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In Spain, operating a limited company (SL) and a public limited company (SA) involves specific legislation and requirements. GDGlobalMobility. (2021)

Both company types provide limited liability protection to their shareholders, making them attractive options for conducting business in Spain. GDGlobalMobility. (2021)

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The Fragile States Index (FSI) as an annual measure of country level resilience and capacity to respond to infectious disease events. Tuite, A. R., Bhatia, D., Rahim Moineddin, Bogoch, I. I., Watts, A. G., & Khan, K. (2020)

Countries are categorised as: Sustainable, Stable, Warning, or Alert, in order of increasing fragility. Tuite, A. R., Bhatia, D., Rahim Moineddin, Bogoch, I. I., Watts, A. G., & Khan, K. (2020)

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WGI feature six aggregate governance indicators for over 200 countries and territories over the period 1996–2022: Kaufmann, D., & Kraay, A. (2023).

1. Voice and Accountability: Kaufmann, D., & Kraay, A. (2023).

Percentile Rank in Spain was reported at 79.71 % in 2022. Trading Economics. (n.d.)

2. Political Stability and Absence of Violence/Terrorism:Kaufmann, D., & Kraay, A. (2023).

3. Government Effectiveness:Kaufmann, D., & Kraay, A. (2023).

Government Effectiveness: Percentile Rank in Spain was reported at 77.83 % in 2022. Trading Economics. (2024a)

4. Regulatory Quality: Kaufmann, D., & Kraay, A. (2023).

Strong regulatory enforcement supports Spain's efforts to ensure quality and safety in the travel and tourism industry.

5. Rule of Law: Kaufmann, D., & Kraay, A. (2023).

Spain is going through turbulent times, marked by a strong political polarization and an increasingly evident decline in the rule of law due to the partisan takeover of institutions. Teruel, M. (2023).

6. Control of Corruption: Kaufmann, D., & Kraay, A. (2023).

Spain has a score of 60 this year, meaning it ranks 36 out of 180 countries. Transparency International. (2023)

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A recent crackdown on active tourism businesses without proper documentation, highlights the potential pitfalls of not complying with Spanish law. SGM. (2024)

1. Understanding Regional Regulations:

2. Application Procedures:

3. Civil Liability Insurance:

4. Activity Licenses. SGM. (2024)

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Tuite, A. R., Bhatia, D., Rahim Moineddin, Bogoch, I. I., Watts, A. G., & Khan, K. (2020)

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Examined trends in FSI score, trends in worldwide air travel, and the association between a state's FSI score and air travel. Tuite, A. R., Bhatia, D., Rahim Moineddin, Bogoch, I. I., Watts, A. G., & Khan, K. (2020)

Results: Among countries included in the FSI rankings, the total number of passengers increased from 0.791 billion to 1.28 billion between 2007 and 2016. Tuite, A. R., Bhatia, D., Rahim Moineddin, Bogoch, I. I., Watts, A. G., & Khan, K. (2020)

Increasing fragility was associated with a decrease in travel volumes, with a 2.9% reduction in passengers per 1-unit increase in FSI score. Tuite, A. R., Bhatia, D., Rahim Moineddin, Bogoch, I. I., Watts, A. G., & Khan, K. (2020)

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The tourism industry in Spain has significant potential for growth and improvement. pyouworld. (2023)

1. Balancing Popularity with Environmental Preservation. pyouworld. (2023)

2. Social benefitin order to achieve a sharing of benefits in the sector. Ministerio de Industria y Turismo. (2019)

3. Sustained economic partner, which should work in favour of competitiveness and profitability of the sector, products and accelerating the process of transformation. Ministerio de Industria y Turismo. (2019)

4. Preservation of natural and cultural values. Ministerio de Industria y Turismo. (2019)

5. Permanent adaptation given that this is not only look to the quality and improvement, but also to enable the industry has responsiveness to the new environment of constant change. Ministerio de Industria y Turismo. (2019)

6. Leadership, which aims at strengthening the role of Spain as a world leader in the sector. Ministerio de Industria y Turismo. (2019)

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Spain’s tourism sector is a cornerstone of its economy, contributing significantly to GDP and employment. However, it faces critical challenges such as political instability, regulatory complexities, climate change, and anti-tourism movements.

To ensure sustainable growth, it is essential to balance economic progress with environmental conservation and the well-being of local communities.

Collaborative efforts between the government, private stakeholders, and local residents will be key to mitigating these risks and fostering resilience.

By addressing these challenges strategically, Spain can maintain its status as a global tourism leader while adapting to a rapidly changing environment.

