FDI in figures

In twenty years, Spain has become the ninth global economic power thanks to its cheap manpower, the spectacular boom in tourism and as of the year 2000, the real-estate boom. Its appeal has deteriorated since 2004 because of the increase in salaries, its lack of productivity and its low competitiveness due to high inflation, its lag in research and development and its bureaucracy caused by the existence of 17 Autonomous Communities in addition to the State and community regulations.

Despite the fact that indicators are at their lowest in the whole European Zone, it would appear that Spain will be able to come out of this slowness clearly better than its neighbors. The evolution of foreign investments in the country perfectly illustrates this transformation. Spain is in the process of implementing a radical change on its outlook of FDI. While its growth in the 1970s to 1990s was based on low costs, the answer to the crisis is based on added value, as much as in terms of training as in R&D and high-tech services. The expected outcome is to place the country at the center of the 21st century's economic stakes. In order to accomplish this, Spain has sweepingly turned towards renewable energy sources (wind power and photovoltaic). As proof, in 2013, Seville will have the highest photovolataic energy production platform on the planet.

In addition, Spain aspires to become an important player on the world research arena. To enable itself to fulfill its ambitions, Spain has just developped the "Malaga Valley" project, whose sponsors hope to make it the biggest European research and innovation center dedicated to information technologies and communication.

Other sectors in which Spain hopes to find its lifeline against the crisis are sea-water desalination and aeronautics.

Why you should choose to invest in Spain

Strong points

The country's main strong points are flexibility and adaptability of economic operators and in the quality of life the country offers.

Weak points

The country's weak points are the low productivity of its manpower, its weak competitiveness as well as a growing trade balance deficit. The complexity of the regulation system with regard to the 17 Autonomous Communities is also a hindrance to investment.

Government measures to motivate or restrict FDI

Spain applies the principle of free establishment and non-discrimination. Foreign investors can operate any type of business and under the same conditions as a local investor. The CEE Council Directive no. 88/361/CEE dated June 24, 1988, concerning the free movement of capital between the residents of member States was adopted in the Spanish legislation by Law no. 18/1992 of July 1, 1992, and came into effect on July 4, 1992 and by Royal Decree 1816/1991 no. 1816/1991 of December 20, 1991 on Foreign Economic Transactions.

The gaming, television, radio and air transport sectors are protected by restrictions for the investors residing outside an EU member country; it is the same for businesses manufacturing and selling arms. In the latter case, these restrictions also concern investors within the community.

Bilateral investment conventions signed by Spain

Spain has signed bilateral agreements with more than fifty countries. 47 agreements can be downloaded from the website of UNCTAD: click here to download these agreements. They define the framework for foreign investment protection in Spain for each of the signatory countries.

Procedures relative to foreign investment

Freedom of establishment

Yes.

Acquisition of holdings

The acquisition of majority interest by a foreign company in a Spanish company is authorized provided that the business is not in the regulated sector of production and trade of weapons.

Obligation to declare

Investment portfolios from an EU member state are exempt from all declarations whatever their amount. Direct investments can require a prior declaration, when the investment amount or the granted loans exceed 30,000 Euros for a foreign interest holding higher than 50%. The request is to be made with the Register of Foreign Investments, from the Directorate General of Commercial Policies and Foreign Investments (DGPCIE).

Competent organization for the declaration

Sub-secretary of state for Commerce

Requests for specific authorizations

Finding assistance for further information

Investment aid agency

Interes

Other useful resources

The investment aid agencies of the autonomous communities