This podcast audio has been transcribed by an automatic transcriber.

Fred Rocafort  0:07 

Global law and global business go hand in hand, but never seem to keep pace with each other, developing and developed nations wax and wane in their importance in the global stage while consumption and interconnectedness both increase, laws and regulations change incessantly, requiring businesses to stay nimble. How do we make sense of it all? Welcome to Global Law Business hosted by Harris Bricken International Business attorneys. I’m Fred Rocafort,


Jonathan Bench  0:37 

and I’m Jonathan Bench. Every week we take a targeted look at legal and economic developments in locales around the world as we try to decipher global trends in law and business with the help of international experts. We cover continents, countries, regimes, governance, finance, legal developments, and whatever is trending on Twitter. We cover the important, the seemingly unimportant, the relatively simple and the complex.


Fred Rocafort  1:02 

We hope you enjoy today’s podcast. Please connect with us via email and social media to comment and suggest future topics and guests.


In this week’s episode, we discuss foreign direct investment in Spain. If you are looking for further information on this topic, I encourage you to check out our upcoming free hour long webinar titled Investing and Doing Business in Spain: a Legal Perspective. This webinar will be taking place on Thursday, November 19, starting at 10am pacific time, we will be including a webinar registration link together with this episode. Register today for this free webinar and get all your questions answered about this interesting topic. Sonia Gumpert is the managing partner of Monereo Meyer Abogados, a leading Spanish law firm with which Harris Bricken has a close working relationship. Among other distinctions. Sonia has served as chairwoman of the Madrid Bar Association and as First Vice President of Spain’s General Counsel for legal practice, which represents Spain’s 83 bar associations. She was recently appointed an expert arbitrator of the Latin American arbitration Center, a graduate of the Autonomous University of Madrid, Sonia also holds a Master’s from Collmias Pontifical University. Sonia, welcome to the show, bienvenida.


Sonia Gumpert  2:37 

Thank you very much. great pleasure to be here.


Jonathan Bench  2:39 

So we’d love for you to start out by telling us a little about your professional career, you you’ve done a lot of amazing things and we’d love to have you explain to us what you think as is significant.


Sonia Gumpert  2:50 

Okay, so to cut it short, let me say after I went I received a school education in Madrid in my hometown, at an international school. And then I studied law and I got as you said, a master’s degree in European law, after which I immediately joined the law firm Monereo Meyer at this,that was in June 1993. And I joined the firm as its first associate lawyer, because I really fell in love with the project of international vocation that the founding partners presented to me in the interview, I have to say, this international orientation corresponded completely to my school and to my university education, and therefore also to my vision and to my conception of the world and of the human relations. And, as I said, the firm was then a very young firm as it was founded four years before I joined it, and with the objective and the vocation of legally advising foreign companies and investors. The idea was to provide legal advice in a in a comprehensive way to the clients or for the client, that is, together with a quality and rigorous legal assistance. The idea was to accompany them in their Spanish adventure, let me say so, with the cultural and this social support that would facilitate synergies to enable and promote the development of business in commercial trade to Spain, over or beyond to say so cultural and language barriers in the early years of our firm in which I was lucky to participate. Our goal was to become known as a reference law firm in Spain business law, and for international companies and investors as well. It wasn’t really an easy challenge, since there were already some large and midsize Spanish law firms active in business law and with international focus. Competing with them was really not an easy task, but our enthusiasm and our desire were really enormous. And each one date and client achieved were really a joy in an incentive that strengthened and encouraged us to move forward. This these first years were of a set of enormous afford and personal sacrifice for really all members of the firm, but also of great joy and enthusiasm. We fought almost unconsciously, a very, very solid bond, both professional and personal between us and which was, as you will know, necessary to overcome the difficulties inherent in our highly committed and socially relevant profession, such as the legal profession is, each one of us contributed in an exceptional way to create our own and shared work philosophy, a shared vision of how to understand the practice of law, its principal limits in the service to the to the clients. During my first years of professional practice, I was lucky to study in advising various I am in different areas of law in civil and commercial, in labor, in tax law, in real estate in trademarks, inheritance litigation, labor law, always from an international perspective. And I think this contributed very much to my overall professional training. Later when the structure of the firm allowed, allowed it, we organized ourselves around each one’s personal specialization and I was able to devote myself to the branch of law that I like best which is, which was installous civil and commercial dispute resolution, both in court and in arbitration. This I would say summarizes very good my my professional, my professional career.


