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Executive Summary

Spain is open and seeking to attract additional foreign investment, particularly to continue its recovery from the recent economic crisis. Spain’s excellent infrastructure, large domestic market, well-educated work force, and export possibilities have attracted foreign companies in large numbers over the past three decades. In 2016, gross new foreign direct investment reached EUR 33.096 billion, with the main investors in Spain being the United States, Luxembourg, Germany, the Netherlands, France, Mexico, and the United Kingdom. This investment focused particularly on activities related to energy, real estate, finance and insurance, engineering, and construction of buildings.

Spain emerged from its recession in the third quarter of 2013. Even with a high unemployment rate – 18.63 percent at the close of 2016– and significant stocks of household and public indebtedness, the economy continued to grow in 2016 and has benefited from a resurgence in domestic consumption. The government attributes this turn-around in part to the economic reforms it implemented beginning in 2012, the largest in the country’s democratic history, which streamlined budgets and loosened labor laws to make hiring and firing easier. As part of this effort, the government sharply curbed public spending, which helped stabilize the fiscal situation. Major economic imbalances are being corrected, and competitiveness and flexibility are being restored.

The government implemented a series of labor market reforms and the restructuring of the banking system, all measures aimed at improving the efficiency in the allocation of resources, the full effects of which were visible by the end of 2014. To avoid the fragmentation of the domestic market emerging from differences of central, regional and local regulation, the 2013 Market Unity Guarantee Act was adopted. The law aims to rationalize the regulatory framework for economic activities, eliminating duplicative administrative controls by implementing a single license system that facilitates the free flow of goods and services throughout Spain. Spain has regained access to affordable financing from international financial markets, which has improved Spain’s credibility and solvency, in turn generating more investor confidence. However, the Spanish government has yet to improve significantly access to financing for small and medium-sized enterprises (SMEs), which have some difficulty accessing credit.

On August 1, 2014, the Spanish Council of Ministers approved three Tax Reform bills relating to Personal Income Tax, Corporate Income Tax, and Value Added Tax (VAT) that went into effect on January 1, 2015. Although the reforms generally reduced personal and corporate taxes in most categories, one of the new measures was an exit tax that applies to taxpayers that have had tax residency in Spain for at least ten of the last fifteen years and who own more than EUR 4 million in relevant assets or more than 25 percent of a company worth over EUR 1 million. Although the measure seeks to combat offshore tax evasion, the provision has caused concern among Spanish entrepreneurs and foreign investors who believe the reform will make it difficult for Spanish start-ups to relocate outside the EU, which can be essential for the growth of a new business.

Some U.S. and other foreign companies operating in Spain say they are disadvantaged by the Tax Administration’s (AEAT) interpretation of Spanish legislation designed to attract foreign investment. For the past several years, AEAT has investigated and disallowed deductions based on operational restructuring at the European level, involving a number of U.S.-owned Spanish holding companies for foreign assets (Empresas de Tenencia de Valores Extranjeros or ETVEs), claiming the companies are committing an abuse of law. This situation disadvantages foreign direct investment in Spain; many U.S. companies now channel their Spanish investments and operations through third countries.

In implementing its fiscal consolidation program, the government has taken some actions which negatively affect U.S. and other investors in the renewable energy sector on a retroactive basis. As a result, Spain is facing several international arbitration claims. Spain is a member of both the International Centre for Settlement of Investment Disputes (Washington Convention) and the 1958 Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).

Registration requirements are straightforward and apply to foreign and domestic investments equally. They aim to verify the purpose of the investment, and do not block any investment. On September 1, 2016 a new Resolution of the Directorate General for International Trade and Investments at the Ministry of Economy, Industry and Competitiveness came into force, by which new forms for declaration of foreign investments before the Investment Registry are established, when the person obliged to declare is the investor or company with foreign participation.

Spanish law protects property rights and those of intellectual property. The government has amended the Intellectual Property Act, the Civil Procedure Law, and the Penal Code to strengthen online protection. Still, internet piracy has continued to increase over the past several years.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 41 of 176
World Bank’s Doing Business Report “Ease of Doing Business” 2017 32 of 190
Global Innovation Index 2016 27 of 128
U.S. FDI in partner country ($M USD, stock positions) 2015 USD 35,794
World Bank GNI per capita 2015 USD 28,530

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Foreign direct investment (FDI) has played a significant role in modernizing the Spanish economy over the past 35 years. Attracted by Spain’s large domestic market, export possibilities, and growth potential, foreign companies have set up operations in large numbers. Spain’s automotive industry is almost entirely foreign-owned. Multinationals control half of the food production companies, a third of chemical firms, and two-thirds of the cement sector. Several foreign investment funds have acquired networks from Spanish banks, and foreign firms control close to one third of the insurance market.

The Government of Spain recognizes the value of foreign investment and the economic importance of attracting more of it, particularly to help spur recovery from the economic crisis. Prime Minister Mariano Rajoy has repeatedly commented that the government aims to make Spain increasingly attractive to foreign investors. Spain offers investment opportunities in sectors and activities with significant added value. There have not been any major changes in Spain’s regulations for investment and foreign exchange under the Popular Party (PP) administration, which took office in December 2016. Spanish law permits 100 percent foreign ownership in investments (limits apply regarding audio-visual broadcast licenses; see next section), and capital movements are completely liberalized.

Entrenched incumbents, powerful labor and trade associations, and a resurgence of the political left have impacted the growth potential for U.S. “disruptor” franchises and technology platforms, such as Google, Airbnb, Uber, and Lyft. Similar to other major European economies, U.S. technology and sharing-economy companies continue to face challenges in entering the Spanish market. In 2015, Spanish media companies urged the government to pass a tax on news aggregators that use snippets and links to content that resulted in Google News closing its Spanish service – the measure is known in Spain as the “Google tax”. Uber and Airbnb have faced strong opposition from taxi and hotel associations in both Madrid and Barcelona, and local governments have placed restrictions on the use of these services.

Due to its degree of openness and the favorable legal framework for foreign investment, Spain has received significant foreign investments in knowledge-intensive activities in the past few years. The United States has been a lead foreign investor in Spain with a gross investment of EUR 5 billion, accounting for 15.1 percent of total investment. Even so, over the five years spanning 2011 to 2015, U.S. FDI stock in Spain fell from $45 billion (2011) to $36 billion (2015.)

The United States continues to be a primary destination for foreign outbound investment. Spain is one of the fastest growing investors in the United States, with much of the investment going to strategic sectors. Spanish investment increased from USD 47 billion in 2010 to USD 62 billion in 2015, making Spain the 9th overall source of Foreign Direct Investment (FDI) into the United States.

For more information on inbound and outbound U.S. FDI flows and positions, both by country and by general industry sector, please visit .

Limits on Foreign Control and Right to Private Ownership and Establishment

Spanish law has adapted its foreign investment rules to a system of general liberalization, without distinguishing between European Union (EU) residents and non-EU residents. Law 18/1992 of July 1, establishing rules on foreign investments in Spain, provides a specific regime for non EU persons investing in certain sectors: national defense-related activities, gambling, television, radio, and air transportation. For EU residents, the only sectors with a specific regime are the manufacture and trade of weapons or national defense- related activities. For non-EU companies, the Spanish government restricts individual ownership of audio-visual broadcasting licenses to 25 percent. Specifically, Spanish law permits non-EU companies to own a maximum of 25% of a company holding a digital terrestrial television broadcasting license; and for two or more non-EU companies to own a maximum of 50% in aggregate. In addition, under Spanish law a reciprocity principle applies (art. 25.4 General Audiovisual Law). The home country of the (non-EU) foreign company must have foreign ownership laws which permit a Spanish company to make the same transaction.

