules:
- This must be done directly by the owner of the investment,
- Investments in transferable securities made through investment companies, credit institutions or other resident entities carrying out part of their activities and acting on behalf and at the risk of the investor must be reported by this entity to the investment register.
Resident investment holders abroad may be required, as a rule, or specifically, to submit an annual investment development report to the Directorate General for Foreign Trade and Investment.
What is the deadline?
The report must be presented during the first nine months of each calendar year. Thus, 30 September of the following year is the deadline for submitting it to the Investment Register.
Form D-6
Form D-6 comes from the Ministry of Economic Affairs, (or more specifically the Secretary of State for Trade), consisting of a declaration for the registration of Spanish investments abroad, for companies listed on a stock exchange or an organized market, if they are deposited with a company established abroad or with the investment owner.
Who must submit Form D-6?
This form must be provided in two cases:
- Flows: for those who must report transactions. It must be submitted for each investment or liquidation carried out in non-resident companies in which the investor has a stake of at least 10% of the capital or is part of its governing body, administration or when the investment exceeds € 1,502,530.26
- Deposits: for those who must report deposits with external institutions.
These two types of Form D-6 will not be presented in the same form.
If you do not fulfil the obligation of submitting this form, a sanction may be imposed. Failure to submit the form is considered a minor administrative offence that can be penalized with 25% of the undeclared amount, with a minimum amount of €3,000.
This form does not replace Form 720, which must be submitted to the Tax Authorities (instead of to the Ministry of Economic Affairs), but complements it.
What is the deadline?
- Flows: The deadline for submitting this form will be one month from the date of the transaction.
- Deposits: The declaration of deposits abroad will be presented in the month of January of each year and will refer to December 31 of the immediately preceding year.
Form D-4
Form D-4 is an annual report on the evolution of investments in Spanish companies with foreign equity participation and subsidiaries.
Who must submit Form D-4?
Spanish companies in which non-residents participate are required to submit a Form D-4 in the cases listed below:
> Spanish companies whose capital or equity exceeds € 3,005,060.52 are required to submit an activity report in the following cases:
- When the participation of non-resident investors in their share capital is 50 per cent or more.
- When the participation of a non-resident investor in its share capital or the total number of votes is 10 per cent or more.
> Spanish holding companies or companies holding shares in Spanish or foreign companies (UTE – Unión temporal de empresas), regardless of their capital or assets, if the non-resident investor’s total shareholding is equal to or exceeds 50% of their capital, or if one non-resident investor holds a share equal to or exceeds 10% of the capital or total voting rights.
What is the deadline?
The report must be submitted no later than nine months after the end of the financial year to which it relates. The 30th of September any year is, therefore, the deadline for submitting information to the Investment Register relating to the previous year.
Forms can be downloaded, completed and submitted electronically on the website of the State Secretariat for Trade at https://sede.comercio.gob.es.
All these obligations are imposed on individuals or entities that are resident for tax purposes in Spain and failure to comply will result in significant fines.
If you have any questions on this or similar topics, please feel free to contact our experts here at GMTax Consultancy!