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Spain offers various incentives for R&D and IP use, potentially lowering the tax burden for innovative companies. PWC. (2022).

Corporate Tax Rate:

The standard rate is 25% on profits, with a reduced rate of 15% for newly created entities during their first two years of profit. PWC. (2022).

R&D Tax Incentives:

A 25% tax credit can be availed of for expenses incurred from R&D activities. If the expenses are higher than the average R&D expenses incurred by the company during the previous two years, the tax credit is 42% for the excess amount. PWC. (2022).

Patent Box:

Income from the transfer of certain IP rights may be taxed at a reduced rate, where only 60% of earnings from patents is taxed. WTS Global. (n.d.).

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Political environment impacts working and efficiency of tourism industry in any country no matter what its size, its area of operation. Think Pacific. (2020).

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Introduction

Overview

Is the country a democracy? Who is in charge?

The Democracy Index

Political Risks

The Worldwide Governance Indicators (WGI)

Legal Risk Factors

What does the legislation for operating a Ltd (GmbH) and PLC (AG) require?

Economic Risk Factors

What are the corporate tax rates and tax rules on IP (intellectual property), R&D (research and development).

The Fragile States Index

Recommendation

Conclusion

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Spain’s tourism sector faces various challenges that impact its sustainable growth. TalentUp Team. (2024)

1. Climate change.

2. Inflation.

3. COVID-19 tourism crisis on the Spanish economy.

4. Unemployment.

5. Anti-tourism movements.

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Spain leads the world in tourism. iCEX INVESTIN SPAIN. (2020).

Spain is known for its vibrant culture, stunning architecture, and beautiful beaches. Baglady Meredith San Diego. (2024)

And with year round tourism taking hold in the nation, the tourism changes in Spain are causing rifts, insinuating riots. Baglady Meredith San Diego. (2024)

The aim is to assess Spain’s tourism industry in terms of political and legal and economic risks.

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1. Climate change:

The Mediterranean Sea is a key region for climate change. de la Vara, A., Cabos, W., Gutiérrez, C., Olcina, J., Matamoros, A., Pastor, F., Khodayar, S., & Ferrando, M. (2024).

Heavily populated areas, particularly along the Spanish Mediterranean coast, face growing risks of negative socio-economic impacts. de la Vara, A., Cabos, W., Gutiérrez, C., Olcina, J., Matamoros, A., Pastor, F., Khodayar, S., & Ferrando, M. (2024).

Variations in temperature, precipitation patterns and the frequency of extreme weather events can profoundly affect tourism demand and the attractiveness of destinations. Barrutiabengoa, J., Carta, G., González, N., Pérez, D., Más, P., & Yücel, G. (2024)

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Capital: Madrid

Official EU language(s): Spanish

EU Member State: since 1 January 1986

Currency: euro (€) Euro area member since 1 January 1999

Schengen: member since 26 March 1995

European Union. (n.d.).

The Spanish legal system is a Civil law system based on comprehensive legal codes and laws rooted in Roman law. Berkeley Law, (2019)

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Record-breaking rainfall and flash floods have hit Spain, causing many dozens of casualties and massive disruption and economic losses. World Meteorological Organization. (2024)

A massive rescue and relief operation was mounted as the reported death toll topped more than 200. World Meteorological Organization. (2024)

Tens of thousands of people in Valencia were without power and transport was disrupted. World Meteorological Organization. (2024)

The Spanish government declared three days of national mourning. World Meteorological Organization. (2024)

the worst floods in Europe this century.Lowen, M. (2024)

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Spain is a parliamentary democracy and constitutional monarchy. European Union. (n.d.).

The prime minister is the head of government and the monarch is the head of state. European Union. (n.d.).

A council of ministers is the executive branch and is presided over by the prime minister. European Union. (n.d.).

Spain is a unitary state, composed of 17 autonomous communities and 2 autonomous cities with varying degrees of autonomy. European Union. (n.d.).

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Uxó, J., Eladio Febrero, & Álvarez, I. (2024)

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2. Inflation:

Spain experienced exceptionally high inflation rates from 2021 to 2023, similar to other Europe countries, marking a significant change from the previous decade. Uxó, J., Eladio Febrero, & Álvarez, I. (2024)

Price increases pose a risk to Spain’s tourism economy. Uxó, J., Eladio Febrero, & Álvarez, I. (2024)

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3. COVID-19 tourism crisis on the Spanish economy:

The tourism sector, which is important to the Spanish economy has been one of the industries most affected by the COVID-19 pandemic. Vayá, E., Garcia, J. R., Jordi Suriñach, & Pons, E. (2023).

