The UTEs (Temporary Business Associations) They are created to carry out specific projects or services.
That is, it is a system of cooperation between businessmen for a certain time which must be formalized in a public deed that includes the identity of the constituent companies and the statutes or agreements that govern their operation in accordance with the provisions of the 18 / 1982.
What are UTES used for?
Temporary Business Unions (UTEs) are used to carry out specific projects in collaboration with other entrepreneurs.
They are usually formed when a single entrepreneur, With its financial, personal and material resources, it cannot afford a private contract.
As a result, it joins forces with other companies to jointly tackle the project.
The main advantage of participating in a UTE lies in the cost reduction and risk distribution, avoiding assuming the burden on your own.
Who can create a UTE?
The UTE participants They can be individual entrepreneurs or companies, that will continue with their activity normally, regardless of those carried out with the Temporary Union of Companies.
This aspect is fundamental and establishes a distinction with the economic interest groups, similar legal structures that do have their own legal personality.
The companies participating in this union They will be subject to a regime of joint and unlimited liability towards third parties, which will be limited exclusively to operations carried out jointly.
How to create a UTE
The Temporary Union of Companies (UTE) is It stands out for the existence of a single corporate purpose, which involves the joint execution of a work or service.
The creation of a UTE requires the participation of a notary, who will elevate the founding or statutory agreement to public deed.
These statutes must contain, at least:
- Name, corporate purpose, duration and tax address.
- The partners that make it up.
- Percentage of participation of each company or entrepreneur in the UTE, along with the possible distribution of losses or profits in the future.
- The details of the initial contributions (if any).
- Liquidation of the Temporary Union.
How is a UTE managed?
Through this business association agreement, a new autonomous entity is created that operates under a single management and adopts a name that may be that of one, several or all of the participating companies, followed by the expression "Temporary Union of Companies".
The management of this entity falls to a single manager, who has sufficient powers to carry out and develop the functions of the UTE, such as signing contracts, performing acts and assuming obligations.
This manager must have powers granted by all members.
In addition, the UTE will organize and manage the following bodies:
- Board of Entrepreneurs: This higher body is made up of a representative of each of the participating companies.
- Management Committee: Made up of a representative from each of the UTE member companies, this body is responsible for designing the project management policy.
Tax aspects of the UTE
It is important to note that, in order to take advantage of the tax benefits provided for by law, the Temporary Union of Companies (UTE) must be formalized by public deed before a notary and registered in the special registry of the Ministry of Finance and Public Administrations.
If you wish to know the specifics of these tax advantages, we recommend that you consult with one of our lawyers: RRYP Global.
It is crucial to keep in mind that The profits generated by the companies that are part of the UTE must be established under the direct estimation regime so that they are subject to taxation in the Personal Income Tax (IRPF).
In addition, the members of the UTE have the obligation to make withholdings for the concept of IRPF or Corporation tax, as well as the indirect taxes that the UTE must pay as a result of the activity it carries out.
How to proceed when concluding the work or project that motivated the formation of the Temporary Business Union (UTE)
Temporary Business Associations (UTEs) will be established for the same duration as the work or service for which they were established.
La Maximum permitted duration is 25 years, except in cases related to contracts linked to the operation of public services, where the duration may extend to 50 years.
Once the work or supply that led to the creation of the UTE has been completed, it will be extinguished.
The process of extinction It must be formalized by public deed and subsequently notified to the Ministry of Economy and Finance, who will proceed to deregister the UTE from the special registry.
Example of a UTE in Spain: Prosan Medicare
A prominent case of Temporary Union of Companies (UTE) in Spain it took place in 2020, in the midst of the health crisis caused by the COVID-19.
Faced with the urgent need for medical supplies, five Valencian companies, including one from Elche, joined forces to create Prosan Medicare, a strategic alliance with the goal of producing quality medical supplies in a short period of time.
The UTE Prosan Medicare emerged with a clear vision: to strengthen the health sector and guarantee the supply of essential products in a critical context.
According to its proponents, business collaboration is key to responding to society's challenges and providing quick and efficient solutions.
The companies that formed this UTE are Mila-Rosa SA and Casa Mediterránea 1967 SL (Ontinyent), Pro Safe Plus SL of the Ferrotall Group (Elche), Aupa Hogar SL (Albaida) and Barbera SL Work Uniformity (Ayora).
Their commitment was not only focused on the production of medical supplies, but also on the employment generation, with thousands of direct and indirect jobs, contributing to economic and social development.
Furthermore, all production complied with rigorous quality controls and the standards required by European regulations, with the authorization of the Agencia Española del Medicamento.
This case exemplifies how the Temporary Business Unions They can play a crucial role in times of crisis, facilitating cooperation between companies to address major challenges and contribute value to society.
RRYP Global, lawyers experts in commercial law.