The Spanish Constitution and Spanish law establishes clear rights to private ownership, and foreign firms receive the same legal treatment as Spanish companies. There is no discrimination against public or private firms with respect to local access to markets, credit, licenses and supplies.

Other Investment Policy Reviews

Spain is a member of the Organization for Economic Co-operation and Development (OECD), the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD). In the past three years, the government has not conducted an investment policy review through any of these three organizations.

Business Facilitation

For establishing a company in Spain, the basic requirements include incorporation before a Public Notary and filing with the companies register called Mercantile Register (Registro Mercantil). The public deed of incorporation of the company must be submitted; it can be submitted electronically by the Public Notary. The Central Mercantile Register is an official institution that provides access to companies’ information supplied by the Regional Mercantile Registers after January 1, 1990. Any national or foreign company can use it, but must be registered and pay taxes and fees. The World Bank “Doing Business” Index indicates the process has been significantly improved and the whole process should take between one week and a month.

“Invest in Spain” is the Spanish investment promotion agency created to facilitate foreign investment, providing procedural clarifications and other services to all investors.

Investment promotion agency: 

Companies register: 

Companies register for the Madrid region: 

More information on the Mercantile Registry: 

Outward Investment

Among the financial instruments approved by the Spanish Government to provide official support for the internationalization of Spanish enterprise are the Foreign Investment Fund (FIEX), the Fund for Foreign Investment by Small and Medium-sized Enterprises (FONPYME), and the Enterprise Internationalization Fund (FIEM), as well as financing lines for investment in the electronics, information technology and communications, energy (renewables), and infrastructure concessions sectors.

2. Bilateral Investment Agreements and Taxation Treaties

Spain and the United States share a Friendship, Navigation and Commerce (FCN) Treaty (1795).

Spain has concluded bilateral investment agreements with Hungary (1989), the Czech Republic (1990), Russia (1990), Azerbaijan (1990), Belarus (1990), Georgia (1990), Tajikistan (1990), Turkmenistan (1990), Kirgizstan (1990), Armenia (1990), Slovakia (1990), Argentina (1991), Chile (1991), Tunisia (1991), Egypt (1992), Poland (1992), Uruguay (1992), Paraguay (1993), Philippines (1993), Algeria (1994), Honduras (1994), Pakistan (1994), Kazakhstan (1994), Peru (1994), Cuba (1994), Nicaragua (1994), Lithuania (1994), South Korea (1994), Bulgaria (1995), Dominican Republic (1995), El Salvador (1995), Gabon (1995), Latvia (1995), Malaysia (1995), Romania (1995), Venezuela (1995), Turkey (1995), Lebanon (1996), Ecuador (1996), Costa Rica (1997), Croatia (1997), Estonia (1997), India (1997), Panama (1997), Slovenia (1998), Ukraine (1998), the Kingdom of Jordan (1999), Trinidad and Tobago (1999), Jamaica (2002), Iran (2002), Montenegro (2002), Bosnia and Herzegovina (2002), Serbia (2002), Nigeria (2002), Guatemala (2002), Namibia (2003), Albania (2003), Uzbekistan (2003), Syria (2003), Equatorial Guinea (2003), Colombia (2005), Macedonia (2005), Morocco (2005), Kuwait (2005), China (2005), the Republic of Moldova (2006), Mexico (2006), Vietnam (2006), South Arabia (2006), Libya (2007), Bahrain (2008), Senegal (2008), the Islamic Republic of Mauritania (2008), Bolivia (2012), South Africa (2013), and Indonesia (2016).

For a current list of all active investment chapters, see the UNCTAD Investment Navigator: 

Spain and the United States share a Bilateral Taxation Treaty (1990), which was amended on January 14, 2013, approved by the United States Senate Foreign Relations Committee on July 16, 2014, and authorized by the Spanish Parliament on December 10, 2014. However, the amendment awaits approval of the United States Senate.

3. Legal Regime

Transparency of the Regulatory System

On December 2014, the Spanish government launched a transparency website that makes over 500,000 details of public interest about the central government freely accessible to all citizens. No comparable website exists for regional and local authorities. 

International Regulatory Considerations

Spain modernized its commercial laws and regulations following its 1986 entry into the EU. Its local regulatory framework compares favorably with other major European countries. Bureaucratic procedures have been streamlined and much red tape has been eliminated, though permitting and licensing processes can still suffer delays. Efficacy of regulation at the regional level is uneven. To avoid the fragmentation of the domestic market emerging from differences and overlapping of central, regional and local regulation, the Market Unity Guarantee Act 20/2013 was adopted in December 2013. The law aims to rationalize the regulatory framework for economic activities, eliminating duplicities in administrative control over one and the same activity or product through a “single license” system that will facilitate the free flow of goods and services throughout Spain. It also reinforces coordination among competent authorities and introduces a mechanism to rapidly solve operators’ problems. With a license from only one of Spain’s 17 regional governments, companies will be able to operate throughout the Spanish territory, rather than having to requests licenses from each region. The measures are expected to reduce business operating costs, improve competitiveness and attract foreign investment.

Legal System and Judicial Independence

Spain’s judicial system is open and transparent, although sometimes slow-moving. Judges are in charge of prosecution and criminal investigation, which permits greater independence. The Spanish prosecution system allows for successive appeals to a higher Court of Justice. The European Court of Justice can hear the final appeal. In addition, the Government of Spain abides by rulings of the International Court of Justice at The Hague. Local legislation establishes mechanisms to solve disputes if they arise.

Recent economic difficulties during the financial crisis in Spain have led to an increase in litigation, putting the judiciary system under severe pressure. The number of civil claims grew significantly over the past decade, resulting in an increase towards alternative dispute resolution mechanisms. Although ordinary proceedings are relatively straightforward, due to the significant number of cases within each court, getting to trial could take years. Domestic court decisions are subject to appeal, and the average time taken for a final judgment to be issued by the Court of Appeal can be anywhere between months and years. After this, the decision may still be subject to appeal to the Supreme Court (although the grounds for this appeal are very limited) and this court generally takes between two to three years to issue a decision. Due to the uncertainty surrounding the duration of appeals, disputes involving large companies or significant amounts of money tend to be resolved through arbitration. For example, one U.S. solar company faced such a prolonged court case brought on by competitors who lost the bid, that it missed its operating deadline and now faces a possible call by the government of Spain on its performance bond.

Laws and Regulations on Foreign Direct Investment

On August 1, 2014, the Spanish Council of Ministers approved three Tax Reform bills relating to Personal Income Tax, Corporate Income Tax, and Value Added Tax (VAT) that went into effect on January 1, 2015. Although the reforms generally reduced personal and corporate taxes in most categories, one of the new measures was an exit tax that applies to taxpayers that have had tax residency in Spain for at least ten of the last fifteen years and who own more than EUR 4 million in relevant assets or more than 25 percent of a company worth over EUR 1 million. Although the measure seeks to combat offshore tax evasion, the provision has caused concern among Spanish entrepreneurs and foreign investors who believe the reform will make it difficult for Spanish start-ups to relocate outside the EU, which can be essential for the growth of a new business.