Fred Rocafort  7:01 

Thank you, Sonia. As we mentioned in the in the introduction, you were the first woman to serve as the dean, the chairwoman, we can be translated either either way of the largest Bar Association in Spain, the Madrid Bar Association, the colegio abogaods de Madrid for our Spanish speakers and the audience, and you’re also the the managing partner of Monereo Meyer Abogados, which is a respected law firm in Spain. So you have a unique perspective from which to assess the current situation of women in the legal sector in Spain, could you tell us about this?


Sonia Gumpert  7:39 

Sure. Well, is the situation of women of Spanish women in the legal profession and in general in the legal world in Spain, has certainly improved slowly but surely, year after year, but really has still a long way to go. Female leadership in Spanish advocacy is scarce in breed really not very visible. I have to give you some some figures about female partners of Spanish law firm, a firm firms barely reach is 16% of of them, have them in when it comes to managing partners, the figure gets even lower. What is what is unacceptable about this situation is not only this figure, but that the figures do not correspond to the percentage of women in the Spanish legal profession, which is around 50%. Obviously, these this does not respond to the lack of capacity of women. But to the fact that these structures, the institution’s the offices, all the Spanish professional environment, are thought and made by for and tailored to men, not to women. This figures in 2020 prove that women find obstacles in the development of their careers in Spanish law firms, and they face obstacles which men do not face. In my opinion, there there is still no meritocratic system in Spain that allows the proper leverage of female talent. And this untapped potential female talent is a great loss, not only for women, ourselves, but for law firms and for the client and thus for society. In my opinion, the main obstacle is in the individual and collective culture. Gender equality is still not integrated in Spanish education and traditions, which are passed on from generation to generation, sometimes through unconscious biases. As soon as this cultural change takes place in Spanish society and any test to take place sooner or later, gender equality will no longer be an issue to worry about and to deal with it. As it will be naturally imposed to reflect in a balanced way the composition of the legal profession and thus, of the society itself. At the level of the legal institutions, let me tell you, when I was elected dean of the Madrid bars Association in 2012, there were no more than six female deans in Spain, including me. We currently have, first of all, a female president of the of the Spanish lawyers of the Spanish advocate and 16 female deans so that same as in the legal profession, the progress in our institutions is still too slow. And women are still underrepresented at this institutional level, as well. As the first woman dean of my dread my exposure and vulnerability were great. But I have to say that it was an honor and a challenge to assume this leadership position, not only because it could have been inspiring for all, to see that it is possible to be a woman in a professional way, with decision making capacity, but mainly because only from positions of leadership and power, things can be really changed. During my terms, or my term of office, I worked hard to give female lawyers of Madrid the visibility they undoubtedly deserved, and move forward in equality in the Madrid legal profession. I think and I want my desire is my wishes to, to, to believe that I managed to do this, Fred.


Jonathan Bench  11:38 

and Sonia, that means that as a woman lawyer, you’re advising largely male clients, and probably in your dispute resolution work, you’re also, you know, you may be the lone woman in the room. So how have you has that been difficult for you? Or have you now been comfortable in your shoes for so long, that that that your clients and others who you work with, understand and respect you for, for the experience and, and you know, the leadership that you bring to the room?


Sonia Gumpert  12:09 

Okay, I have to say that my personal experience has been very positive. And I have had no big obstacles in my law firm, which I’m very proud of. But the thing is that in Spain, when you look at the career of the women lawyers, they do great until they start having children. And then suddenly, everything changes. And it changes because the careers are built up in the law firms, based on cliches and on life. And the circumstances of men, not of women, and this is unfair. On the other hand, with clients, I have to say that it comes often very often that I’m sitting in a big table only with with men and there are some traditions, or some way some things that men do that I do would like to change or would not like to do. And I just what I do, what I do is simply not not do what I don’t want to do. I keep it professional, I keep it on a professional level and a try to try to steal a keep my balance between my professional and my personal life.


Jonathan Bench  13:30 

It’s very interesting the way you describe that, because Fred and I just interviewed another guest, who will air probably two weeks before your episode, and she’s from India came to the US and her her company is largely focused on helping women get back to work after a gap in in having children or in becoming a caretaker for maybe an older relative. And so that has been her primary focus because she experienced that same, that same prejudice in taking, I think she only had an 18 month gap when she had her daughter and very, very well qualified individual and and she found a lot of doors closed just from that, from that short gap.


