Legal Status - NOVEMBER 2025
Tax: Improved legal certainty for family businesses with real estate after supreme court ruling
Disputes: Conflict between agency agreements and similar contracts. A practical comparison
MERCANTIL
Key points of the draft bill on sustainable consumption law: Greenwashing and right to repair
ALBERTO CHENLO
Associate
Last July, the Council of Ministers approved the Draft Bill on Sustainable Consumption Law ("Sustainable Consumption Law").
I. Context
The Sustainable Consumption Law transposes Directives (EU) 2024/825 (“Greenwashing Directive”) and 2024/1799 (“Right to Repair Directive”) into the Spanish legal framework and, consequently, amends key regulations such as the General Law for the Defense of Consumers and Users and the Unfair Competition Law. This legislation aims to address, among other aspects, the prohibition of commercial practices such as greenwashing, and establishes an effective “right to repair” for consumers by setting out a series of obligations for companies and providing consumers with concrete tools to make informed and responsible decisions.
II. Key Aspects
Greenwashing
The Sustainable Consumption Law restrains environmental claims so that they are clear, truthful and verifiable:
i. Generic claims: The use of advertising slogans will be limited to cases where an excellent and recognized environmental performance can be demonstrated.
ii. Third-party verification: Any corporate commitment must be supported by a detailed plan, with measurable goals verifiable by an independent expert.
iii. Sustainability labels: The use of sustainability badges must be supported by an official certification system, or one established by public authorities.
iv. Clarity in claims: It will not be allowed to imply that a product is 100% recycled when only a small part of it is.
v. CO₂ emissions: It will not be allowed to claim that a product has a "neutral" or "positive" environmental impact based solely on CO₂ offsetting.
Other misleading practices
i. Software updates: It must be disclosed when a software update may negatively affect the operation of a device or be presented as necessary when it is not.
ii. Durability and repairability: It may not be claimed that a product has a specific durability under normal conditions of use, or that the use of non-original parts or accessories may affect its functionality when this is not true.
iii. Planned obsolescence: Consumers must be informed if the product´s durability has any restriction.
iv. Product characteristics: It will not be allowed to present legal requirements imposed on all products in the category as a distinctive feature.
Warranty and right to repair
The Sustainable Consumption Law seeks to end the "use-and-dispose" culture by making repair a more accessible and attractive option for consumers than replacement:
i. Legal warranty: Information about the legal warranty of products must be provided clearly and understandably. This information must be accompanied by the European Commission's "harmonized notice".
ii. Commercial warranty: Information on the commercial warranty for durability must be provided when it:
o is free;
o covers the entire product; and
o has a duration of more than two (2) years.
This information must be accompanied by the European Commission's "harmonized label".
iii. Software updates: The period (or reference date) during which the manufacturer will provide software updates must be disclosed.
iv. Repairability: Information on the repairability score of products must be provided or, failing that, on the availability and restrictions on repair.
v. Extension of the legal warranty: If during the legal warranty period (currently three (3) years) a product presents a non-conformity and the consumer chooses to repair it instead of replacing it, the warranty period will be extended by twelve (12) months (applicable once).
vi. Obligation to repair: Manufacturers will be required to offer a repair service, even outside the legal warranty period, at a reasonable price.
vii. Refurbished goods: If consumers choose replacement of a product under legal warranty, they may request a refurbished item.
viii. European Information Form: A standardized document that will contain a summary of the repair to be carried out by technical services. Its use will not be mandatory. However, if used, its content will be binding for technical services for thirty (30) days and once accepted by the consumer.
ix. Diagnostic services: Technical services must inform in advance about the cost of diagnostic services.
x. Spare parts: Manufacturers that sell spare parts and tools must offer them at an affordable price that does not discourage repair.
xi. Freedom for the consumer and technical services: Manufacturers may not refuse to repair a product claiming it has been previously handled by an unofficial technical service. They may also not prevent unofficial technical services from using second-hand, compatible, or even 3D-printed parts, provided they comply with regulations.
xii. Cofinancing of repairs: During the four (4) years following the expiration of the legal warranty, manufacturers must cover part of the repair cost. The discount will be applied directly by the technical service and will follow the following scheme:
o 20% of the cost during the first two years;
o 10% of the cost during the third year;
o 5% of the cost during the fourth year.
This measure aims to close the gap between what a consumer is willing to pay for a repair and its real cost, preventing a functional product from remaining unrepaired because it is economically discouraging.
Other scenarios
i. Shrinkflation: When a product reduces its quantity while maintaining the same price, it must be clearly and visibly indicated at the point of sale.
ii. Ticket resale: Companies are not allowed to sell tickets at a price higher than the purchase price, except for increases in line with the CPI.
iii. Fossil fuels: Advertising energy products and transport services that operate exclusively on fossil fuels is limited.
III. Transposition
The Greenwashing Directive must be transposed no later than 26 March 2026 and applied from 27 September 2026. The Right to Repair Directive must be transposed and applied no later than 31 July 2026.
IV. Conclusions
i. The Sustainable Consumption Law represents a paradigm shift in the way companies present their products and services to consumers, by focusing attention on corporate practices such as greenwashing, which have been used as an advertising strategy for decades.
ii. The model shifts from passive protection to one based on "consumer empowerment", in which consumers gain greater tools to demand transparency, extend product life, and make decisions that benefit not only their finances but also the environment.
iii. Consumers are encouraged to adopt a more critical and conscious attitude towards their consumption habits, and companies are urged to rethink how they design, manufacture, and promote their products and services.
iv. Finally, it will be necessary to closely monitor the parliamentary process of this new regulation in order to evaluate possible amendments that may be presented by the various parliamentary groups.