Some U.S. and other foreign companies operating in Spain say they are disadvantaged by the Tax Administration’s (AEAT) interpretation of Spanish legislation designed to attract foreign investment. For the past several years, AEAT has investigated and disallowed deductions based on operational restructuring at the European level, involving a number of U.S.-owned Spanish holding companies for foreign assets (Empresas de Tenencia de Valores Extranjeros or ETVEs), claiming the companies are committing an abuse of law. This situation disadvantages foreign direct investment in Spain; many U.S. companies now channel their Spanish investments and operations through third countries.

In April 1999, the adoption of royal decree 664/1999 eliminated requirements for government authorization in investments save those in activities directly related to national defense, such as arms production. The decree abolished previous authorization requirements on investments in other sectors deemed of strategic interest, such as telecommunications and transportation. It also removed all forms of portfolio investment authorization and established free movement of capital into Spain as well as Spanish capital out of the country. As a result, Spanish law conforms to multi-disciplinary European Union (EU) Directive 88/361, part of which prohibits all restrictions of capital movements between member states as well as between such states and other countries, and which classifies investors according to residence rather than nationality.

Registration requirements are straightforward and apply to foreign and domestic investments equally. They aim to verify the purpose of the investment, and do not block any investment. On September 1, 2016 a new Resolution of the Directorate General for International Trade and Investments at the Ministry of Economy, Industry and Competitiveness came into force, by which new forms for declaration of foreign investments before the Investment Registry are established, when the person obliged to declare is the investor or company with foreign participation.

Useful websites:


Statement of Foreign Investments (Instructions for filing the forms): 

Residency program for investors and entrepreneurs: 

International Sanctions: 

International Agreements: 


Investor Support Center: 

National Contact Point for Guidelines: 

Attracting Foreign Investment: 

Invest in Spain (investment promotion agency): 

Investment aid and incentives in Spain: 

Competition and Anti-Trust Laws

The parliament passed Act 3/2013 on June 4, 2013, by which the entities that regulated energy (CNE), telecoms (CMT), and competition (CNC) merged into a new entity, the National Securities Market and Competition Commission (CNMC). The law attributes practically all of the functions entrusted to the National Competition Commission under the Competition Act 15/2007, of July 3, 2007 (LDC) to the new CNMC.

Expropriation and Compensation

Spanish legislation has set up a series of safeguards to prevent the nationalization or expropriation of foreign investment. Since the beginning of the economic crisis, Spain has altered its renewable energy policy six times, creating a high degree of regulatory uncertainty, and resulting in losses to U.S. companies’ earnings and investments. In December 2012, the government enacted a comprehensive energy sector reform plan in an effort to address a EUR 30 billion energy tariff deficit caused by user rates that were insufficient to cover system costs. Spain’s government announced on February 3, 2014 the details of its plan to cut subsidies for renewable-energy producers, a move that producers say could cause defaults across their industry. Additional reforms in 2014 negatively affected U.S. investors in the solar power sector, with some companies arguing that the changes to the legal regime are tantamount to indirect expropriation. As a result of Spain’s energy reforms the country has accumulated more than a dozen lawsuits, totaling EUR 1 billion in claims. Spain now faces several international claims, all of which come from the photovoltaic energy sector.

Spain is now the country with the largest number of pending cases (27 as of April 2017) in the International Center for the Settlement of Investment Disputes (ICSID). See the ICSID website for a list of ongoing cases: 

Dispute Settlement

ICSID Convention and New York Convention

Spain is a signatory to the International Centre for the Settlement of Investment Disputes (ICSID; Washington Convention) and to the 1958 Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Therefore, the recognition and enforcement of awards is straightforward and implies the same guarantees and practicalities sought by the New York Convention and arbitration practitioners worldwide, with the additional advantage of access to a court specialized only in investment arbitration issues.

Investor-State Dispute Settlement

Spain is now the country with the largest number of pending cases (27 as of April 2017) in the International Center for the Settlement of Investment Disputes (ICSID). See the ICSID website for a list of ongoing cases: 

International Commercial Arbitration and Foreign Courts

Law 11/2011, of May 2011, amending Law 60/2003 of December 2003 on Arbitration applies to national and international arbitration conducted on Spanish territory, and aims to contribute to the promotion of methods of alternative dispute resolution (ADR), particularly arbitration. The Arbitration Act includes that the Civil Court and Criminal Court of Justice are competent to recognize foreign arbitral awards. The Spanish Arbitration Act is based on the UNCITRAL Model law.

There are two main arbitration institutions in Spain, the Court of Arbitration of the Official Chamber of Commerce and Industry of Madrid (CAM), and the Civil and Commercial Arbitration Court of Madrid (CIMA), both of which have modern and flexible rules, leading to successful support of arbitration. The number of cases –both domestic and international– handled by both institutions, has been rapidly increasing over the past years and the trend continues. In particular, proceedings in the CAM are resolved swiftly, allowing the parties to obtain an award in as little as six months.

U.S. citizens seeking to execute American court judgments within Spain must follow the Exequator procedure established in Spanish law. The Spanish judiciary has a well-established tradition of supporting and facilitating the enforcement of both foreign judgments and awards. In fact, the recognition and enforcement of foreign judgments is so well entrenched in the judicial system, that it has not been subject to any relevant modifications (save those imposed by international conventions) since the late nineteenth century. For a foreign judgment to be enforced in Spain, an order declaring it is enforceable or exequatur is necessary. Once the exequatur is granted, enforcement itself is quite fast, provided that the assets are identified. Attachment of the assets will be immediate and time for realization will depend on the type of asset. First instance courts are competent for the enforcement of foreign rulings.

Bankruptcy Regulations

Spain has a fair and transparent bankruptcy regime. Bankruptcy proceedings are governed by the Bankruptcy Law of 2003. It applies to both individuals and companies. The main aim of the law is to ensure the collection of debts by creditors, to promote consensus between the parties and, if possible, to enable the survival and continuity of the company. New legislation, called the second-chance law, came into force in early 2015 to promote Spain’s economic recovery. The reform aims to avoid the bankruptcy of viable companies and preserve jobs by providing for refinancing agreements to be reached through debt write-off, capitalization, and rescheduling. It extends bankruptcy facilities to individuals, suspending mortgage payment requirements for two months once negotiations begin. Applicants’ assets, including their home, are sold. A maximum five-year repayment plan is agreed based on the debtors’ income. If a serious effort is made to meet the repayment plan, pending debts are cancelled at the end of the period. Despite the intent of the new law to ease the burden on debtors, few have taken advantage of the new procedures.

4. Industrial Policies

Investment Incentives

A range of investment incentives exist in Spain; they are provided according to the authorities granting incentives and the type and purpose of the incentives. The national government provides financial aid and tax benefits for activities pursued in certain industries which are considered to be priority industries (e.g., mining, technological development, research and development, etc.) in view of their potential for growth and their impact on the nation’s overall economy. Additionally, regional governments provide similar incentives for most of these industries. Financial aid includes both nonrefundable subsidies and interest relief on loans obtained by beneficiaries, or combinations of the two.

The European Union:

Since Spain is an EU Member State, potential investors are able to access European aid programs, which provide further incentives for investing in Spain. The EU provides incentives primarily to projects that focus on economically depressed regions or that benefit the EU as a whole.

The European Investment Bank provides guarantees, microfinance, equity investment, and global loans for small and medium enterprises as well as individual loans focusing on innovation and skills, energy, and strategic infrastructure. Projects aiming at extending and modernizing infrastructure in the health and education sectors may also qualify for the EIB support.