The economic impact was also severe. GDP shrank 10.8% in 2020, the deepest recession in 80 years and the harshest in Europe. Chislett, W. (2021)

Unemployment:

The unemployment rate, which stood at 14% when the pandemic started. Chislett, W. (2021)

One year after the arrival of the pandemic, the teleworking rate reached almost 15% (2.8 million people).

Chislett, W. (2021)

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1. Understanding Regional Regulations: SGM. (2024)

The registration of tourism and leisure businesses is conducted at the regional level. SGM. (2024)

Location plays a pivotal role in determining the paperwork, processes, timeframes, and even tax considerations associated with setting up a business. SGM. (2024)

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4. Anti-tourism movements (Go home)

Are gaining traction across Spain and are active on social media. Agence France-Presse - AFP. (2024)

In Barcelona and the Balearic Islands, activists have put up fake signs at the entrances to some popular beaches warning in English of the risk of "falling rocks" or "dangerous jellyfish." Agence France-Presse - AFP. (2024)

Locals complain that a rise in accommodation listings on short-term rental platforms such as Airbnb has worsened a housing shortage and caused rents to soar, especially in town centers. Agence France-Presse - AFP. (2024)

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2. Political Stability:

Tourism to Catalonia has slumped by 15% in the two weeks since the region’s independence. The Guardian. (2017)

Tensions between the Catalan and Spanish governments, which has led to Spain’s biggest political crisis for 40 years. The Guardian. (2017)

Tourist activity in Catalonia had fallen by 15% in the weeks. The Guardian. (2017)

Catalonia welcomed about 18 million visitors last year, and tourism accounts for about 12% of the region’s GDP. The Guardian. (2017)

More than 400,000 people in Catalonia depend on the tourist industry for employment. The Guardian. (2017)

Huge rallies around the 1 October vote on independence are taking their toll.." The Guardian. (2017)

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OECD (2024), "Executive Summary", in Measuring and Monitoring the Sustainability of Tourism at Regional Level in Spain: Indicator Framework and Compilation Guide, OECD Publishing, Paris, https://doi.org/10.1787/152a6ba3-en.

Our World in Data. (2023). Democratic culture index. Our World in Data. https://ourworldindata.org/grapher/democratic-culture-index-eiu?tab=chart&time=2006..latest&country=~ESP

Pitrelli, M. (2024, October 13). Protesters in Spain told tourists to “go home.” Instead more arrived. CNBC. https://www.cnbc.com/2024/10/14/after-anti-tourism-protests-spain-receives-record-number-of-travelers.html

Pngtree. (2022). Frame Of Euro Currency With Tax Inscription On White Background Photo And Picture For Free Download - Pngtree. Pngtree. https://pngtree.com/freebackground/frame-of-euro-currency-with-tax-inscription-on-white-background-photo_12154684.html

PWC. (2022). Spain - Corporate - Taxes on corporate income. Taxsummaries.pwc.com. https://taxsummaries.pwc.com/spain/corporate/taxes-on-corporate-income

pyouworld. (2023, August 16). A Sustainable Future for Spanish Tourism | Pyou. Pyou |. https://pyou.eu/a-sustainable-future-for-spanish-tourism/

Rubio, V. L. (2020, January 29). Corruption in Spain – A Brief Analysis of High-Profile Cases and Spanish Authorities’ Anticorruption Efforts. Duff & Phelps. https://www.kroll.com/en/insights/publications/compliance-risk/spain-corruption-analysis

SGM. (2024, February 2). Tourism and Leisure Business Rules in Spain | SGM Abogados. SGM Abogados. https://sgmlegalspain.com/tourism-and-leisure-business-rules-in-spain/

Smith, E. G. (2024, July 19). ▷ The Impact of Tourism on Spain ✅ 【 2024 】. Turispanish.com. https://turispanish.com/tourism/how-has-tourism-impacted-spain/

TalentUp Team. (2024, September 20). The economic impact of the tourism sector in Spain. Talentup.io. https://talentup.io/blog/the-economic-impact-of-the-tourism-sector-in-spain

Tax Foundation. (2023, September 12). Spain Tax Data Explorer. Tax Foundation. https://taxfoundation.org/location/spain/

Teruel, M. (2023). Rule of Law Eroded. https://doi.org/10.59704/196393d30e10249b

The Fund for Peace. (2024). Fragile States Index. Fragilestatesindex.org; The Fund for Peace. https://fragilestatesindex.org/country-data/