November 2025
TAX
Improved legal certainty for family businesses with real estate after supreme court ruling
ALEJANDRO PUYO
Partner
On 14 July, the Spanish Supreme Court issued Judgment No. 956/2025. This establishes a clear precedent for the application of the tax benefit set out in Article 20.2.c) of the Spanish Inheritance and Gift Tax Act (LISD), particularly regarding family businesses involved in real estate rental.
The LISD provides for a 99% reduction in the net value of shares in a family-owned company. In this case, following the death of the taxpayer on 28 April 2013, their heirs applied this reduction to 90% of the shares in the family business that they had inherited, as this represented the main component of the estate.
However, the Tax Administration rejected the application for the benefit, arguing that the inherited company was not engaged in economic activity, but was merely a passive holding entity. Specifically, Article 27.2 of the Spanish Personal Income Tax Act (LIRPF) states that real estate leasing will only be considered an economic activity if the following two conditions are met:
A) The existence of dedicated office space used exclusively for managing the activity.
B) The employement of at least one full-time worker under a labour contract.
According to legal doctrine, it is not enough for an employee to formally meet these conditions. The employee must also perform tasks that are directly related to the management of the rental activity (excluding auxiliary duties such as gardening or concierge services), have a sufficient workload, and be genuinely necessary for the business to operate.
The Tax Administration argued that the last condition had not been met, since although the company owned 16 properties, 14 of these were managed by an external service provider. Therefore, hiring a full-time employee was deemed to be a mere formality intended solely to access the tax benefit.
Lower courts upheld this restrictive interpretation over the years until the matter reached the Supreme Court, which overturned it. However, the High Court did not explicitly assess whether the requirements set out in Article 27.2 of the Income Tax Regulations (LIRPF) were met in this case. However, the High Court emphasised that the company had been carrying out rental activities and filing taxes accordingly for years without any prior objection from the Tax Administration.
In this context, the Supreme Court ruled that it would be unreasonable to deny economic activity status at the time of succession if there had been no significant change to the business or its management. Succession involves the continuation of the family business, so if the conditions are the same as before the deceased’s death, the Administration cannot change its previous stance retroactively to the detriment of the heirs. Consequently, the right to apply the inheritance tax reduction must be upheld.
According to the judgment, the rule should be interpreted teleologically, or with a view to its purpose. The tax benefit is intended to protect the survival of family businesses following the death of the owner. This protection should extend to both the heir and the corporate structure.
This ruling represents a significant endorsement of the continuity of such businesses during succession processes. It prevents restrictive interpretations that could hinder generational transitions and threaten the survival of Spain’s family businesses.
November 2025
DISPUTES
Conflict between agency agreements and similar contracts. A practical comparison
ANTONIO FAIXÓ
Partner
Agency contracts are regulated by the Agency Law, so their characteristics and effects are clearly legally defined. However, historically, there have been doubts and conflicts in numerous legal proceedings due to their similarity and confusion with other types of contracts, and due to the interest of plaintiffs in claiming the compensation provided for in the Agency Law, even though the contract may not be an agency agreement.
In this regard, confusion with distribution agreements, which are not specifically regulated by any law, has been very common in courts. However, case law has increasingly accepted that the compensation for goodwill regulated in the Agency Law can be applied by analogy to distribution agreements, so the distinction between the two contracts is not so relevant from a legal standpoint.
The distinction is important when the contract between the parties has different effects that preclude compensation for goodwill. In such cases, a conflict arises and may lead to confusion in the courts.
It's important to remember that goodwill compensation is a legal concept specific to agency contracts and not applicable to other types of agreements. It's not regulated by the Civil Code or the Commercial Code, but only by the Agency Law. This compensation corresponds to the specific work performed by the commercial agent, which focuses on finding and acquiring clients for the supplier.
In any case, compensation for goodwill is not automatic; the agent must prove that their work increased the supplier's clientele and that the supplier will continue to benefit from that clientele. While case law has interpreted this burden of proof flexibly, allowing for the application of presumptions in favor of the agent, meaning that the courts can presume that the supplier will benefit from the clientele acquired by the agent and, therefore, that the agent is entitled to compensation—the agent's claim for goodwill is not automatically accepted.
Examples of conflict and argument situations include the following:
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Commission contract. Its purpose is the same as in an agency agreement: the supplier's commission to the commission agent to obtain a client. However, in the case of a commission, it is a one-off transaction, while an agency agreement is a stable and long-term relationship.
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Employment contract. You can hire a worker to perform the tasks of finding and acquiring clients. In that case, it's not an agency because the agent is independent and therefore there is no employment relationship.
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Brokerage or mediation agreement. The mediator is tasked with managing and closing a transaction with a client. The mediator does not seek out the client but is solely responsible for negotiating the contract between the two parties.
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Franchise agreement. The franchisee uses the franchisor's brand and know- how to acquire their own customers, while the agent seeks customers for the supplier, not for themselves.
- A marketing, promotional, advertising, or public relations contract. The advertiser aims to raise the brand or product awareness of the supplier in the market, but in a general way, without dealing directly with the end customer.
Finally, it should be noted that the contract between the parties may be a mixed agreement rather than a pure agency agreement. In that case, compensation for goodwill can be claimed and applied, because such compensation exists when there is an agency relationship, even when only a minor part of the contractual relationship is an agency agreement.
November 2025