The European Investment Fund (EIF) provides venture capital to small and medium-sized enterprises, particularly new firms and technology-oriented businesses, via financial intermediaries. It also provides guarantees to financial institutions (such as banks) to cover their loans to small and medium-sized enterprises. The EIF does not grant loans or subsidies to businesses, nor does it invest directly in any firms. Instead, it works through banks and other financial intermediaries. It uses either its own funds or those entrusted to it by the European Investment Bank (EIB) or the European Union.

There are various structural and investment funds designed to fund initiatives which reduce the wealth disparity between member states. Most autonomous regions of Spain qualify for structural funds under the EU’s 2014-2020 budget (EUR 454 billion). Investments under the European Regional Development Fund (ERDF) will be concentrated in four key priorities: innovation and research, the digital agenda, support for small and medium-sized enterprises (SMEs), and the low-carbon economy, depending on the category of region. Through the European Social Fund (ESF), Cohesion Policy will provide a significant contribution to EU priorities in the field of employment, as through training and life-long learning, education and social inclusion. The ESF allocation will be established according to the needs of each Member State. The new Youth Employment Initiative linked to the ESF will support the implementation of the Youth Guarantee.

Financial incentives are routed through major Spanish banks, such as the Instituto de Credito Oficial (ICO) and Banco Bilbao-Vizcaya Argentaria (BBVA), and must be applied for through the financial intermediary.

The Central Government:

Spain’s central government provides numerous financial incentives for foreign investment, generally designed to complement European Union financing. The Ministry of Economy and Competitiveness (MINECO) runs the Directorate General for International Trade and Investments and Directorate General for Innovation and Competitiveness to assist businesses seeking investment opportunities. They provide support to foreign investors in both the pre- and post-investment phases. Most grants are aimed at encouraging the development of certain economic sectors, but often for a given subsidy, there may be sectors that are not exclusive but are preferential. A comprehensive list of incentive programs is available at the website, . Using this tool, companies can gain access to updated information regarding the grants available for investment projects. Users can sign up to the automatic alert system which prompts a tailor-made newsflash as suitable grants or subsidies are published. Applications for these incentives should be made directly to the relevant government agency.

Spain provides certain subsidies for job training and job creation, although they have been recently reduced due to budget constraints. Projects designated as Investment and Employment may be eligible for further subsidies from the Government Public Employment Service (formerly the National Employment Institute). Labor law reforms adopted in 2012 increased hiring bonuses for youth and long-term unemployed. In 2014 the Council of Ministers approved a royal decree-law to promote employment and permanent contracts with a new “flat rate” for Social Security contributions. The measure applies to contracts signed after February 25, 2014. For the benefit to apply, the hiring must create net employment, although the benefit also can be applied for temporary contracts that are converted into permanent ones.

In March 2015, the government approved an extraordinary credit of €850 million to fund the Activation Program for Employment, which is aimed at long-term unemployed with family responsibilities. This program has been extended by a Royal Decree-Law to April 15, 2017.

Despite these measures, many small and medium enterprise (SME) owners report that hiring/firing laws and social security costs still pose a challenge to hiring more full-time employees. Much of the job growth during Spain’s recovery has been in temporary, rather than full-time, contracts in traditional sectors such as infrastructure and tourism.

Spain supports SMEs with a national program for innovative cluster networks to strengthen innovative business groups and competitiveness. In 2013, Spain passed the “Law of Entrepreneurs”  which established an entrepreneur visa for investors and entrepreneurs. Entrepreneurs with a business plan, subject to approval by the Spanish Commercial Office, and with the intent to develop the project in Spain for at least one year may apply for the visa. Investors who purchase at least to EUR 2 million in Spanish bonds, or at least EUR 1 million in shares of Spanish companies or Spanish banks deposits may also apply. Foreigners who acquire real estate with an investment value equal to or in excess of EUR 500,000 are eligible as well.

In 2015, changes to the Personal Tax Law, Article 95 bis, affected the transfer of investments or SMEs outside of Spain by creating a tax on unrealized gains from investment. Spanish tax residents that have resided in Spain for at least 10 out of the previous 15 years are subject to a tax of 19-23% if they relocate their holdings or investments outside of Spain, if the market value of the shares held exceeds EUR 4 million or if the individual holds shares of 25% or more in a venture whose market value exceeds EUR 1 million.

The central government provides financial aid and tax benefits for activities carried out in certain industries which are considered to be priority sectors in view of their growth potential and their impact on the nation’s overall economy (e.g., activities in new industrial plants, as well as expansion of production capacity or relocations that industries decide to undertake to gain competitiveness, new infrastructure projects, and the extension of projects in mature sectors, such as transport, energy and environment, and social infrastructure and services sectors; creation/growth of Research &Development (R&D) and innovation; the acquisition, upgrading and maintenance of scientific-technological equipment for R&D activities, private technology centers and private centers of innovation located in science and technology parks, etc.). In addition, the regional governments provide similar incentives for most of these industries. Financial aid includes both nonrefundable subsidies and interest relief on the loans obtained by the beneficiaries, or combinations of the two.

Companies may qualify for these programs according to the size of their business. According to the current classifications, “micro” company refers to those employing fewer than 10 employees, with a turnover of less than EUR 2 million and with the same limit for its total assets. A “small” company has fewer than 50 employees, a turnover below EUR 10 million and total assets also below EUR 10 million. “Medium-sized” enterprises are those with fewer than 250 employees, annual turnover not exceeding EUR 50 million and total assets lower than EUR 43 million.

The state-owned corporate entity (Instituto de Crédito Oficial, ICO) attached to the Ministry of Economy and Competitiveness, has the status of State Financial Agency. Its activity seeks to boost small and medium companies and to encourage technological innovation and renewable energy projects as well as help to alleviate critical situations. ICO direct financing programs are aimed at financing large-scale investment projects in strategic sectors in Spain, backing large-scale investments by Spanish companies abroad, and supporting projects that are economically, financially, technologically and commercially sound and involve a Spanish interest.

Other government bodies that grant aid and incentives:

  • MINHAP – Ministry of Finance and Public Administration
  • MINETAD- Ministry of Energy, Tourism, and Digital Agenda
  • ENISA – National Innovation Company S.A. (under MINECO)
  • AXIS ICO Group (under MINECO)
  • RED.ES (under MINETDA)
  • IDAE – Institute for Energy Diversification and Saving (under MINETDA)
  • CERSA – Spanish Guarantee Company S.A. (under MINETDA)
  • CDTI – Center for Industrial Technological Development (under MINECO)
  • Tripartite Foundation for training in employment (under Ministry of Employment and Social Security)
  • CESGAR – Spanish Confederation of Mutual Guarantee Companies

The Regional Governments:

Spain’s 17 regional governments, known as autonomous communities, provide additional incentives for investments in their region. Many are similar to the incentives offered by the central government and the European Union (EU), but they are not all compatible. Additionally, some autonomous community governments grant investment incentives in areas not covered by state legislation but which are included in EU regional financial aid maps. Royal Decree 899/2007, of July 6 2007, sets out the different types of areas which are entitled to receive aid, and their maximum ceilings. Each area’s specific aspects and requirements (economic sectors, investments which can be subsidized and conditions) are set out in the Royal Decrees determining the different areas. Most are granted on an annual basis.

