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New era for Spain’s Zara empire as Ortega heiress takes over

Marta Ortega on Friday took the reins of Zara-owner Inditex, the group founded by her father, and faces an immediate challenge after the fashion giant closed shops in Russia, its second biggest market.

(FILES) In this file Founder and chairman of the Inditex fashion group Amancio Ortega (R) laughs with his daughter Marta Ortega. Photo taken July 31, 2016.
Founder and chairman of the Inditex fashion group Amancio Ortega laughs with his daughter Marta Ortega at the A Coruna International Show Jumping competition in Arteixo, on July 31, 2016. Photo: MIGUEL RIOPA / AFP

With neither fanfare nor ceremony, the 38-year-old daughter of multibillionaire Amancio Ortega took over the world’s biggest fashion retailer and its 6,500 shops.

“I begin this stage…with a deep sense of responsibility,” Ortega wrote in a letter to the 174,000 employees of the group, which has eight brands including Massimo Dutti, Bershka and Stradivarius.

“I ask for your support and patience while I continue to learn from everyone every day,” she added.

The youngest of Ortega’s three children, she was in charge of design and product launches across all of Inditex’s brands before becoming chairwoman on Friday, taking over from Pablo Isla who had run the group since her father retired in 2011.

As her father’s right hand, Isla oversaw Inditex’s massive international expansion over the past decade.

Marta Ortega’s promotion has been on the cards for several years but was only announced at the end of November as part of a reorganisation engineered by her father, now 86.

Anna Wintour, Marta Ortega and Diane von Furstenberg attending the CFDA / Vogue Fashion Fund 2019 Awards at Cipriani South Street in New York City on November 5, 2019 .

Anna Wintour, Marta Ortega and Diane von Furstenberg attending the CFDA / Vogue Fashion Fund 2019 Awards at Cipriani South Street in New York City. Photo: Jamie McCARTHY / GETTY IMAGES NORTH AMERICA / AFP
 

“We’ve been preparing for this transition for a while,” said Isla at the time. “Marta has been working in the company for 15 years … she knows it very well”.

‘Very well prepared’ 

Described as discreet and reserved, Marta Ortega was born on January 10, 1984 to the billionaire and his second wife Flora Perez, growing up in La Coruna in northwestern Spain with her half-sister Sandra and half-brother Marcos.

After attending a Swiss boarding school and graduating in 2007 from the European Business School in London, she briefly worked on the shop floor at a Zara store in the British capital to understand how things operate.

Although she never said she was the Inditex owner’s daughter, her colleagues told El Pais newspaper they quickly figured it out after noticing her Rolex watch.

“The first week, I thought I was not going to survive. But then you get kind of addicted to the store” she told The Wall Street Journal in a rare interview in August 2021.

When her appointment was initially announced in November, it caused concern in the business community, triggering a fall in the company’s share price but such fears appear to have evaporated.

Although she has never held an executive role at Inditex, she is “well prepared” and will be “surrounded by good people” said Alfred Vernis, professor at Spain’s ESADE business school and a former Inditex executive.

Working with her is Oscar Garcia Maceiras, who recently took over as chief executive of Inditex barely a year after joining the group from Spanish banking giant Santander.

“He will be the one who takes executive decisions,” said Vernis.

A difficult moment

The change at the top comes at a pivotal time for the Galicia-based company which has chalked up record profits in recent years but is now facing one of its most difficult moments.

People pass by a Zara shop in Barcelona on January 7, 2017.

People pass by a Zara shop in Barcelona on January 7, 2017. Photo: JOSEP LAGO / AFP

Worth some 62 billion euros, Inditex nearly tripled its profits last year to 3.2 billion euros, but its outlook for 2022 has been overshadowed by Russia’s invasion of Ukraine.

At the start of March, the retail giant suspended all retail activity in Russia, its biggest market after Spain, shutting its 502 shops and suspending all online transactions.

The move is likely to have a significant impact on its results, with the Russian market accounting for nearly 10 percent of sales.