Sonia Gumpert  14:11 

Absolutely. The sad thing about this and Jonathan is that this what happens in Spain happens worldwide. I mean, this is not is not a Spanish problem or an American problem. It’s a worldwide problem. And I think it at the end of the day, we have all all over the world the problem is the same the problem is first biological because we get to children and and then also very, very much cultural, very much bound to how we feel that we have to raise our children only in the loving hand of the mother because in our culture, our religion, whatever whatever social skills is traditional says that it has To be like this and not the other way around. But I think and I think the big, big revolution comes because the good news is not that women are changing her minds, but men are changing their minds. I mean, young professionals do want to take care of their babies as much as young women do. And they are ready to be we say in Spain to share to share 50/50, this responsibility. And this has an impact on the professional concept consequences of it. And this is a very good news.


Jonathan Bench  15:40 

It is very good news. So let’s turn now to talk about the differences between the legal systems of the US and continental Europe. Which of the two do you consider more business oriented?


Sonia Gumpert  15:52 

Well, okay, United States has a common law system, whereas continental Europe has what is called a civil law tradition. Okay. So the civil law, tradition is based on compendiums of rules approved by the suffering called codes. In this constitutes a fundamental difference. Renowned professors of law may write highly influential legal commentaries, but only the codified law is spinning for courts. The two most important collections of law in Europe where the Justinian code, a compilation of Roman laws, or a Pilate Roman Byzantine impera in the Napoleonic Code Jam, while France and the Napoleonic occupied countries like Germany, Italy, and Spain only for short period, the legal system, which the French had created for the New Republic, addressed what were back then modern and progressive concerns. That’s all those countries have legal codes influenced by the Napoleonic code in suit, so do many countries around the world which adopted European style codes to modernize in indo industrialized Japan, for example. However, if this is this is the academic part of the story, however, if you see it from the practitioners eyes, the differences in both legal systems are not essential, but lay in small nevertheless important details. As I have learned from speaking to practitioners in both countries, because I myself did never practice in the United States, it seems that their way of arguing in developing an idea might differ. But the results and the solutions come out to be very similar. Let me go a little bit into detail. For example, for the investor looking into Spain, a typical m&a transaction might seem not that different in Europe, from what he may be used to in the US, however, there are some differences that are important to be to your mind. For instance, an investor who decides to enter the Spanish market through distribution channels, before taking the step of an FDI should not miss that commercial agency, a law in Europe. That is very different from US law. In Europe or Spain, the requirements for distribution agreements can be fairly strict and on arose. Hence, the US company needs to make sure that signed agreement meets all requirements to avoid future remuneration claims that prevent a classification as labor agreement or as labor relationship and clearly defined the rebel six sensibles clause, which proves to be very important of the intense like we are regrettably now of COVID. In addition, when selling products into Spain, especially if doing so through a distributor, in my view, it is imperative to register your brand name as a trademark in Spain, since the failure to do so could eventually block the US company from using your name in Spain. Spain’s trademark law is based on first to register and not first to use. Another important fact for example, in my opinion, is that investors who decide to form a subsidiary in Spain will soon have to face the incredible extent of bureaucracy and formalism in the Spanish administration which is really really huge. I advise us investors to expect that getting any sort of registration in Spain or in the on the E e o in the in Europe will take at least twice as long as it usually costs twice as much as in the United States. You will not be able to form a company online and overnight but need countless notarized and apostilled stamped documents extracts powers of attorney agree etc etc. And on the top of this all in original legalized and authenticated versions, getting your business form and its tax IDs might take up to four weeks double then if you need to hire double of that if you need to hire employees. Good contracts as as important as they are in the US in the United States. Of course, you need to you need to ensure clarity, prevention of conflicts and enforcement. However, in Spain, we are far from using digitally signed contracts still, but would still recommend originally signed versions as there is to consider and having more evidentiary proof if you have to go to court.