Generally, the regional governments are responsible for the management of each type of investment. This provides a benefit to investors as each autonomous community has a specific interest in attracting investment that enhances its economy. No investment project can receive other financial aid if the amount of the aid granted exceeds the maximum limits on aid stipulated for each approved investment in the legislation defining the eligible areas. Therefore, the subsidy received is compatible with other aid, provided that the sum of all the aid obtained does not exceed the limit established by the legislation of demarcation and EU rules do not preclude it (incompatibilities between Structural Funds).

Types of incentives available:

  • Financial loans and subsidies
  • Exemption from certain taxes
  • Preferential access to official credit
  • Reduction of burdens, with social security discounts to companies
  • Bonuses for acquisition of certain material
  • Customs exemption for certain imported goods
  • Real estate grants, and gratuitous or favorable land grants
  • Guarantees granted in credit operations
  • Loans with low interest, long maturities, and grace periods
  • Guarantee of dividends
  • Professional training and qualification
  • Indirect aid by means of supplying infrastructure facilities (access, services, communications, etc.)

Incentives from national, regional or municipal governments and the European Union are granted to Spanish and foreign companies alike without discrimination.


Municipal corporations may offer incentives to direct investment by facilitating infrastructure needs, granting licenses, and allowing for the operation and transaction of permits. Municipalities such as Madrid offer numerous support services for potential foreign investors. Local economic development agencies often provide free advice on the local business environment and relevant laws, administrative support, and connections to human capital in order to facilitate the establishment of new businesses. Spain recently made starting a business easier by eliminating the requirement to obtain a municipal license before starting operations and by improving the efficiency of the commercial registry.

Research and Development

Incentives from national, regional or municipal governments and the European Union are granted to Spanish and foreign companies alike without discrimination. These incentives include most notably those aimed at fostering innovation, technological improvement (TI) and research and development (R&D) projects, which have been one of the main priorities of the Spanish authorities in recent years. The Science, Technology and Innovation Law 14/2011, of June 1, 2011, establishes the legal framework for the fostering of scientific and technical research, experimental development and innovation in Spain. In 2013 the Council of Ministers approved “the Spanish Strategy for Science and Technology and for Innovation” for the 2013-2020 period, whose essential purpose is to promote the scientific, technological and business leadership of the country as a whole and to increase the innovation capacities of the Spanish company and the Spanish economy. The beneficiaries may be individuals, public research agencies, public and private universities, other public R&D centers, public and private health entities and institutions related to or assisted by the National Health System, certified health research institutes, public and private non-profit entities (foundations and associations) engaging in R&D activities, enterprises (including SMEs), state technological centers, state technological and innovation support centers, business groupings or associations (joint ventures, economic interest groupings, industry-wide business associations), innovative business groupings and technological platforms, and organizations supporting technological transfer and technological and scientific dissemination and disclosure.

The aid can take the form of subsidies, loans, venture capital instruments, and other instruments (tax guarantees and incentives).

Foreign Trade Zones/Free Ports/Trade Facilitation

Both the mainland and islands (and in most Spanish airports and seaports) have numerous free trade zones where manufacturing, processing, sorting, packaging, exhibiting, sampling and other commercial operations may be undertaken free of any Spanish duties or taxes. The largest free trade zones are in Barcelona, Cadiz, and Vigo, and the entire province of the Canary Islands is a Special Economic Zone. Others vary in size from a simple warehouse to several square kilometers. Spanish customs legislation allows companies to have their own free trade areas. Duties and taxes are payable only on those items imported for use in Spain. These companies have to abide by Spanish labor laws.

Performance and Data Localization Requirements

Performance requirements are not used to determine the eligibility or level of incentives granted to investors.

The Spanish Data Protection Agency and the Spanish Police request data from companies, although the companies may refuse unless required by court order.

5. Protection of Property Rights

Real Property

The improving Spanish economy has been reflected in the Spanish real estate market. Prices in the real estate and foreign investment markets have stabilized generally, and particularly in Barcelona and Madrid. This new trend has been evident in the market for second homes on the Spanish coast and in office space in Madrid. New financing to acquire shares and assets of Spanish banks and financial institutions has helped support prices. Investment in real estate is made directly through a permanent establishment or a Spanish company, or through special vehicles. Access to bank finance for the acquisition of real estate has been limited in Spain since 2007 due to previous land speculation that contributed to Spain’s financial crisis. Funding has come mostly from foreign and individuals assets.

There are generally no restrictions on foreign ownership of real estate. The buyer must fill out a Declaration to the Foreign Investment Register form before buying the property if the funds for the purchase come from a country or territory considered to be a tax haven. The declaration lasts six months. Foreign individuals require an identification card for foreigners (NIE for individuals). Other foreign legal persons require an identification card known as a CIF. Apart from money laundering regulations, no special restrictions or limitations apply to foreign mortgage guarantees and loans.

The Land Register provides evidence of title. The registration system is rigid, formalistic yet functions efficiently. It is not possible to make changes to the ownership of the real estate by electronic means. Public or private acts that affect the property are included in the land register. A right or title recorded in the registry prevails over any other right or title. Certain administrative concessions (licenses for individuals to use or develop publicly-owned property for a particular purpose) may also be registered. The transfer of real estate or the grant of rights over property should be executed by public deed in front of a notary before being registered with the Land Registry. A registered title includes the plot of land and the buildings attached to the land. Each plot constitutes a registered property. Each registered property is a legal object and has its own separate entry in the registry in which all data affecting it is registered. There are rules that determine whether a parcel of land, a building, farm, spring or other type of property has a separate entry in the registry system.

Lenders generally use mortgages as security. Once registered, the mortgage takes priority over the interest of any third party. Anyone with a legitimate interest in a property can find out whether it is mortgaged by consulting the register.

Sale and leaseback is another form of real estate financing that has been used by some Spanish financial institutions. These institutions raised finance through the sale of their offices to their clients and subsequently leased them back. The institution raised funds and their clients received a stream of rental income.

Intellectual Property Rights

Spanish law protects intellectual property rights, with enforcement carried out at the administrative and judicial levels. Intellectual property protection has improved in recent years and is generally effective although the Spanish government struggles with significant on-line piracy and rights-holders complain the administrative system is slow due to limited resources. Spanish patent, copyright, and trademark laws all approximate or exceed EU levels of intellectual property protection. Spain is a party to the Paris Convention, Bern Convention, the Madrid Accord on Trademarks and the Universal Copyright Conventions.


Spanish law extends copyright protection to all literary, artistic, or scientific creations, including computer software. Spain has ratified the World Intellectual Property Organization’s (WIPO) Copyright Treaty (WCT) and the WIPO Phonograms and Performances Treaty (WPPT), the so-called Internet treaties. In 2006, Spain passed legislation implementing the EU Copyright Directive, thereby also making the Internet treaties part of Spanish law. However, the Internet presents the most problematic area in terms of respect for intellectual property rights in Spain.

Spain has undertaken extensive, multi-year reform measures in recent years to strengthen its framework for intellectual property rights (IPR) protections. As a result, Spain now has a strong legal framework and corresponding criminal procedures to address IPR violations. However, digital piracy in Spain remains relatively high and rights holders continue to voice concerns about the length of Spain’s administrative, civil, and criminal procedures for combating online piracy.


