Fintech Market Overview

This article does not constitute legal advice.

Fintech in Spain

Fintech Software

The most noteworthy recent initiative is the adoption by the European Commission on 24 September 2020 of a digital finance package, which included a digital finance strategy and legislative proposals on cryptoassets and digital resilience, and that will require the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority (ESMA) to provide technical advice on different matters in the coming years.1

Various electronic sources provide information on fintech. For instance, the Spanish Fintech and Insurtech Association has its own website and the National Securities Market Commission (CNMV) created a section on its website to provide an informal communication space with fintech and a Q&A for fintech companies on activities and services that may be within the CNMV's remit.1

The main tax incentive schemes for investment in tech or fintech businesses generally applicable in Spain are: (1) the Spanish patent box regime and the research, development and innovation tax credit that potentially applies to Spanish-resident companies engaged in tech and fintech activities (generally only where the technology qualifies for it; for example, as a patent or as advance registered software); (2) the corporate income tax (CIT) benefits for start-ups and small enterprises (e.g., a 15 per cent rate applicable to stand-alone start-ups during the first two fiscal years in which the company has a positive taxable base, instead of the statutory 25 per cent rate or qualified depreciation regime for tangible assets and property investments) and Spanish-resident venture-capital entities; and (3) tax credits for 'business angels' in specific start-ups (under specific conditions). Proper structuring is essential for investors in these companies to mitigate any Spanish tax leakage applicable to investments in tech and fintech companies.1

In December 2021, the Spanish government adopted the draft Start-up Law to place Spain in pole position to attract investment and innovative entrepreneurship. The draft includes important tax incentives, such as an increase in the period for which the reduced CIT rate applies (the first four years in which the company has a positive taxable base, rather than the first two years), as well as interest- and deposit-free tax debt deferrals. The Start-up Law is expected to be approved in 2022.1

In general, and until further regulations are passed, Spain should be considered a fintech-friendly jurisdiction, which has been evidenced by the approval of a regulatory sandbox. For example, in 2013 it was estimated that there were 50 fintech companies in Spain; this number had grown to 463 as at March 2021.1

Spain has not regulated fintech across the board. Therefore, fintech businesses are not subject to specific licences or marketing rules in Spain. This is mainly because they provide a variety of financial services. In general, leaving aside third-party providers (TPPs), which are regulated under Directive (EU) 2015/2366 on payment services in the internal market (PSD II) and crowdfunding and crowd-lending platforms, which are subject to Law 5/2015 of 27 April 2015 on the promotion of business financing, fintech businesses focused solely on developing IT solutions to support the provision of services by financial entities are not currently subject to any financial regulatory regime.1

From a purely regulatory perspective, the provision of information about financial products is not subject to authorisation if this information does not involve the provision of any other regulated services (for instance, investment advice).1

Generally, the main legal and regulatory issues for fintech in Spain are the obstacles resulting from the provision of financial services that trigger licensing requirements. As stated in Section I, the current legal regime for the authorisation of financial entities, which is established by reference to EU law, does not provide for a simplified procedure for businesses that only provide a limited range of services, as is the case of many fintech businesses. Hence, at present, fintech-providing regulated services such as payment or investment services must navigate complex and burdensome procedures in Spain or in their country of establishment before having access to customers.1

Crowdfunding in Spain

Fintech in other countries

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  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/spain
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