In other fact, I would like to point out is the banking became complicated since the European anti money laundering regulations were implemented in Spanish law in 2010. Spain has extremely strict anti money laundering rules really incredible. While one of the essential historical principles of Spanish corporate law is the concept of anonymity, hence, the name saathiya anonima. Which means the identity of the owners behind the Spanish corporation or capital company in principle does not need to be revealed to the public. In the course of combating money laundering. Spanish legislators and the bureaucrats are increasingly undermining this principle. This is unknown to most of our US clients when they first go into Europe, but can really create big issues as they need to reveal their ultimate beneficial owners, not only to all involved advisors, such as notaries and lawyers, but also to the back. A more commonly known different layers in employment law, other than with us at will employment law employees in Spain are heavily protected and enjoy indemnification writes for unlawful dismissal, which any us investor needs to be aware of. Employment Law may also become important in m&a when the title company will transfer employees, which can be all sorts of liabilities for the foreign investor. And last but not least, the investor further needs to keep an eye on privacy and data protection. Of course, most most investors have probably by now heard about the GDPR in know how to avoid that a breach notification and penalties. Considering that I would characterize the legal Spanish, the legal the legal system of the US as in general, more business oriented. It’s it’s like this, however, this that this does not mean that Spain does not offer many attractive business opportunities for us investors, of course.


Fred Rocafort  23:05 

Thank you, Sonia. It’s actually rather remarkable that even at this stage, when we’ve had so much interaction between our system here in the US and systems in Europe, there are still fundamental misconceptions perhaps, and a lack of knowledge. Certainly here in the US. Many, many lawyers are not that familiar with the differences between our our system and the European systems, you know, that people can people know there’s, most lawyers know, there’s a difference of some sort. But really, very useful to have this detailed explanation. Thank you. You brought up the the the issue of COVID. And I wanted to I wanted to follow up on that. We know, of course, that Spain has been strongly impacted by by the pandemic, every country in the world has, but I think Spain, especially because of what happened in Spain during the early days of the pandemic, I think I think people associated more with those early days when we were coming to terms with with this virus, turning specifically to the law and the Spanish legal sector. How has COVID-19 impacted the work of lawyers in Spain? How have a working conditions changed, not just for lawyers, but perhaps for for others as well. You know, we have this ongoing conversation now here in the United States about how the world is going to look after COVID maybe we will preserve some of the changes maybe we will continue to look for opportunities to work remotely and start moving away from In person conferences and even in person, court appearances, etc. So how is that conversation looking in Spain?


Sonia Gumpert  25:10 

Yeah, absolutely. The Covid pandemic has been a real tsunami and had that unprecedented  impact on the Spanish legal profession and as you said, but as it has had in almost all economic and social sectors in the legal profession that COVID has demanded from the law firms in immediate and unremitting review of our processes, our internal relations, and those who are third parties, that is almost everything. Third parties, I mean, clients in the common stakeholders, like traditional parties, public administration, other legal professionals, such as research, justice, etc. So almost everything processes relationship, almost everything, for the legal for the Spanish legal profession sector, A, which I have to say, is a very traditional sector that has been very reticent about technological transformation, the undisputed and undesirable adaptation of these new processes, necessarily linked and supported in technology and computer science has been called qualitative leap, really. So it has, of course, meant a huge challenge, a deep change in the work methodology with the appearance of new processes, and new ways of learning working in delivering really, it has been a revolution in the first place. Of course, you mentioned it before Fred, remote work or home office, as we call it, has required an immediate investment on equipment and software, of course, as well as a quick technological solution to preserve confidentiality and professional secrecy, of course, which are at the core of the legal profession. And because of that, it has demanded new internal communication policies, principles and guidelines, we had to review everything. But despite all these difficulties, and due to the COVID remote work has managed to overcome I still strongly present spaced working tradition, which was not so good for everybody. And in which was until now almost sacred in the sector, proving that is useful for certain tasks, the home office is useful for certain tasks and functions. And this happens in this committee experience all in record time, that will realize that this presence based working tradition was not the best and it could be mixed with a home office in a very effective, efficient way.


