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Can Spain really become ‘Europe’s Hollywood’ as PM suggests?

Whilst on an official visit to the United States, Spain’s Prime Minister has pitched his country as the perfect backdrop for blockbuster American productions, but can Spain get round its reputation as a bureaucratic nightmare among international movie and series producers?

Can Spain really become 'Europe's Hollywood' as PM suggests?
Spanish Prime Minister Pedro Sánchez during his visit to the United States in July 2021. Photo: Robyn Beck / AFP

“We aim to become, and we have been named in some media, and if you allow the comparison, the Hollywood of Europe,” Pedro Sánchez told guests at a meeting with American audiovisual giants in Los Angeles on Thursday.

“Numerous providers of cross-border TV channels that were established in the UK before Brexit have now moved their operations to Spain,” the Spanish Prime Minister explained.

“Among them our hosts today NBC Universal, Sony, Disney, just to name a few.  

“Spain has all the necessary administrative and tax incentives, as well as all possible landscapes and backdrops to receive new projects and create new narratives.

Does Spain do enough to convince Hollywood?

Spain has been the movie set of numerous film classics such as Indiana Jones, Star Wars and more recently hugely popular franchise productions including Fast and the Furious and Game of Thrones. 

But Spain is also reported to have lost out on several big Hollywood shoots due to its slow and complex bureaucratic processes, for example not issuing visas quickly enough for film crew members who are American or from another non-EU country.

In some cases, actors, makeup artists, producers and other film crew had to be able to prove they had three years of experience, have a recognised degree or show they had a contract longer than three months with the audiovisual company to be eligible for a visa. 

A scene from Star Wars: Episode II – Attack of the Clones, shot in Seville’s Plaza de España. Photo: Screenshot

Slowly but surely, Spain is realising how its outdated and convoluted official processes and strict requirements for foreigners do not correspond with the reality and demands of a fast-paced international job market, especially for an industry as demanding as Hollywood’s.  

During his meeting with the US’s top studios, Sánchez outlined his government’s plans to allocate €1.6 billion ($1.88 billion) to boost Spain’s audiovisual sector, including tax incentives for international production houses that relocate to Spain. 

If carried out in practice, this would mean Spain’s audiovisual industry would grow by 30 percent in the next four years.

In early July, Spain’s Migrations Department also sent instructions to simplify and fastrack the granting of permits and visas for all workers who come to Spain to shoot series, movies or advertisements. 

Will all this be enough to convince Hollywood to turn to Spain?

If recent reports are anything to go on, Greece is currently the European country that’s garnering the attention of big-money American productions. 

After the 2016 Jason Bourne was shot in Spain’s Canary Islands when the film was set in Athens – all in the name of tax deductions –  the Greek government reacted by introducing a law to attract international productions with a tax rebate of 40 percent on all manner of expenses.

As a result, more than 70 major international productions have chosen the Hellenic nation, pumping millions into the Greek economy.

It seems Spain is late to the party, but it’s still a worthy competitor, as the Game of Thrones prequel “House of the Dragon” (shooting in Spain in autumn) suggests. 

How important is Hollywood to Spain’s economy?

According to data from Spain’s Secretary of State, one of the world’s leading production companies will invest almost €362 million in the filming of scenes from 33 series and 18 films in the Canary Islands, Andalusia, Madrid, Aragon, Catalonia, Navarra, the Balearic Islands and Valencia.

So there’s certainly the potential for big cash injections into the Spanish economy, although as seen in Greece in recent productions, jobs don’t always go to locals as fast-tracked visas means Hollywood directors bring more of their own crew over. 

Around 668,000 people in Spain work in the film, video, radio and TV industry, according to 2020 data by the country’s Ministry of Culture, a sector that’s among the hardest hit in Spain as a result of the pandemic. 

That’s not counting the catering, transport and other businesses that make money indirectly from multimillion-dollar productions. 

Between 2015 and 2018, Spain ranked fifth in the European Union in content creation, at the same level as Italy and Sweden, but behind the United Kingdom, Germany, France and the Netherlands.

The entertainment industry also has the potential to boost tourism as has happened in the Basque Country thanks to Game of Thrones.