Spanish authorities published a new Patents law in 2015 (Law 24/2015). It entered into force on April 1, 2017. A non-renewable 20-year period for working patents is available if the patent is used within the first three years. Spain permits both product and process patents. The European Parliament approved regulations to establish a single patent for the EU in December 2012. Spain and Italy decided to opt out, however, due to discrepancies with the patent’s linguistic regime (English, French, and German). A special court will be created to resolve disputes arising from the 25 country signatories. Companies or individuals who want to protect their innovations throughout the EU will have to request a patent in three places – in Munich, the headquarters of the European patent, in Spain, and in Italy (compared to the current need to do so in 27 different countries) – and will be exposed to litigation in many other jurisdictions. Patents will be issued in English, French, or German, although applications may be presented in any official EU language, along with a summary in one of the three aforementioned languages. Although the regulations entered into force on January 20, 2013, the Patent Package will not enter into force until Germany, France, and 10 other Member States have ratified the Agreement on a Unified Patent Court. As of March 2017, 12 countries have ratified the agreement, which is scheduled to enter into force upon ratification by Germany and the United Kingdom.

Pharmaceutical companies have reported that Spain’s lack of patent harmonization with the majority of European Union member states has left holders of pharmaceutical process patents with weaker patent protection than required by the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. The Spanish government has amended the penal code to stipulate that patent infringers will receive one to three years imprisonment for infringing on protected plant varieties for commercial or agricultural purposes.


Spain continues to effectively enforce trademark rights. Several high-profile, high-impact raids took place in 2016 to halt physical sales of counterfeit goods. Most notable was the November 29 raid in La Jonquera (Catalonia), in which Spanish National Police executed a major operation against suspected money laundering and intellectual property crimes. Additional law enforcement efforts took place in Barcelona, Madrid, Málaga, and Cádiz, among other locations.

Spanish authorities published a new Trademark law in 2001 (Law 17/2001), which came into effect in July 2002. The Spanish Office of Patents and Trademarks oversees protection for national trademarks. Trademarks registered in the Industrial Property Registry receive protection for a 10-year period from the date of application, which may be renewed. Protection is not granted for generic names, geographic names, those that violate Spanish customs or other inappropriate trademarks. In March 2015, the Spanish parliament passed a reform of the penal code that entered into force in July 2015 (Ley Organica 1/2015). The revised penal code removed the condition that certain intellectual property rights crimes related to the sale of counterfeit items meet a threshold of EUR 400 in order to merit prosecution and changed the procedure for destruction of counterfeit items seized by law enforcement. Counterfeit items may now be destroyed as soon as an official report has been made regarding the items, unless a judge formally requests that the items be retained.

The Spanish Tax Agency releases statistics on seizures of counterfeit goods on an annual basis via its website. Statistics for 2016 were not available as of March 2017.

Businesses may seek a trademark valid throughout the European Union. The Office for Harmonization in the Internal Market (OHIM) for the registration of community trademarks in the European Union started its operations in 1996. Its headquarters are located in Alicante:

Office for Harmonization in the Internal Market (Trade Marks and Designs)
Avenida de Europa, 4
E-03008 Alicante
Tel: (34) 96-513-9100 

The World International Property Organization (WIPO, headquartered in Geneva) oversees an international system of registration. Applicants must designate the countries where they wish to obtain protection. However, this system only applies to U.S. firms with an establishment in a country that is a party of the Agreement or the Protocol.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at .”

Resources for Rights Holders

Embassy POC:

A list of local lawyers can be found at:

6. Financial Sector

Capital Markets and Portfolio Investment

The convergence of monetary policy following the 1999 adoption of the euro led to a significant lowering of Spanish interest rates; however, the eurozone crisis and the subsequent downgrade of Spanish sovereign debt has had a negative impact on public financing costs. Foreign investors do not face discrimination when seeking local financing for projects. There is a large range of credit instruments available through Spanish and international financial institutions.

Many large Spanish companies rely on cross-holding arrangements and ownership stakes by banks rather than pure loans. However, these arrangements do not act to restrict foreign ownership. Several of the largest Spanish companies that engage in this practice are also traded publicly in the U.S.

There is a significant amount of portfolio investment in Spain, including by American entities. During 2015, foreign investment flows in negotiable securities slightly decreased by 0.1 percent over 2014, and accumulated foreign investment amounted to 731.1 billion euros. 99.7 percent of this amount was in equity securities, and 0.3 percent in shares of investment funds. Investors were mainly from the Organization for Economic Co-operation and Development (OECD) countries (98.6 percent), especially from EU members (88.5 percent) and the United States (7.7 percent).

Money and Banking System

A domestic housing slump that began in 2007 has had a profound impact on savings banks (cajas de ahorros), many of which were heavily exposed to troubled construction and real estate companies. The government created a Fund for Orderly Bank Restructuring (FROB) through Royal Decree-law 9/2009 of June 26, which restructures credit institutions with an eye toward bolstering capital and provisioning levels.

The number of Spanish financial entities has shrunk significantly since 2009, with 50 entities consolidated into 13 as of April 2016 (Santander, BBVA, Banco Popular, Bankinter, Banco Sabadell, CaixaBank, Bankia, Banco Ibercaja, Kuxtabank, Banco, Banco Mare Nostrum, Liberbank, Abanca, and Unicaja Banco). Between 2008 and 2015, more than 13,000 Spanish bank branches closed, with 1,906 closures in 2014. After this reduction there were still 31,876 bank branches in Spain; industry analysts foresee a continued downsizing until the total drops to about 30,000 offices. The sector has also shed 62,000 workers, representing 22.3 percent of the pre-crisis workforce. The downsizing runs in parallel with a 32 percent drop in credit to households and businesses in Spain from 2008 to 2013. However, total bank deposits have remained roughly stable at 1.16 trillion euros.

Financial sector reforms announced in February and May of 2012 sought to increase bank transparency with regard to exposure to toxic assets, reduce oversupply of financial services by encouraging further consolidation, and alleviate the credit crunch by stabilizing bank balance sheets to increase lending. In January 2014, Spain cleanly exited its EU aid program and has made several prepayments of its ESM obligations, steps that have earned praise for Spanish restructuring efforts from EU officials. In November 2015, the Government approved legislation implementing the Law on the Recovery and Resolution of Credit Institutions and Investment Service Companies. The regulation also develops the role of the Orderly Bank Restructuring Fund (Spanish acronym: FROB), as the National Resolution Authority, as well as the contributions of institutions to the National Resolution Fund and the Deposit Guarantee Fund. The flow of credit has been restored and alternative financing mechanisms have been created.

Total assets for the six biggest banks in Spain as of late 2016 were 2.969 trillion euros:

  • Banco Santander: 1.339 trillion euros
  • Banco Bilbao Vizcaya Argentaria (BBVA): 731.8 billion euros
  • CaixaBank: 347.9 billion euros
  • Banco Sabadell: 212.5 billion euros
  • Bankia: 190.2 billion euros
  • Banco Popular: 147.9 billion euros

Foreign Exchange and Remittances

Foreign Exchange

There are no controls on capital flows. In 1992 Royal Decree 1816/1991 provided complete freedom of action in financial transactions between residents and non-residents of Spain. Previous requirements for prior clearance of technology transfer and technical assistance agreements were eliminated. The liberal provisions of this law apply to payments, receipts and transfers generated by foreign investments in Spain.

Remittance Policies

Capital controls on the transfer of funds outside the country were abolished in 1991. Remittances of profits, debt service, capital gains, and royalties from intellectual property can all be affected at market rates using commercial banks.