So as a result of that, we found out found out that conciliation should no longer be the only purpose of home office, which is not bad, and is talking about women, women should therefore not be any more than main applicants for this work method. Productivity should be now the main value when it comes to home office for Spanish law firms, which is very important. We shall now reformulate the concept and the content of working time, and rethink or think over how to not lose certain periods of our day time, such as daily commuting, especially significant in big cities, like Madrid, or Barcelona is in lunchtime, which has been traditionally long in Spain, and take advantage of them whether to work or whether for professional life, or for personal life. The challenge for law firm is now to find their ideal formula that combines both work methodology so amorphous and persons based or providing the environment and the tools for efficiency, and of course, in first place for security in every sense, but there is no doubt that Spanish law firms have been and are capable of providing advice in the digital environment, as well as in person. individual and collective acceptance of remote work has been extraordinarily accelerated by the, by the pandemic. Our immediate challenge is now to implement it combined with present a present space to work in the right balance, which might be different for each law firm or even for for every legal area. Once this ideal mixed working system has been created and duly implemented. There will be in my opinion, in my opinion, a second big revolution and have even a greater economic and social impact, which is the conception and the conception that configuration and the use of the working spaces. By in the in And of Spanish law firms, then the dimensions to pollution and even the location of this basis of this Spanish law firms will be subject to a complete review. I think this is the first and most important effect of this of this Home Office Mix home office in person based work system, the traditional person presents based working model that gives way to the mixed model will undoubtedly mean that common or shared space is his basis will gain ground compared to the steel still valid model of individual and personalized spaces, I mean, the impact of this change of working spaces on the firm’s income statement, and therefore, the prices of the legal services will be comparatively huge to the to that cost by the technological innovation, I am sure of that. Likewise, likewise, in the relationship with third parties, switching to online communication has meant an enormous force of change for Spanish law firms, which where I as I said before, not so crazy about technology, to be honest, not only the communication with our client has changed, but also the acts of our litigation practice, such as online judicial hearings, which were unthinkable six months ago. And this is, has changed our way of working and the same has undoubtedly been true for the conduct for the pandemic with regard to Hispanic public administration, especially for the justice system, despite the price to be paid in terms of procedural delay, which has further aggravated then they make slowness of the Spanish courts. Covey has been there for both for the Spanish law firm and for the Spanish legal authorities in major boost on a path of technology, technological innovation, which was already mapped out and which has to be traveled, the sooner or the later.


Jonathan Bench  32:15 

It’s very interesting hearing the changes to the legal profession. And I love your description of Spanish law firms not really adapting well or not being willing to adapt to the technology very well. That’s great insight that we’re very curious on Spain is a tourism destination. And COVID-19 impact in Spain has to have been massive. How is the country facing it? And what is there? Is there light at the end of the tunnel? Are people getting hopeful yet? Or is it still just very depressing to see what COVID is doing to the tourism sector?


Sonia Gumpert  32:50 

It’s depressing. It’s really depressing and we are not I think we are not seeing even the light at the end of the tunnel yet. And according to the Spanish confederation of business organizations, tourism contributes a 12% to spend to Spain’s GDP and is among the center sectors as you said  most affected by the social and economic crisis of the covid. The tourist situation in Spain is really serious in the app, the airplanes are grounded, the hotels are closed, and there are travel restrictions to Spain, or quarentine  period in almost every country in the world including the US, not only with other countries, but inside Spain, we have As you have probably recently heard or read, they also inside Spain, you never know if you will be able to travel tomorrow to Barcelona to Madrid to Malaga because things are changing every day. So nevertheless, in when it comes to international level reason, good news are that Germany will lift I will lift it has lifted already in September. At the end of September. Its recommendation not to travel to risk areas, which included Spain, and the so called tourist corridors for the Canaryand for the Balearic Islands, where the most of the of the European tourism is concentrated, being a city’s tourist corridors are being negotiated with a UK. This development will certainly lead to a reduction of the Restriction Policies of both countries, Germany and the UK, which are the main sources of Spanish tourists. The figures really speak for themselves Spanish airports recorded in the previous years 69.6% fewer passengers that in previous years Palma Mallorca with a full of 45.9% is the Spanish airport with the highest number of moments in overseas I’m talking about the most important month, which is always in terms of tourists. And then after Palma Mallorca, Madrid is the the airport which is more important and the tide of fall of 59.1% in August of this year in Barcelona had a fall of a 57%. A talking about movement of code of goods not of persons but of good, it has been reduced by almost 28.6% compared to the previous year. And the total number of commercial passengers on domestic flights recorded in August was 41.6% lower than now goes to 2019. And the number of commercial passengers on international flights was listen at 80.7% lower which is scary.


