Main Spanish tax issues to consider when acquiring debt in Spain

Recent restructuring of the Spanish financial sector, together with new regulatory requirements and increased focus on profitability, have motivated that many financial institutions are looking to sell off distressed commercial real estate and corporate debt, which provides an opportunity for overseas buyers to purchase distressed loans of Spanish entities at significant discounts.

Taxes may have a significant impact in the return of these investments, and in this note we summarize some of the main Spanish tax issues that should be considered both in the purchase of distressed debt and also in connection with any subsequent restructuring of such debt.

We include also some brief comments on the tax treatment of so-called FABs ("Fondos de Activos Bancarios"), which are special funds designed to facilitate the disposal of assets by the Spanish bad bank (SAREB).
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