Have there been any significant regulatory developments in Spain over the last 12 months?

The more significant regulatory developments in Spain over the last 12 months could be summarized as follow:

Labor reform 2022: Among other issues, it modifies contractual modalities, establishes new flexibility mechanisms and reintroduces the ultra-activity of collective agreements. The majority of this regulation came into force on 31 December 2021.

Reform of the Criminal Code: extension of offences entailing criminal liability to legal persons. This legislative change directly affects legal persons, whose exposure to criminal risk is increased. Companies and entities must adopt internal organizational and procedural measures for the protection of the right to sexual freedom and for the prevention, detection and reaction and the eradication of all sexual violence. Legal entities that already have a Criminal Risk Prevention System in place, must carry out a verification and, where appropriate, modification and adaptation of their System to the new criminal risks.

Incorporation of a limited liability company with €1 share capital: In order to promote the creation of companies, the “Crea y Crece” Act introduces a series of corporate measures. One of the most important changes is the modification of the minimum capital required for the incorporation of limited liability companies to €1, compared to the legal minimum capital of €3,000 established until now. However, in order to protect creditors, a number of requirements are now imposed on companies with a share capital of less than €3,000.

Amended Public Sector Contracts Law for greater guarantee of payments to subcontractors: Among the new features, it highlights that in contracts subject to harmonized regulation or with an estimated value equal to or greater than €2 million, the contracting body will retain the contractor's guarantee when the subcontractor claims in court or arbitration for the payment of overdue invoices, until the contractor complies with the ruling and the requirements for the return of the guarantee are met.

Reform of the Insolvency Law: This profound structural reform of the insolvency system, which came into force on 26 September, was long awaited, as the one-year extension requested by the Government in July 2021 had already expired on 20 June 2019. The reform aims to attack the main limitations of the Spanish insolvency system, which the Preamble groups into four blocks: pre-insolvency instruments, late recourse to insolvency proceedings, the excessive duration of insolvency proceedings, which moreover almost always (90% of cases) end in liquidation and not in an agreement, and the scant use of the second chance.

Are there any service areas where demand has grown over the last 12 months?

The dynamism of the M&A market, the post-pandemic recovery of the economy, debt refinancing, the peak of private equity activity and new generation fund applications have boosted the activity of professional practices this year.

Has there been any significant consolidation or merger activity in the accounting profession?

The market for small and medium-sized practices in Spain continues to need concentration to enable them to meet increasingly demanding regulatory requirements. However, the pandemic has halted merger processes and there is still no news of significant operations in the market today.

What are your expectations for the next 12 months - are there any potentially significant developments in the pipeline?

Medium-term growth areas include compliance, data protection, digital technology and cybersecurity consulting, which is forcing the industry to rely on an increasing number of staff specialising in these new segments.

One of the biggest challenges for the industry has been the return to face-to-face work with mixed remote/face models, as well as the retention of young talent due to the gap between a very demanding industry culture that demands long working hours and many deliveries and queries against the clock, and the desire of young people to have a more balanced life.