in addition to the use of masks, which is mandatory in Spain for all public spaces and public transport for people over six years, there are some other specific measures for tourism businesses such as capacity and timetable limitation, restrictions of valid or ironing service, mandatory use of single those products and have single use materials compulsory individually individualization operations and so on that make really the tourist the touristic business extremely difficult. In Moreover, expensive, maybe you have heard that recently today or yesterday in Barcelona, or that closing a shutdown of every bar, every cafeteria, every restaurant, and the sector is really on fire and and are fearing the worst of the outcome for this. So the Spanish confederation of business organization, which is the national level the biggest one has asked for a reduction of VAT to 7% during 2020 and 2021. For accommodation services. That means restaurants, passenger transport, travel agencies and leisure leisure businesses like discos, restaurants, bars and cinemas. And asking enterpreneurs asking for a specific measure that really relieves them a little bit of the difficult same circumstances they are they are still suffering. Businesses linked to the tourism sector like travel agencies or hotels, catering bars, and so on, were forced to lower to lower prices this summer to try to attract customers in to survive the crisis. So that in addition to suffering a collapse of international customers in unprecedent, fall in demand, the sector was forced to offer really crashed prices to try to attract the domestic tourists and to revive a little bit consumption. According to the Cannes Consumer Price Index, which is published by the National Institute of statistic prices in the sector have fallen by a 0.3% in July, compared to the same month last year. And by 0.5% in August. This means that prices have been this summer 0.4, lower on average, then in 2019. So the sector is still in crisis and still making us suffer every day.


Fred Rocafort  38:47 

That’s very interesting, Sonia. And I think it’s important for our listeners in the US at least to understand that for Spain, tourists from places like Germany, places like the UK, are what tourists from New York or the Midwest are to a state like like Florida, you know, the size of Europe is comparable to the size of the US so he you know here in the US if we have a closed borders. First of all, tourism, perhaps as a contributor to the national GDP is has less importance than than it does in Spain. But in addition to that, even to the extent that it is important to places like like Florida, the lack of international visitors, it has much less of an impact than it does in Spain. I’m also wanted to comment on those those numbers. You know, the the numbers that you shared with us regarding the drop in passengers. I follow aviation news closely and sometimes when I hear some of these statistics, I have to double check because I think to myself there there must be a mistake here the decrease cannot be so big. I think they made a mistake, you know where they put the the decimal point but but no, it’s it’s for for many airlines it’s it’s a really critical situation. And of course for the for the tourism industry more broadly. Turning in a more positive direction, the firm that you lead Monereo Meyer Abogados is specialized in advising foreign companies doing business in Spain, as you as you mentioned earlier in the podcast. And as a matter of fact, I’ve had the pleasure of traveling to Spain to to participate in joint events between Harris Bricken and Monereo Meyer, I have greatly enjoy that. In fact, we very recently we have been working on some promotion events here that US companies that want to invest in Spain. So let’s take advantage of this opportunity to talk about that a little bit for for international companies, but especially for American companies that might be looking to, to invest in Spain, what are some of the things that they have to consider, especially in the aftermath of the or in the midst of the of the COVID situation and perhaps for people that might not be as familiar with Spain? What are some of the opportunities that the country offers to foreign companies who might enter that market?


