Warning: The information set out below is a general guideline provided by DOMENECH ABOGADOS.
Specific advice should be sought before any action in reliance on it is taken, as explained more
fully in this website's
legal
notice.
The UK press is full of dreadful stories of foreign investors trapped in
fraudulent Spanish investment schemes. A recent one, affecting over 2,000 foreign investors (mainly
from Germany and the UK), relates to a business operating on Spain’s Costa del Sol known as “
Fortuna Land”.
The fraud used websites and telemarketing to offer prospective investors the
chance to take part in (what must have sounded like too-good-to-be-true) property developments. The
developments were to be operated through companies and off-shore payments were required (which in
itself should have rung potential investors’ alarm bells).
Prudent investors tempted by the Fortuna Land’s offer should have asked
themselves (or, better, asked their own Spanish lawyer) whether:
-
It was suspicious that a business supposedly operating in Spain would request
payment through a bank in Cyprus.
-
It was odd to involve such an unconnected jurisdiction in the
arrangements.
-
Sufficient and independent investigation had been made as to the good standing
of the companies involved (since what investors were being tempted with was not a direct investment
in Spanish land but a participatory investment in a company).
-
It was a good idea to invest when bank guarantees covering the investment were
not offered.
Why is it every year that foreign investors become enticed by criminal
organisations and trapped in this way? We at DOMENECH ABOGADOS think the answer may lie in
the following widely held misconceptions:
-
Operating through off-shore accounts is necessarily tax efficient.
This is simply not so. Most territories commonly labelled “off-shore” are
included in the Spanish black-list of tax havens. A foreign investor should not assume that
investing through these territories is going to place him in a better position; on the contrary,
much Spanish legislation is aimed at making it more burdensome and costly for investors using such
territories.
-
Intervention of a Spanish notary guarantees investment safety.
Again, a widely held misconception. A notary basically checks the identity
of the parties to a transaction. For example, a notary certifies that whoever appears before
her/him as a director of a company is in fact that that person. But a notary has nothing to
do with the transaction itself. S/he is not checking that the company’s publicity tells the truth
or that a supposedly “guaranteed” building licence will ever be granted by the Spanish local
planning department. The only way for a foreign investor to get assurance on such matters is
to engage the services of an independent lawyer to run all the relevant checks.
-
Lawyers provided by the company inviting investment can also fairly advise the
foreign investor.
This is a terrible blunder. What about conflicts of interest? Why do people who,
in their home country, wouldn’t dream of handing over large sums of money for an investment that
hadn’t been first scrutinised by their own lawyers think such prudence unnecessary in
Spain?
We at DOMENECH ABOGADOS will be happy to ensure that any investment you’re being encouraged
to make in Spain is secure. If you have such concerns, then please phone Christopher Lee on
(00 34) 93 415 06 77 or e-mail
cl@domenechabogados.com