But the reaction by the majority of Spaniards has been of frustration with Pedro Sánchez’s ‘Hollywood’ allusion, for whom the focus should be on fixing local work issues without having to promote Spain abroad.

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What you need to know about investing in index funds in Spain

Index funds are considered a safer and more passive way of investing for those with little financial knowledge. However, understanding what they are, the best funds available, and how they're taxed in Spain is key before investing your money.

What you need to know about investing in index funds in Spain

What are index funds?

According to a basic definition by Banco Santander, “index investment funds are collective investment undertakings whose investment policy strives to mimic a certain index.”

What does that actually mean? And what is being mimicked here? Let’s look at an example. An index fund tracking the Vanguard Global Stock Index, for example, will put together an asset portfolio that essentially mirrors, or is similar to, at least, the Vanguard portfolio, in terms of composition. 

So that means that if the Vanguard Index has any major changes in terms of portfolio makeup, the fund manager (more on the best of those in Spain below) changes your index fund to reflect that change.

Often in Spain index funds would be linked to the IBEX 35, Spain’s main stock exchange, but many people invest in regional or global funds too. Besides that, index funds basically function in the same way as other funds: the money in the fund is used to buy and sell assets to make profit.

Generally speaking, the benefits of index fund investing are their low cost, the little financial knowledge and time investment required from the investor, and their diversification. The drawbacks are the lack of downside protection when there are losses, the lack of choice in index composition, and the fact that your investments can’t ‘beat’ the market.

READ ALSO: The best high-yield savings accounts in Spain

How profitable can index funds be?

Owing to the fact that the entire point of index funds is to mimic a particular index, the way we think about profitability is slightly different than with other forms of investment.

In that sense, there’s really no such thing as a ‘good’ or ‘bad’ index fund based on its performance. How well the index fund performs is better thought of as how well it replicates the index it is supposed to be mimicking.

According to Rankia, a Spanish investment service and comparison site, index funds vary wildly in terms of returns, but compound annualised returns ranging from as low as -40 percent in the worst case examples to 55 percent profits in the best.

Obviously, how much you make in cash terms depends on the size of your original investment in the fund.

Can you invest in foreign index funds in Spain?

Yes, you can. In fact many people do, and fund managers often recommend doing so.

In Spain, the main fund managers that offer index funds include iShares, EBN Bank, Amundi, Vanguard, Pictet, Bankinter, Caixabank, BBVA, and Credit Suisse.

Which are the best index funds to invest in from Spain?

Most index funds are grouped on a regional basis, so there are several funds that mirror European markets, North American markets, the Pacific region markets, and so on, as well as broader global index funds.

According to Rankia, some of the best global index funds to invest in from Spain include:

Fidelity MSCI World Index Fund P-ACC-EUR
Total Expense Ratio (TER): 0.12 percent
3-year return: 11.73 percent

Vanguard Global Stock Index Fund EUR Acc
TER: 0.18 percent
3-year return: 11.63 percent

Amundi Index MSCI World – IE (C)
TER: 0.19 percent
3-year return: 11.51 percent

Vanguard ESG Developed World All Cap Equity
TER: 0.20 percent
3-year return: 9.29 percent

Vanguard Global Small-Cap Index Fund
TER: 0.29 percent
3-year return: 7.37 percent

Amundi Index FTSE EPRA NAREIT Global – AE (C)
TER: 0.34 percent
3-year return: 3.17 percent

How are index funds taxed in Spain?

Under the Spanish tax system, index funds are taxed as savings income as part of the IRPF (Spain’s income tax) and are included as capital gains and losses, as if they were any other type of stock market shares or investment product.

However, one of the advantages of index funds over other forms of investment is that if you sell one index fund in order to buy another, you don’t pay for the capital gains obtained because it is considered a transfer from one fund to another and is therefore exempt from taxation.

This makes it one of the best investment options if you want to get a higher return on your earnings via compound interest because you can take advantage of these capital gains to reinvest them instead of paying them in taxes.

As index funds in Spain are taxed in the same way as any other investment products that is subject to savings rates, they are taxed at the following rates:

19 percent for capital gains of less than €6,000

21 percent for capital gains between €6,000-€50,000

23 percent for capital gains in excess of €50,000

READ ALSO: Bank overdraft in Spain: What are the risks and penalties?

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