Report Topics:
1:- General Information
2:- Cooling-off Period
3:- Pyramid Schemes
4:- Multi-Level Marketing
5:- Prohibition on Products
6:- Credit Restrictions Country
7:- Money Collections
8:- Licenses
9:- Status of Direct Sellers
10:- Earnings Claims
11:- Taxes and Fees
12:- Social Security
13:- Others
General Information
is a country of 45 million people, whose political structure is very close to that of a federal country. In addition to a bicameral parliament: Congress and Senate, there are seventeen “autonomous communities” or regions, each one with its own regional parliament and government.
Some matters belong exclusively to the central parliament and government whereas others are handled exclusively by the regions.
In the case of direct selling, there is legislation promulgated by the central parliament and also legislation promulgated by some of the regions.
Spain is one of the European Union countries that adopted the “euro” as its new currency.
Cooling-off Period
Royal Decree 1/2007 provides for a right of cancellation on the part of the consumer up to seven (7) days after receipt of the goods. No reason has to be given for this cancellation.
In the coming months, transposition of EU Directive 2011/83 will increase the number of days to fourteen (14).
Pyramid selling is forbidden under article 23 of the Law on Retail Trade and article 28 of Law 3/1991 on Unfair Competition.
The regional trade laws of Aragon and Catalonia also forbid pyramid selling.
Multi-Level Marketing
Multi-level marketing is regulated under article 22 of Law 7/1996 on Retail Trade, modified by Law 29/2009.
Multi-level selling is defined as a special form of trade where a manufacturer or wholesaler sells his products or services to the final consumer through a network of traders and/or independent distributor agents coordinated within the same commercial network and whose economic profits are obtained by means of a sole margin on the selling price to the public, and which is distributed through the perception of variable percentages over the total billing generated by the whole of the consumers, traders and/or independent distributors integrated in the commercial network, and in proportion to the volume of business that each component has created.
Between the manufacturer or the wholesaler and the final consumer, the law only accepts the existence of one distributor.
It is prohibited to organize the selling of products and services when:
- The economic profit of the organization and the sellers is not exclusively obtained from the sales or services distributed to final consumers, but from the recruiting of new sellers, or
- It is not adequately guaranteed that the distributors have a working contract or fulfil the requirements that are legally required to develop a commercial activity, or
- It exists the obligation by the new sellers to make a minimum purchase of the products distributed without a buy-back provision under the same conditions.
Under no circumstances the manufacturer or wholesaler holder of the network shall be able to condition the access to the network to the payment of a quota or entry fee which is not equivalent to the products and promotional, informative or educational material delivered to a similar price of other materials in the market and whose amount will not exceed a figure that will be fixed by future legislation.
Prohibition on Products
Royal Decree 1/2007 forbids direct selling in the home of food and beverages.
However, this prohibition does not exist in some laws on consumer protection promulgated by regional parliaments with “exclusive legislative power” on consumer protection.
So, in principle, food and beverages could be sold in the home in these regions.
Credit Restrictions Country
Credit to consumers is regulated by Law 16/2011.
No specific restrictions apply to direct selling.
This detailed Law covers mainly two principles: transparency and information to the consumer.
Money Collections
There are no legal restrictions in connection with down payments, partial payments in advance, deposits, etc.
Licenses
All companies, independent entrepreneurs and direct sellers have to register with the tax authorities.
Independent Status
Dealer (buying / selling)
The dealer must:
- register with the tax authorities;
- register with the social security and pay the monthly contributions;
- present quarterly to the tax authorities income tax returns and VAT if applicable.
The company must:
- file a return to the tax authorities on purchase made by dealers when the value of annual purchases exceeds the sum of 3.005 Euros, VAT included.
Commission Agent
The agent must:
- register with the tax authorities:
- register with the social security authorities and pay monthly contributions;
- present quarterly to the tax authorities income tax returns and VAT;
The company must:
- withhold 21% on commissions paid;
- at the end of the financial year, file a return to the tax authorities on earnings made by employees and commission agents.
Earnings Claims
No legislation or court precedent on this subject.
Taxes and Fees
See information in Section IX – Status of Direct Sellers.
Social Security
All independent traders and sellers operating on a commission basis have to register with the social security run by the Government and pay monthly contributions.
The above also applies to independent direct sellers. The minimum monthly contribution for direct sellers is in the region of 140 Euros.
Others
Spain is now divided into seventeen (17) ‘autonomous regions’, some of which have the power to legislate on consumer matters. So far, five of the regions of Spain: Catalonia, Valencia, Basque Country, Andalucía and Castilla-La Mancha have passed laws whereby direct selling companies have to register with the regional authorities and make a deposit of money as a guarantee of their activities in the region in addition to providing some other information like products sold, names and addresses of direct sellers, etc.
The WFDSA International Guide to Direct Selling Legislation is a guide and is not exhaustive either in terms of subjects presented or for all areas of concern to direct selling companies. It is intended to cover general areas of concern. The Guide is not a substitute for legal counsel but only intended to alert you to the general nature of laws and regulations affecting the direct selling industry in a particular country. Consequently, before beginning an operation in any foreign country, it is strongly recommended that competent legal counsel be consulted. While every effort has been made to insure that the information contained in this Guide is accurate, the variety of sources used makes absolute verification difficult. Further, laws and regulations also can change from time to time without notice. Therefore, the WFDSA cannot be held liable for the information included in this publication.