BRIEF

Businesses stay put in Catalonia

December 2015.- In recent weeks there has been speculation regarding an exodus of companies from Catalonia. This has largely been due to a report published by the privately-owned Spanish business risk rating agency, Axesor, which claimed that the number of businesses moving their tax residences out of Catalonia had grown in 2014.

Firstly, it must be pointed out that tax residence transfers take place in every Autonomous Community. Catalonia lost 987 tax-resident businesses in 2014 (0.38% of Catalan businesses with employees), Madrid lost 1,388 (0.66 % of Madrid businesses with employees). In 2009 there were 957 transfers in Catalonia, 1,342 in Madrid. In other words, no upward trend can be observed.

Furthermore, businesses are also moving their registered offices out of other Spanish regions and into Catalonia, which maintains a positive balance with most of them. In fact, Catalonia is the second leading destination for tax residence transfers. According to further information from Axesor, 3,984 companies have left Catalonia to register in another autonomous community and 4,000 companies from the rest of Spain have come to Catalonia since 2011. Tax residence transfers seem to have much more to do with potential tax competition and normally do not entail movement of productive activity.

A leading European region in terms of attracting foreign companies

Official statistics position Catalonia as a leading European region in terms of attracting foreign companies. For the 1st half of 2015, foreign investment in Catalonia amounted to a total of 1,959.2 million euros. This figure is 3.8 times higher than the same period of the previous year, and the highest amount in the 1st half of a year on record.

Indeed, fDi Markets place Catalonia among Europe’s top destinations for foreign investment. Catalonia is the region of mainland Europe that created the greatest amount of jobs through foreign investment in 2014. This strong position consolidates the trend of previous years. Data from fDi Markets show Catalonia remained the main destination for job-creating investments in mainland Europe throughout the 2010–2014 period, with the sole exception of 2011.

The positive trend continues in 2015. According to data from fDi Markets, an international database from the prestigious British newspaper The Financial Times, Catalonia attracted more investments than any other region in mainland Western Europe from January to September, 2015, both in terms of total investment and in terms of job creation.

Catalonia in the 2015 foreign investment ranking (January–September)

 

Region Number of projects Sum invested (millions of euros) Jobs
South East (UK) 294 8,536.5 14,772
Ireland 129 3,245.0 7,844
Scotland 71 1,183.9 5,765
Catalonia 55 3,006.5 5,440
West Midlands (UK) 49 1,757.5 5,123

Based on data from fDi Markets. Ranked by number of jobs created.

Other statistical indicators

Other statistics connected to business activity also show positive growth. Catalan exports continue to grow at a record-high pace, proving that the Catalan business base is competitive. Catalan exports grew by 6.3% in cumulative terms from January to September, 2015, compared with the same period in 2014. A total of 14,078 companies were incorporated from January to September, 2015, a 5.6% increase on the same period last year.

Summary

The attached article looks into this issue in greater detail and can be summed in the following points:

  • There is no such thing as a business exodus. Some businesses move their tax residences, but their operating units remain in Catalonia.
  • Tax residence transfers in Spain have much less to do with the sovereignty debate than with potential tax competition.
  • Catalonia is attracting foreign investment, according to statistics. 
  • Catalonia remains an attractive destination for foreign investment on the international scene. 
  • Catalan exports continue to grow at a record-high pace, proving that the Catalan business base is competitive.

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Tax residence transfers seem to have much more to do with potential tax competition and normally do not entail movement of productive activity.

Catalonia in Business