Sonia Gumpert  41:31 

Indeed, we provide about 80% of our legal advice to foreign clients, mostly foreign companies or investors that carry out business activities or have business interest in Spain. Our law firm is internationally oriented with a team of lawyers of different origins in equipo. Clearly education obtained within and beyond Spanish national borders. As I told you before, since the creation of the law firm, we have had a significant number of foreign lawyers in our partnership structure, we can truly say that we have set standards in cross border legal services, and has become one of the few truly international Spanish law firms in Spain. Our core business has always been the German speaking market. And since joining our alliance with Harris Bricken, we have had the opportunity to assist many us investors in Spain. Speaking about investment in Spain, Fred it must be said that the spread of COVID has a touch every facet on Spanish society, and the scale of the humanitarian crisis has been matched by widespread economic disruption. Spanish companies that had been writing years of present reasonable economic expansion had to throw out in existing strategies and adapt. It is hard to predict recovery terms but a recent McKinsey report from September 2020, assumes Spain’s economy will recover by the end of 2023. So the impact of COVID is, is huge, but it on revenues will vary by sectors, with slower recovery times likely for sector suffering stronger shocks. As tourist tourist, the touristic business might be. And there are sectors that could experience a drop of more than 20% of revenues in real terms, as they rely on activities that have been and partially still are highly restricted or fooled by discretionary consumer spending. This include accommodation and food services, entertainment, transport outdoor real estate in wholesale and retail, excluding a groceries. This segment represents 27% of gross value added and employment. The second segment represents a 34% of GVA and 36% of the labor market.Sectors in it could experience a 10 to 20% drop in their in revenue in 2020. These sectors are constructions logistic, agriculture, forestry and fisheries, professionals activities, financial institutions energy and utilities and other industry. And last, the sectors that may be less affected by COVID represent 26% of GVA and 20 31% of the labor market. These sectors with revenues potentially dropping only, let me say only 10% or less. I telecommunications, pharma and medical products Public Services, the consumer goods industry in retail groceries. This is how we, how we see it from our experience and from our forecast. Some changes, as you said before, or really here to stay in may affect certain sectors more than others. For instance, the impact of the contact free economy and the accelerated digitation has been significant in Spain, and likely will continue to be the crisis has placed more pressure on just in time on silver stock approaches that many companies employ as well as increased the importance of the end to end supply chain visibility. The sectors that could suffer a lower short term demand hit. Like I said before telecommunications, pharmaceuticals and medical products, retail groceries, and energy and utilities could maybe start focusing now on what their businesses will look like in the future. The companies will, of course need to determine whether to pursue traditional business models, or explore new ones considering how their customer’s needs and preference have changed or might have changed, which in turn could lead to a way for mergers and acquisition in partnership and Alliance. Of course, this is the positive way to see it. Spain’s economic recovery we will be neither instant nor easy this that’s for sure. The pandemics impact has been really seismic. But the experience could also be an opportunity to create a value in this so called New normality that investors do need to diligently choose which steps steps needs to be taken. In the wake of coronavirus pandemic, the Spanish legislator has passed new, stricter regulations for foreign investment in Spain which require that certain investment obtained other than before prior authority authorization. Until recently, the legal framework for foreign direct investment in Spain was based on a liberal regime, which opened the economy to foreign direct investment is pain will threes reserving the right for the Spanish government to suspend this lead liberalisation for certain investments. This liberal legal framework framework allowed in the past foreign investment subject only to the obligation of subsequent of all posterior reporting for certain statistical purposes, and, if applicable, specific relation of certain very limited industries. According to the residence of the new law, the economic crisis triggered by the health crisis poses a threat a threat to Spanish companies, which find themselves exposed to takeover attempts by foreign investors. And even though not all foreign direct investments in Spain require prior authorization. When one studies these new regulation, it becomes clear that the definition of the included sectors is widely vac and open. So in our experience, the authorities would probably opt for broad interpretation of the regulation. But foreign investors in Spain are advised in case of any depth to preventively obtain the respective authorization. This whole development clearly comes aligned with certain protectionist tendencies around the globe. So we do expect stricter regulation for foreign investment. However, at the same time, Spain remains at the forefront of foreign investment, and remained extremely interesting for foreign investors. We still believe that climate for investment has been is good. Despite this described emergency regulation in the past several months, their legislators intentions and generally foreseeable. Spain has overcome the huge economic downfall of the years 2008 to 2014, which was as you very well known, also huge and has now recovered, which means the economic the economy is growing and stable. Several tax incentives have been implemented and foreign securities holding companies in Spanish if they were was developed as a special tax regime applicable to holding companies in Spain. There are certainly tax incentives for Spanish companies investing into South America. Spain has tax treaties in place with 94 countries to avoid double taxation. labor costs remain much more competitive than in other main European economies. While counting with a highly skilled labor force. The applicable labor law is comparatively attractive for enterpreneurs in Spain has implemented an excellent Infrastructure and Transport over the last years. The Spanish lease leader approved a fast track visa framework for investment in qualified professionals in Spain is part of an EU a framework and European Framework, which guarantees competitiveness and services in product markets. Library liberalisation 14% of the GDP fiscal package, as recently announced in the fiscal measures of the G20. Economies is in place to minimize long term impact of the pandemic. The governments around the world have responded to the pandemic by launching sizable stimulus packages to protect lives and livelihoods. And for now, the magnitude of the Spanish government’s response has been in line with it of other advanced economies. Until now, the political situation has also stabilized since after several real elections in recent years, Spain now finally has a government. And it remains to be seen how the new coalition government will support business owners. But we are very, very optimistic on that.


Jonathan Bench  51:37 

Sonia, it has been great having you on the podcast, thank you for bringing your expertise and sharing your opinions on what’s going on in Spain and greater Europe. We always love to end the podcast with recommendations from our guests on what you’ve been reading or watching or listening to lately. That might be interesting to our listeners.