“The current financial year promises to be very complex, due to Inditex’s exposure in Russia and the rest of Europe” and “rising production costs” caused by record inflation, Credit Suisse said in a note.

Founded in 1985 by Amancio Ortega, Inditex must also strengthen its online offering in the face of stiff competition from other retailers.

Above all it must step up its “green transition” in order to reduce its environmental impact, which is huge.

“Pablo Isla was doing it but not enough,” said Vernis, indicating such an essential step “would cost” the company.

Shares in Inditex closed up 1.67 percent at 20.11 euros.

READ ALSO: Zara founder Amancio Ortega enters renewable energy sector

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The tax cuts and other benefits Spain’s new Startups Law will bring to entrepreneurs

Foreign entrepreneurs have been waiting for years for Spain's highly anticipated Startups Law to be finalised. The latest news is that it will come into force in September 2022; and new details on the benefits it will bring have also been released.

The tax cuts and other benefits Spain's new Startups Law will bring to entrepreneurs

Spain’s new Startups Law, which the Spanish government first announced in 2019, could finally come into force in September 2022, as indicated by Economy Minister Nadia Calviño. 

For the first time, Spain will have a law directly aimed at the particularities of small technology-based companies. 

The new Startups Law hopes to attract foreign companies, making it easier for startups to choose Spain by giving them incentives such as tax reductions. 

Although there is still a long way before the final text of the Startups Law is published, and it may have to go through several amendments yet, here’s the latest on the draft law so far and the benefits it will bring.

There will be no obligation to pay the social security self-employed fee for multiple activities

One of the most important announcements is the elimination of having to register as self-employed (autónomo) in the Special Scheme for Self-Employed Workers (RETA) for three years, provided that the entrepreneur who launches the startup is in turn hired as an employee by another company.

This is the case for 25,000 self-employed workers in Spain who currently combine working for themselves with being hired by someone else.

Overall, it’s good news as Spain’s social security fee is among the highest in Europe at €294 a month. 

Self-employed workers will have three chances to benefit from the new law

The failure of a business is something that is being contemplated for the first time in legislative text in Spain.

The startup bill will make serial entrepreneurship easier, meaning that a freelancer who has started a business, which ultimately doesn’t work, can try again and can continue to benefit from the same advantages. Specifically, entrepreneurs are allowed to benefit from the Startups Law up to three times.

Improvement in the tax treatment of stock options

Stock options are often a form of remuneration for work that is frequently used in startups. It consists of offering directors or employees the possibility of obtaining shares of the company where they work. Specifically, the tax exemption amount will rise from €12,000 to €45,000.

In addition, tax will only be paid on these shares when the sale of them takes place, or when the company goes public.

Deduction in Corporation Tax to 15 percent

It will give startups and investors a reduction in Corporation Tax from the current 25 percent to 15 percent. 

The elimination of obstacles for foreign investment 

One of the main problems foreign investors encounter when they want to invest in a Spanish startup is bureaucracy.

As a result of this, the new law aims to eliminate the obligation for international investors to request a NIE (foreigner ID number) to carry out this type of action. Both investors and their representatives will only need to obtain Spain’s tax identification numbers (NIFs).

Tax breaks

The new law includes a series of tax benefits in order to make national investment more attractive.

The maximum deduction base for investment for newly or recently created companies will be raised from €60,000 to €100,000 per year and the type of deduction will increase from 30 to 50 percent.

The period of time that a company is considered ‘recently created’ will increase

The period that is considered ‘recently created’ for eligible companies will go up from 3 to 5 years old. For biotechnology, energy or industrial companies, the bracket is wider still – 7 years.

Who will be able to benefit from Spain’s new Startups Law?

The Startups Law is open to anyone from the EU or third countries, as long as they haven’t been resident in Spain in the five previous years. It will allow them to gain access to a special visa for up to five years. 

This visa will be open to executives and employees of startups, investors, and remote workers, as well as their family members. 

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