Sovereign Wealth Funds

While Spain, itself, does not have any sovereign wealth funds, more than EUR 32 billion has been invested into Spain between 2009 and 2016 by sovereign wealth funds of other governments. Spain is consolidating its position as an attractive destination for global sovereign investment: Norway, the Middle East (Kuwait, Qatar, Oman, United Arab Emirates), and Asia (China, Singapore and Malaysia) have targeted Spain as an attractive investment destination in 2014 and 2015, and all the signs point to their continuing to do so in the medium term. Investments were largely concentrated in the real estate sector, highlights being the equity stakes taken by Singapore’s GIC in property group GMP and by QIA in Colonial and its French subsidiary SFL, although main transactions have been concentrated in energy (distribution), construction, and infrastructures companies. Sovereign wealth funds are also increasingly betting on innovation and technology, and in the coming decades, they could lead a new wave of investment in agricultural assets. Kuwait has started investing again in Spain, through Wren House Infrastructure Management (WHI). The most important deal in 2015 was in Barcelona, with the EUR 60 million sale of the Hilton hotel to the Oman Investment Fund. This was the first real-estate deal involving this Omani fund in Spain. In 2016, Turkey’s Dogus group, in partnership with Spain’s BBVA bank, bought the five-star Villa Magna hotel in Madrid from Portugal’s Queiroz Pereira family for EUR 180 million.

7. State-Owned Enterprises

The size of the public enterprise sector in Spain is relatively small. Over the last two decades, the role and importance of state-owned enterprises (SOE) in Spain decreased notably due to the privatization process that started in the early 1980s. The reform of SOE oversight in the 1990s led the government to create the State Holding for Industrial Participations, (Sociedad Estatal de Participaciones Industriales, SEPI). SEPI was created as a public-law entity by decree in 1995; its status was then protected by law in 1996. SEPI has direct majority participation in 15 SOEs, which makes up the SEPI Group, with a workforce of more than 73,000 employees in 2015, and also is a direct minority shareholder in ten SOEs (five of them listed on stock exchanges), and participates indirectly in ownership of more than a hundred companies. Both legislative chambers and any parliamentary group may request the presence of SEPI and SOE representatives to discuss issues related to their performance. SEPI and the SOEs are required to submit economic and financial information to the legislature on a regular basis.

SEPI’s broader mission is to make profitable its entrepreneurial participations and orient all its activities taking into account the public interest, which makes it responsible for combining the objectives of economic and social profitability. Beyond its initial nature of a mere Agent in charge of industrial policy, SEPI has been consolidated as an instrument for the economic and financial policy, maintaining a close relationship with the budgetary policy.

The European Union, through specialized committees, also controls SOEs’ performance on issues concerning sector-specific policies and anti-competitive practices.

Companies in which SEPI holds a Majority Interest:

Agencia Efe – Alimentos y Aceites – Cetarsa – Corporación RTVE – Defex – Ensa – Grupo Cofivacasa – Grupo Correos – Grupo Enusa – Grupo Hunosa – Grupo Mercasa – Grupo Navantia – Grupo Sepides – Grupo Tragsa – Hipodromo de la Zarzuela – Izar Construcciones Navales en Liquidación – Mayasa – Saeca

Companies in which SEPI holds a Minority Interest:

Airbus Group, NV – Alestis Aerospace – Enagas – Enresa – Hispasat – Indra – International Airlines Group – Red Eléctrica Corporación –

SEPI-Attached companies: RTVE- Corporación de Radio y Televisión Española

Reference: =

OECD Guidelines on Corporate Governance of SOEs

Spain bases its policies on the OECD Corporate Governance Guidelines for SOEs. These cover the state ownership function and accountability, as well as issues related to performance monitoring, information disclosure, auditing mechanisms and the role of board oversight of companies.

8. Responsible Business Conduct

As a member of the Organization for Economic Cooperation and Development (OECD), the Spanish government has taken some measures to promote the OECD Guidelines for Multinational Enterprises; Spain’s National Contact Point can be contacted here: 

Spanish companies consider corporate reputation, competitive advantage, and industry trends to be the major driving forces of responsible business conduct (RBC). Initiatives undertaken by the EU and international organizations such as the OECD have influenced companies’ decision to incorporate a due diligence approach to RBC. Associations and fora that bring together the heads of leading corporations, business schools and other academic institutions, NGOs and the media are actively contributing to the advancement of RBC in Spain. Although the visibility of RBC efforts is still moderate by international standards, in the last two decades there has been a growing interest in it. Today, almost all of Spain’s largest energy, telecommunications, infrastructure, transport, financial services and insurance companies, among many others, have indicated some recognition of the importance of RBC to their operational success.

9. Corruption

Spain has a wide variety of laws and regulations addressing corruption. The legal regime has both civil and criminal penalties for corruption, bribery, financial malfeasance, etc. Giving or accepting a bribe is a criminal act. Under Section 1255 of the Spanish civil code, corporations and individuals are prohibited from deducting bribes from domestic tax computations. There are laws against tax evasion and regulations for banks and financial institutions to fight money laundering terrorist financing. In addition, the Spanish Criminal Code provides for jail sentences and hefty fines for corporations’ (legal persons) administrators who receive illegal financing.

In 2010, Spain’s Law 10/2010 transposed the third EU money laundering Directive (Directive 2005&60/CE) of the European Parliament and the Council of October 26, 2005. Law 7/2012, restricts the size of cash transactions, a measure to reduce Spain’s large underground economy. In 2013, the Parliament approved the Law of Transparency aimed at reducing corruption among public officials. The Law applies to Public Law Corporations, the House of His Majesty the King, Congress, judicial entities, as well as the Bank of Spain, State Council, Ombudsman, Court of Auditors, Economic and Social Council, and corollary regional institutions. Political parties and unions also must abide by the law, as well as private entities that receive certain amounts of public assistance or subsidies.

Two bills related to the Transparency Law were passed in 2015, the Law of Control of Political Parties’ Economic and Financial Activities, and the Law for the Regulation of Public Office of Officials in the General Administration. The former prohibits political parties from accepting donations from companies and limits donations from private citizens to a maximum of 100,000 euros per year; the latter deters the inappropriate use of official positions and strengthens public institutions.

The General State Prosecutor is authorized to investigate and prosecute corruption cases involving funds in excess of roughly $500,000. The Office of the Anti-Corruption Prosecutor, a subordinate unit of the General State Prosecutor, investigates and prosecutes domestic and international bribery allegations. There is also the Audiencia Nacional, a corps of magistrates with broad discretion to investigate and prosecute alleged instances of Spanish businesspeople bribing foreign officials.

Spain enforces anti-corruption laws on a generally uniform basis. Public officials are subjected to more scrutiny than private individuals, but several wealthy and well-connected business executives have been successfully prosecuted for corruption. From July 2015 to September 2016, 1,378 people faced trial for corruption in a total of 166 cases. Of those, 99 of the 166 were completed, and 73% of them resulted in guilty sentences. In 2017, various high-profile cases of political corruption within the major political parties in Spain will be prosecuted. Of note, even members tied to the royal family have been prosecuted for corruption charges, an attempt by the government to demonstrate that Spain is attempting to address the perception of impunity.

There is no obvious bias for or against foreign investors; U.S. firms have rarely identified corruption as an obstacle to investment in Spain. Although no formal corruption complaints have been lodged, U.S. companies have indicated that they have been disqualified at times from public tenders based on reasons that these companies’ legal counsels did not consider justifiable.

Spain’s 2016 rank in Transparency International’s annual Corruption Perceptions Index was 41. Transparency International noted a lack of legal protections for whistle-blowers and the public perception that addressing corruption is politicized. Among the Spanish public, corruption continues to be one of the main concerns, second to unemployment.