The Fund for Peace. (2024). Fragile States Index. Fragilestatesindex.org; The Fund for Peace. https://fragilestatesindex.org/country-data/

The Guardian. (2017, October 20). Catalonia tourism slumps 15% since referendum violence. The Guardian. https://www.theguardian.com/world/2017/oct/20/catalonia-tourism-slumps-15-since-referendum-violence

Trading Economics. (n.d.). Spain - Voice And Accountability: Percentile Rank - 2023 Data 2024 Forecast 1996-2022 Historical. Tradingeconomics.com. https://tradingeconomics.com/spain/voice-and-accountability-percentile-rank-wb-data.html

Trading Economics. (2024). Spain - Voice And Accountability: Percentile Rank - 2023 Data 2024 Forecast 1996-2022 Historical. Tradingeconomics.com. https://tradingeconomics.com/spain/voice-and-accountability-percentile-rank-wb-data.html

Transparency International. (2023). Spain. Transparency.org. https://www.transparency.org/en/countries/spain

Travel and Tour World. (2024, November 2). Valencia Flood Crisis New Update: Spain Deploys 500 More Troops Amid Criticism, Impacting Travel - Travel And Tour World. Travel and Tour World. https://www.travelandtourworld.com/news/article/valencia-flood-crisis-new-update-spain-deploys-500-more-troops-amid-criticism-impacting-travel/

Tuite, A. R., Bhatia, D., Rahim Moineddin, Bogoch, I. I., Watts, A. G., & Khan, K. (2020). Global trends in air travel: implications for connectivity and resilience to infectious disease threats. MedRxiv (Cold Spring Harbor Laboratory). https://doi.org/10.1101/2020.03.29.20046904

Uxó, J., Eladio Febrero, & Álvarez, I. (2024). Prices, markups and wages: inflation and its distributive consequences in Spain, 2021-2023. Structural Change and Economic Dynamics. https://doi.org/10.1016/j.strueco.2024.09.021

Vayá, E., Garcia, J. R., Jordi Suriñach, & Pons, E. (2023). Effects of the COVID-19 tourism crisis on the Spanish economy. Tourism Economics. https://doi.org/10.1177/13548166231185899

World Bank. (2023). Worldwide Governance Indicators. World Bank. https://www.worldbank.org/en/publication/worldwide-governance-indicators/interactive-data-access

World Meteorological Organization. (2024, October 31). Devastating rainfall hits Spain in yet another flood-related disaster. World Meteorological Organization. https://wmo.int/media/news/devastating-rainfall-hits-spain-yet-another-flood-related-disaster

WTS Global. (n.d.). R&D tax allowance in Europe. https://wts.com/wts.com/publications/brochures/rd-tax-allowance-in-europe/wtsglobal-rd-tax-allowance-in-europe.pdf

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"Spain is an established tourism market in Europe – the region with the most tourist arrivals globally.

Spain counted more than 120 million international visitors.

That figure represented more than 2.5 times Spain’s total population.

Therefore, tourism is one of the major drivers of the Spanish economy. " López, A. M. (2023)

Tourism directly contributed approximately 12% to Spain's Gross Domestic Product (GDP). Mosrati. (2023)

Employed more than 2.6 million people, almost 12,7% of the total employment in Spain. Orive, V., Elboj, C., & Valero, D. (2021)

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2. Application Procedures:

"Applications for registration and authorization are typically submitted to the regional Ministry of Tourism. SGM. (2024)

Applicants may be required to provide basic information about their companies, including a business plan, physical address, anticipated workforce size, equipment inventory, and other relevant details. SGM. (2024)

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3. Civil Liability Insurance:

is mandatory when seeking authorization, and businesses may also need to establish an action protocol for responding to accidents. SGM. (2024)

4. Activity Licenses:

The primary license required is an activity license issued by the regional authority, permitting the operation of companies in the sector within the region. SGM. (2024)

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They add that the influx of tourists also contributes to noise and environmental pollution and taxes resources such as water. Agence France-Presse - AFP. (2024)

In the northeastern region of Catalonia, which declared a drought emergency in February, anger is growing over the pressure exerted on depleted water reserves by hotels on the Costa Brava. Agence France-Presse - AFP. (2024)

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Spain has been downgraded from the highest category of "full democracy" to the second category of "flawed democracy" in The Economist's Democracy Index reviewing 2021. Euro Topics. (2021)

With a score of 7.94, the country now ranks 24th. Euro Topics. (2021)

Commentators blame the dispute over the independence of the judiciary for the drop in ranking but take different views on who is to blame. Euro Topics. (2021).