Spain: Foreign investment

FDI in Figures

After falling as a result of the financial crisis, Spanish FDIs recovered in recent years due to an increase in competitiveness and investor confidence in the country. According to UNCTAD’s World Investment Report 2023, FDI inflows increased by 58.5% year-on-year in 2022, reaching USD 34.8 billion (12th position worldwide). In the same year, FDI stock stood at USD 787.3 billion, representing around 56.2% of the country’s GDP. Geographically, the U.S. was the main investor in Spain, accounting for 27.7% of the investment flows into the country in 2022, followed by the U.K. (17.8% of the investment) and Germany (14%). By sector, more than half of the total foreign investment in Spain (55.1%) went to the services sector, followed by industry (42.2%) and then construction (2.5%) and the primary sector (0.2% - official government data). Furthermore, in 2022, the manufacturing sector surpassed EUR 10.1 billion, establishing a new record. The telecommunications sector secured over EUR 2.7 billion, marking its highest performance in the last decade. The collective investment in renewable energies exceeded EUR 2.8 billion, with EUR 872 million allocated to wind (the third-highest in the historical series) and EUR 1.9 billion to solar (the fourth-highest in the series). The programming and IT sector achieved EUR 1.4 billion, the second-best result in the series after 2021. The research and development sector surpassed EUR 800 million, more than doubling any previous year. The Community of Madrid, the Basque Country, Catalonia, Valencia and Andalusia were the regions that received the most foreign investment in 2022. These five regions account for 87.6% of all foreign investment received. According to the latest figures from OECD, FDI inflows to Spain totalled USD 15 billion in the first half of 2023, compared to USD 24.5 billion in the same period one year earlier (-36.5%).

The country’s strengths in terms of FDI attractiveness include a restructured financial sector, the boom in tourism, its highly efficient transport network, its development of renewable energies and the cultural proximity to Latin America, with the presence of a number of Spanish multinational companies. Spain also aspires to become one of the world's key research actors. On the other hand, the country has high levels of private and public debt, a very negative net external position and a high level of structural unemployment. However, Spain suspended the FDI liberalisation regime and government authorisation is now required for direct investments of more than 10% of a Spanish company's capital made by residents of non-EU or EFTA countries (including the UK) in certain sectors, including critical infrastructure and technologies, media and food safety. In 2023, the Spanish Government approved additional regulations (Royal Decree 571/2023) pertaining to FDIs in Spain. These updated provisions officially took effect on September 1, 2023, and include providing clarity as to which transactions are caught by the FDI regime, as well as a new consultation procedure to confirm whether doubtful investments are subject to an FDI screening mechanism. The timeframe for issuing decisions regarding the FDI screening mechanism is shortened from 6 to 3 months; if no decision is rendered within this period, the request for FI authorization is considered as denied. Spain ranks 63rd out of 82 countries in the Economist Business Environment ranking and 36th out of 63 in the World Competitiveness Ranking. Furthermore, it is ranked 55th out of 184 economies in the 2023 Index of Economic Freedom and 29th among the 132 economies on the Global Innovation Index 2023.

What to consider if you invest in Spain

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

Yes. Although, the new regulation (Royal Decree-Law 8/2020, Royal Decree-Law 11/2020) restricts the liberalization regime for certain foreign direct investments in Spain, specifically those that are carried out in sectors that affect public order, public safety and public health.

Acquisition of Holdings

The acquisition of majority interest by a foreign company in a Spanish company is authorised. The Spanish government issued new regulations on foreign investment in March 2020. In Royal Decree-Law 8/2020, subsequently modified by Royal Decree 11/2020, the government prohibited the acquisition by foreign investors of 10 percent or more of companies active in critical sectors. Purchases of less than 10 percent are also subject to authorization if they result in participation in the control/management of the company. Under the new regulation on FDI, the sectors which are targeted by the restrictions on foreign direct investment rules in Spain include: critical infrastructures, whether physical or virtual; critical technologies and dual-use items as defined in article 2(1) of Council Regulation (EC) No 428/2009, supply of essential inputs, such as energy; sectors with access to sensitive information and media.

Obligation to Declare

Investment portfolios from an EU member state are exempt from all declarations whatever their amount. For transactions in non-target sectors by the new screening mechanism of FDI, the foreign investor must send its administrative authorization request to the General Director of Commercial Policy and Foreign Investment, in accordance with the procedure set out in Royal Decree 664/1999, 23 April 1999, regarding foreign investments and the Order dated 28 May 2001 related to the procedures applicable to foreign investment declarations and their liquidation.

Competent Organisation For the Declaration

Ministry of industry, trade and tourism

Requests For Specific Authorisations

Although the Spanish system is liberalised for foreign investment, certain sectors require prior authorisation from the corresponding competent public governmental body for investment activity to start, including in relation to:

• Banking.
• The stock market.
• Investment services companies.
• Collective investment institutions.
• Insurance companies.
• The energy sector.
• Television and radio.
• Telecommunications.
• Weapons and national security.
• Air transport.

Office Real Estate and Land Ownership

Possible Temporary Solutions

There are several of them: the domiciliation of the company in the private residence of the manager, domiciliation in a business center, hosting in shift workshops, company backbones as well as renting of professional sites.

The Possibility of Buying Land and Industrial and Commercial Buildings

There are no specific restrictions on the acquisition of real estate by a foreign national or foreign entity, except for certain restrictions or conditions that may apply in certain strategic sectors such as defense or energy. Foreign investors must therefore comply with the same requirements as any Spanish individual or legal entity.