Sonia Gumpert  51:58 

Okay, thank you, Jonathan. So it was also really a pleasure for me to be with you with Fred and with you. And and I will encourage very much your our your listeners to explore Spain in every sense for investing for touristic purposes. And Spain is a really safe country. A really nice country from the from the from the human beings. perspective. And we are always happy to have Americans here. And we are we as lawyers will be glad to help in any sense.


Jonathan Bench  52:42 

Thank you so much. And Fred, what do you have to recommend for us today?


Fred Rocafort  52:46 

Well, first of all, I’m going to have to strongly endorse Sonia’s recommendation I I think Spain is a is a wonderful destination. And one of the things that that I love about it is just how diverse it is, especially in comparison to the size it’s you know, Spain is comparable to a to a large US state, I don’t have a specific comparison at hand, but there is just so much with within the borders of Spain in terms of different landscapes. Culturally, there are huge differences, you know, as you as you go from one region to another address different languages, different, just different cultural traditions. It’s just a wonderful, wonderful place. In terms of my own recommendations. I have to this week, the first one, just a practical recommendation, I’ve started using YouTube premium and I was a little hesitant at first, right because my thinking was well i can i can get all that I need but I was looking for a music app to use when I’m exercising and I decided to give YouTube premium a try to see if if that would work and it does you know basically what it does, it takes away the annoying ads at the beginning of the video. It allows you to basically have a proper playlist of whatever content you want and and it’s basically it’s allowed me to get over one of the things that bothered me about YouTube which was that if you know if I if I put the phone I don’t know what the proper term is right but sometimes you know there are apps that you can continue to run while give your your screen a bit of a rest with with YouTube premium you can do this so you know I just just wanted to share that look into it. Um, it’s worth worth the money to me. Reading recommendation. I think it was yesterday I read an article. And this just has certainly been in the news by the time this podcast comes out and might be a little dated but, but if you haven’t read the article by then I highly recommend that you Do so it’s a it’s an article in the intercept, China’s man in Washington and it’s about the son of former Iowa governor and former ambassador to China, Terry Branstad. And basically his son is a political lobbyist. The article does touch upon China quite a bit because of the fact that well, it’s a hot topic and his father was was the ambassador there. And I think what’s really interesting about the article is that how it really captures this whole theme of lobbying and the unholy links that exist right between those in power and different entities, companies that want to influence the political the political process. So it is an interesting complement to much of what’s been said about hunter Biden. And interestingly, there’s actually this is a little bit of a probably not what’s going to catch most people’s attention about the article. But one of the matters in which this this man Eric brands that was involved actually involves a Spanish company, and it involves certain trade actions that with which our firm has has been involved in how a Spanish company was able to successfully lobby to, to stay out of the the list of companies and products that would be affected. So really interesting, there’s there’s a lot there to to unpack. So again, China’s man and Washington, October 15, is the publication date on the intercept? And what about you, Jonathan?


Jonathan Bench  56:38 

I am recommending a language app, right? It’s not something everyone’s heard of, right? It’s Google Translate. I recommend this because I use it basically every day, whether I am working with Chinese language documents, or I am working on my very rudimentary Spanish. But I have enjoyed it. I it’s interesting, because I asked my couple of our colleagues, Fred, who are native Chinese speakers, said, What do you use for good translation software, when you’re working on a contract or just working through documents? And they they both looked at me kind of blankly and like, I was some kind of idiot and said, we use Google Translate. And so I was I thought they would, you know, there’d be some, some great proprietary Chinese language, software that they would use. And it turns out, they just like using Google, it is very user friendly, quite accurate. It has a great community of people who contribute to it users, you can contribute to it to help verify translations and say, yes, this is what this word means in Chinese or in Spanish. And so it’s very user friendly. Like, I know, you enjoy this episode you haven’t gotten to it’s just based on social media, you can use and translate things in real time as your host week for another episode of the cameras. So lots of functionality. So that’s my recommendation today. Sonia, once again, we’d love to thank you for being with us today. We look forward to catching up with you again, to get some more intel on what’s going on in Spain and in the larger continent. and wish you very well, thank you so much.


Fred Rocafort  58:15 

Thank you, Sonia.


Sonia Gumpert  58:16 

Thank you so much. Thank you.


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