Bill on de-indexation of the the Spanish economy

Written on 2 Feb 2015

The Parliamentary Commission for Competitiveness and Economic Affairs has passed a new text of the Bill on de-indexation of the Spanish economy (Official Gazette of the Parliament of 5 January 2015). This Bill sets out a scheme based on the principle that monetary values shall not be amended according to price indexes or formulas containing them.

1. Periodic and default review; periodic but non-default review and non-periodic review of monetary values which determination involves the public sector.

In general terms, review of monetary values which determination involves the public sector shall not be undertaken according to prices, price indexes or formulas containing them.

Nevertheless, when the developments of the costs so requires, reviews according to individual prices and specific price indexes are admitted on exceptional basis.

In any event, such costs shall be assessed in accordance with the efficiency and good business management principles. On the other hand, such costs shall not include financial costs, depreciation, overhead costs, structure costs or industrial return. Labour costs variation could be included in the review according to the statutory provisions to be passed.

The periodic and default review shall be justified by the recurring nature of the changes of the activity costs. For these purposes a Royal Decree will be passed to regulate, inter alia: (i) those cases in which a periodic and default scheme may be approved; (ii) the guidelines for designing formulas and (iii) the criteria to interpret the efficiency and good business management principles.

On exceptional basis, regarding the lease agreements entered into by the public sector, the parties may establish a periodic and default review scheme whenever it is justified by an economical report. This scheme shall be referred to the offices rental prices in each Autonomous Community. If not expressly agreed, no review shall take place.

The periodic but non-default review and the non-periodic review have to be justified by the corresponding economic report.

2. Review of the prices and fees on the public sector contracts.

Review of the prices and fees on the public sector contracts shall be governed by its own legislation (Royal Legislative Decree 3/2011, of 14 November)

3. Review of private contracts.

Monetary values included in contracts entered into by private parties shall only take place when expressly agreed.

If the index or the reference methodology is not specified, the Competitiveness Guarantee Index shall be applied.

4. Amendments and repeals

Please note that this Bill amends the following regulations: (i) Law 29/1994, of 24 November, on urban leases; (ii) Law 49/2003, of 26 November, on rural leases; (iii) articles 47, 89, 131, 133 and 255 of the Royal Legislative Decree 3/2011, of 14 November on public sector contracts, establishing that periodic and default reviews can only take place regarding works and supply contracts for weapons and equipment manufacturing and those which period for investments review is equal or greater than 5 years; (iv) Royal Legislative Decree 2/2004, of 5 March, on Local Revenue Authorities.

Finally, this regulation repeals: (i) articles 90, 91 and 92 of Royal Legislative Decree 3/2011, of 14 November on public sector contracts; (ii) article 77 of Law 14/2000, of 29 December on administrative, tax and social measures which refers to the fees and tolls of highways hold by the State; and (iii) the 8th Additional Provision (section 8) of Law 22/2013, of 23 December, on the General State Budget.