Spain’s new tax measures prompt Agatha Ruiz de la Prada to leave the US
Spanish designer brand Agatha Ruiz de la Prada has closed its NY flagship store at 466 Greenwich Street and is leaving the US market, as a new corporate tax measure in Spain threatens the company’s financial health.
Spain’s new corporate tax measures, recently approved by the government, are forcing the Madrid-based designer to close her business in the United States.
In an interview with Fashion Network, the designer spoke of her frustration and said the new measures will severely impact Spanish fashion businesses. The new Royal Decree Law introduces a raft of tax rules aimed at increasing tax revenues in the country, including limitations on net operating loss, carry forwards and foreign tax credits.
For the Spanish company, this means that losses incurred overseas will stop being deductible for tax purposes.
Agatha Ruiz de la Prada launched in New York in 2008 with a first store in Soho. The brand, known for its quirky and colourful collections, opened its last US store in 2010. Further international flagships in Paris and Milan will remain open for business.
According to the Spanish designer, the decision to close the loss-making NY branch was taken as no better alternative was found. The immediate liquidation was the only way to avoid the impact of new tax measures on the group’s financial health.
Agatha Ruiz de la Prada closed the doors of the store on 23 December, surprising thousands of shoppers who hit the streets of New York to buy last-minute Christmas presents.
Although the store was struggling to make a profit, the business was starting to turn itself around, said the fashion designer. “In store sales were up by 50% on last year and we had recently refurbished the interior,” she commented.
The US subsidiary was the worst-performing company in Enjoy and Laugh’s portfolio, which also includes the brand’s subsidiaries in Italy and France.
The business will retain ownership of the NY property, and is currently looking for a new tenant.
The new tax rule will also affect other Spanish fashion companies, warned Agatha Ruiz de la Prada. The new measures have been also criticised by businesses from other sectors and have caused, according to newspaper Expansion, a multitude of sales of foreign subsidiaries.
Copyright © 2022 FashionNetwork.com All rights reserved.