Participation in International Anti-Corruption Initiatives

Spain is a signatory of the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery and the UN Convention Against Corruption. It has also been a member of the Group of States Against Corruption (GRECO) since 1999. OECD has noted concerns about the low level of foreign bribery enforcement in Spain and the lack of implementation of the enforcement-related recommendations.

Resources to Report Corruption

Ministry of Finance and Public Administrations
Alcalá, 9
28071 Madrid, Spain
34 91 595 8000

Transparency International

National Chapter – Spain
Fundación José Ortega y Gasset
Calle Fortuny, 53, 28010 Madrid

Telephone: +34 91 700 4105

10. Political and Security Environment

There have been periodic peaceful demonstrations against austerity measures and other social or economic policies. Public sector employees and union members have organized frequent small demonstrations in response to service cuts, privatization, and other government measures.

11. Labor Policies and Practices

Spain has exited the economic crisis and has some of the strongest growth rates in the EU, although it still suffers high unemployment. The unemployment rate made a downward march, from nearly 27 percent at the height of the economic crisis in 2013 to 18 percent at the end of 2016. This is the first time in six years that Spain’s unemployment rate has fallen below 20 percent. However, with 4.2 million Spaniards out of work, Spain continues to have the second-highest unemployment rate in the EU, behind Greece. The Government of Spain forecasts the unemployment rate will not drop below 15 percent until 2019. The unemployment rate among youth, defined in Spain as those aged 16 to 25, remains high (42.9 percent at year end), leaving a significant portion of the next generation currently without skills, a significant risk to Spain’s long term competitiveness, particularly given the shortage of workers who possess the skills for today’s tech economy.

Popular Party President Mariano Rajoy has promised to create half a million jobs per year, and he came close in 2016 with 413,000 jobs. Jobs growth could be related to the increasing numbers of tourist coming to Spain. In 2016, Spain set a new record with more than 75 million visitors, who spent more than 77 billion euros according to government figures. By regions, employment rose the most in Comunitat Valenciana (+32.6 thousand), Madrid (+27.8 thousand) and Castilla-La Mancha (+13.7 thousand). By sector, jobs were created in agriculture (+72.9 thousand) and industry (+47.8 thousand) while employment fell in services (-112.3 thousand) and construction (-27.8 thousand).

The size of Spain’s labor force is shrinking. The number of people willing and able to work fell by over 100,000 individuals to 22.7 million in the final quarter of 2016, for an economic activity rate of 58.9%. The number of employed persons decreased 0.1 percent to 18.51 million. Employment decreased in both public (-17.8 thousand) and in private sector (-1.6 thousand).

The estimated number of foreigner workers in Spain in 2016 was 1.7 million. The most representative groups of workers come from Romania (310,577), Morocco (216,040), China (95,408), Italy (84,801) and Ecuador (65,999).

In 2016, permanent job contracts rose by 60,200 while temporary contracts decreased by 79,400. The Labor market reforms in 1994 and 1997 eased impediments to hiring and firing but did not fundamentally change the labor regime. The labor market is divided into permanent workers with full benefits and temporary workers with few benefits. Labor market reform legislation enacted by the parliament in September 2010 aimed to encourage the use of indefinite labor contracts by reducing the number of days of severance pay under these contracts. In January 2011, government, business and labor agreed to a pension reform that increases the legal retirement age from 65 to 67 over a 15-year period beginning in January 1, 2013, and gradually increases the number of years of contributions on which pensions are calculated.

After consultations between business and labor organizations, the government introduced a labor reform decree in 2012 that included new provisions related to collective bargaining, hiring, and job placement. The law makes dismissal quicker and less costly, and gives more power to businesses to change working conditions and wages. In 2013, the Minister of Employment announced changes to the 2012 labor reform to promote hiring consolidating the incentives that were scattered throughout Spanish legislation into a single chapter of the Law of Employment in order to facilitate hiring. In 2013, the Parliament approved a further reform of the pension system, in order to guarantee the sustainability of Social Security, introducing a sustainability factor, a new indicator for the revaluation of pensions, and the creation of an independent fiscal authority that is responsible for reporting on the effects of the law and adequacy of pensions.

In 2014, the government approved a Royal Decree on a special program for the activation of employment. According to the Minister, this was the government’s response to the Eurogroup’s demands for a second round of labor reform. In 2015, the government approved an extraordinary credit of EUR 850 million to fund during 2015 the Activation Program for Employment, which is aimed at long-term unemployed with family responsibilities. It is estimated that the program will have a total annual cost of over EUR 1 billion. The program was renewed for one more year and the latest application period will end by April 15 2017. This program will come to an end by October 15, 2017 if not renewed. Over 400,000 unemployed people are expected to benefit, (about 350,000 of them in the first year). Andalusia, Valencia, Catalonia and the Canary Islands will have the highest number of beneficiaries.

Collective bargaining is widespread in both the private and public sectors. A high percentage of the working population is covered by collective bargaining agreements, although only a minority (generally estimated to be about 10 percent) of those covered are actually union members. Under the Spanish system, workers elect delegates to represent them before management every four years. If a certain proportion of those delegates are union-affiliated, those unions form part of the workers’ committees. Large employers generally have individual collective agreements. In industries characterized by smaller companies, collective agreements are often industry-wide or regional. The reforms enacted in 2012 gave business-level agreements primacy over sectoral and regional agreements and made it easier for businesses to opt out of higher-level agreements. They also required collective labor agreements to be renegotiated within one year of expiration.

The Constitution guarantees the right to strike, and this right has been interpreted to include the right to call general strikes to protest government policy.

12. OPIC and Other Investment Insurance Programs

U.S. Overseas Private Investment Corporation (OPIC) insurance is not offered in Spain. Various EU directives, as adopted into Spanish law, adequately protect the rights of foreign investors. Spain is a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), which provides political risk insureance.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2015 $1.2 2015 $18.04 
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or international Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in Spain ($M USD, stock positions) 2014 $62,869 2015 $35,794 BEA data available at
Spain’s FDI in the U.S.nited States ($M USD, stock positions) 2014 $57,451 2015 $61,947 BEA data available at
Total inbound stock of FDI as % host GDP 2014 44.9% 2015 3.43% N/A

*Ministry of Economy, Industry and Competitiveness, 

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions), 2015
Inward Direct Investment Outward Direct Investment
Total Inward 546,803 100% Total Outward 490,332 100%
Netherlands 116,601 21.3% United Kingdom 82,832 16.9%
Luxembourg 74,523 13.6% United States 69,599 14.2%
United Kingdom 71,952 13.2% Brazil 40,593 8.3%
France 49,419 9.0% Mexico 38,726 7.9%
Italy 37,452 6.8% Chile 24,742 5.0%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets, June 2016
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 550,770 100% All Countries 241,586 100% All Countries 309,184 100%
Luxembourg 123,474 22.41% Luxembourg 117,436 48.6% Italy 96,483 31.2%
Italy 99,404 18% France 28,044 11.6% United States 27,374 8.8%
France 48,293 8.8% Ireland 26,039 10.8% France 20,248 6.5%
United States 39,349 7.1% United Kingdom 12,078 5.0% United Kingdom 19,994 6.5%
Ireland 35,093 6.4% United States 11,974 5.0% Germany 11,915 3.8%

14. Contact for More Information

Ana Maria Waflar
Economic Specialist, U.S. Embassy Madrid
(34) 91 5872290

2017 Investment Climate Statements: Spain
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