Risk of Expropriation

Public authorities can expropriate real estate for reasons of public use or general interest, including to achieve goals in planning regulations, following the legal expropriation procedure.

Investment Aid

Forms of Aid

The national government provides financial aid and tax benefits for activities pursued in certain industries that are considered priority industries, given these industries’ potential effect on the nation’s overall economy. The aid can be a non-refundable subsidy; a loan with the various conditions that this type of funding require; or a combination of the two as in partially refundable grants; the provision of funds implemented through the company’s capital shareholdings with the joint and several decision rights involved; repayable advances that are intended to advance part of the payment of a grant; guarantees, understood as the security provided by a third party in the obligation for the payment of the debt; leasing whereby a company may get the right to use a fixed asset by paying a regular amount set by contract; or third-party financing, in which the entity responsible finds funding through private individuals or other entities and which is normally implemented using one of the modalities mentioned above.

Privileged Domains

Job creation, training, research and development, renewable energies, tourism sector, broadcasting sector. The preferred sectors are ICT, renewable energies and environment, life sciences, chemical sector, automotive and aerospace.

Privileged Geographical Zones

Special aids are granted to companies investing in regions which are lagging behind in economic development. There are community aids as in support provided by the European Union in the least favored regions. The regions concerned by the European Regional Development Fund.
The province of the Canary Islands is a Special Economic Zone (SEZ), which grants tax advantages including a reduced rate of corporation tax, a reduced rate of value added tax (VAT) and exemptions for transfer taxes and stamp duties. The Spanish territories of Ceuta and Melilla also provide unique tax incentives; they do not impose VAT but tax imports, production and services at a reduced rate. Furthermore, Spanish customs legislation allows companies to have their own free trade areas. Duties and taxes are only payable on items imported for use in Spain. These companies must comply with Spanish labour laws.

Free-trade zones

Spain’s seven free zone ports are located in Vigo, Cadiz, Barcelona, Santander, Seville, Tenerife, and the Canary Islands—all of which fall under the EU Customs Union, permitting the free circulation of goods within the EU.

Public aid and funding organisations

To learn about all the aids for investment, search the database of the investment promotion agency.

The EU via FEDER.
The Official Credits Institute (ICO),
Le Ministry of Economy, Industry and Competitiveness.
The governments of the regions and municipalities also finance the incentives for foreign investments.

Investment Opportunities

The Key Sectors of the National Economy

Real estate, Energy, Finance and insurance, Telecommunications, Wholesale trade and retail trade, Manufacturing of non-metallic minerals, Construction, Civil engineering, Business consultancy, Transportation and storage.

High Potential Sectors

The website Invest in Spain suggests a range of investment opportunities related to the industrial sectors (aerospace, life sciences, chemical sector, automotive and ITC) and to the Spanish regions.

In the energy sector, the government plan for renewable energies represents an opportunity for investments in technological innovation. The biotechnology sector is developing faster in Spain than in other EU countries. The investments in this sector are growing at a rate of more than 25% per year, making Spain the fourth biggest contributor in the world in scientific production in the biotechnology sector. According to the Spanish Institute for External Trade, the chemical, pharmaceutical and plastics industry represent great investment opportunities.

In the agrarian sector, Spain has become the largest European producer of organic foodstuff. It is one of the top markets in the EU for legumes, nuts and sea products.

Spain has become one of the most attractive destinations for call centres. It has attracted several multinationals (Avis, Hewlett-Packard, Citigroup, etc.) thanks to a labour cost 30% less expensive than in other European countries. R&D in the Information Technology (IT) and data processing (software development, artificial intelligence, supercomputers, etc.) is also one of the spearheads of Spain. Finally, numerous investments in property for development of tourism infrastructure are possible, even though some tourist areas are saturated.

Privatization Programmes

No privatisation has been announced.

Tenders, Projects and Public Procurement

Ted - Tenders Electronic daily , Business opportunities in the EU
Globaltenders , Tenders & Projects in Spain
Tenders Info , Tenders in Spain
DgMarket , Tenders Worldwide
Tendios , Spain's Public Tenders: Alerts and Analysis
Plataforma de Contratación del Sector Público , Spain's Government Public Sector Procurement Platform

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

The Spanish government retains control in the following sectors:

• Energy. The government retains a controlling stake (that is, more than 51% ownership, including 100%) in Ensa, Grupo Enusa and Grupo Hunosa. It retains a minority stake (that is, less than 50% ownership) in Enagás, Enresa and Red Eléctrica Corporación.
• Foreign trade and finance. The government retains a controlling stake in Grupo Cofivacasa, Defex (in liquidation) and Grupo Navantia. It retains a minority stake in Hispasat and Indra.
• Food environment and leisure. The government retains a controlling stake in CETARSA, Hipódromo de la Zarzuela, MAYASA, Grupo Mercasa, SAECA and Grupo Tragsa. It retains a minority stake in Ebro Foods.
• Communications and transport. The government retains a controlling stake in, among others, Agencia EFE, Grupo Correos and Grupo SEPIDES. It retains a minority stake in International Airlines Group (IAG), Airbus Group and Alestis Aerospace.

Finding Assistance For Further Information

Investment Aid Agency

Invest in Spain (ICEX Spain Trade & Investment)

Doing Business Guides

Spain country profile (KPMG)
Establishing a business in Spain (Thomson Reuters Practical Law)
Spain - Market Overview (U.S. Department of Commerce)

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