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Executive Summary

Spain is open to foreign investment and is actively seeking to attract additional investment to sustain its strong economic growth. Having emerged from a double dip recession and corresponding economic crises, Spain turned in one of the highest growth rates in the EU in 2017 at 3.1 percent—its fifth straight year of at least 3 percent growth. Spain’s excellent infrastructure, large domestic market, well-educated workforce, and robust export possibilities are key selling points for foreign investors. Spanish law permits foreign ownership in investments up to 100 percent, and capital movements are completely liberalized. In 2017, gross new foreign direct investment reached EUR 36.1 billion. According to Spanish data, the United States is the fourth-largest investor in Spain. Foreign investment is concentrated in the energy, real estate, finance and insurance, engineering, and construction sectors.

Spain emerged from its recession in the third quarter of 2013. Even with a still relatively high unemployment rate—16.6 percent at the close of 2017—and high levels of household and public indebtedness, the Spanish economy sustained its strong and balanced growth in 2017, benefitting from a resurgence in domestic consumption. This turn-around is due, in part, to the economic reforms the government began implementing in 2012, which streamlined budgets and loosened labor laws to make hiring and firing easier. As part of these efforts, the government sharply curbed public spending, which helped to stabilize the fiscal situation. Spain’s economy has also benefitted from favorable external factors, namely low global energy prices and the European Central Bank’s expansionary monetary policy. Spain’s economy has diversified and become more competitive, resulting in export-led growth and a current account surplus.

Following the global financial and euro crises, the Spanish government implemented a series of labor market reforms and restructured the banking system. In 2013, the Spanish government adopted the Market Unity Guarantee Act, which eliminated duplicative administrative controls by implementing a single license system to facilitate the free flow of all goods and services throughout Spain. The Spanish Treasury has forecasted a 1.52 percent boost to GDP over the ten-year period as a result of the law. However, the law’s implementation has been uneven and certain provisions were declared unconstitutional by Spanish courts in 2017. Moreover, some U.S. companies continue to complain about the difficulties in dealing with variances in regional regulations within Spain.

Since the financial crises, 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, small and medium-sized enterprises (SMEs) still have some difficulty accessing credit.

In implementing its fiscal consolidation program, the government has taken 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 (ICSID Convention) and the 1958 Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). 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. In 2017, internet piracy decreased for the first time in years.

Spain and the United States have a Friendship, Navigation and Commerce (FCN) Treaty, and a Bilateral Taxation Treaty (1990), which was subsequently amended in 2013 and signed by Spain’s finance minister and the U.S. Ambassador to Spain. However, the new Protocol is not yet in force, as it is pending confirmation with the U.S. Senate.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2017 42 of 175
World Bank’s Doing Business Report “Ease of Doing Business” 2017 28 of 190
Global Innovation Index 2017 28 of 127
U.S. FDI in Partner Country (M USD, stock positions) 2016 USD 37,388
World Bank GNI per capita 2016 USD 27,580

Policies Towards Foreign Direct Investment

Foreign direct investment (FDI) has played a significant role in modernizing the Spanish economy during the past 40 years. Attracted by Spain’s large domestic market, export possibilities, and growth potential, foreign companies set up operations in large numbers. Spain’s automotive industry is almost entirely foreign-owned. Multinationals control half of the food production companies, one-third of chemical firms, and two-thirds of the cement sector. Several foreign investment funds acquired networks from Spanish banks, and foreign firms control about one-third of the insurance market.

The Government of Spain recognizes the value of foreign investment. Prime Minister Mariano Rajoy has repeatedly indicated that the government seeks to attract additional 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 current 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.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. Total gross new FDI flow into Spain slightly increased by 0.74 percent in 2017 according to Spain’s Finance Ministry data, continuing the significant growth path of gross FDI flow into Spain that began in 2014. In 2017, 78.7 percent of total gross investments were investments in new facilities or the expansion of productive capacity, while 21.3 percent of gross investments were in acquisitions of existing companies. The United States had a gross direct investment in Spain of EUR 2.6 billion, accounting for 10.7 percent of total investment and representing a decrease of 50.1 percent compared to 2016. Over the five years spanning 2011 to 2015, U.S. FDI stock in Spain fell from USD 45 billion (2011) to USD 36 billion (2015.)

The United States continues to be a primary destination for Spanish outbound investment, largely in strategic sectors such as transportation and energy. Spanish investment increased from USD 46.7 billion in 2010 to more than USD 68.17 billion in 2016, an increase of 1.8 percent from 2015, making Spain the 10th 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

Spain has a favorable legal framework for foreign investors. Spain has adapted its foreign investment rules to a system of general liberalization, without distinguishing between EU residents and non-EU residents. Law 18/1992 of July 1, which established 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 percent of a company holding a digital terrestrial television broadcasting license; and for two or more non-EU companies to own a maximum of 50 percent 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 that 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 signatory to the convention on the Organization for Economic Co-operation and Development (OECD). Spain is also a member of the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD). Spain has not conducted Investment Policy Reviews with these three organizations within the past three years.

Business Facilitation

For setting up a company in Spain, the two basic requirements include incorporation before a Public Notary and filing with the 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 also be registered and pay taxes and fees. According to the World Bank’s Doing Business report, the process to start a business in Spain should take about two weeks.

“Invest in Spain” is the Spanish investment promotion agency to facilitate foreign investment. Services are available to all investors.

Useful web sites:

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). The Spanish Government also offers financing lines for investment in the electronics, information technology and communications, energy (renewables), and infrastructure concessions sectors.

Bilateral Taxation Treaties

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), 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), Saudi Arabia (2006), Libya (2007), Bahrain (2008), Senegal (2008), the Islamic Republic of Mauritania (2008), Bolivia (2012), South Africa (2013), India (2016), and Indonesia (2016).

Spain and the United States have a Friendship, Navigation and Commerce (FCN) Treaty, and 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 amended bilateral taxation protocol is pending ratification by the United States Senate before it enters into force.

Transparency of the Regulatory System

On December 2014, the Spanish government launched a transparency website that makes over 500,000 details of public interest freely accessible to all citizens. The website only offers details about the central government. Regional and local authorities must develop their own transparency portals. .

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, although permitting and licensing processes still result in significant delays. The efficacy of regulation at the regional level is uneven. The Market Unity Guarantee Act 20/2013 was adopted in December 2013 with the goal of rationalizing the regulatory framework for economic activities in order to facilitate the free flow of goods and services throughout Spain. It also reinforced coordination among competent authorities and introduced a mechanism to rapidly resolve operators’ problems. With a license from only one of Spain’s 17 regional governments, companies are able to operate throughout the Spanish territory, rather than needing to requests licenses from each region. The measures are designed to reduce business operating costs, improve competitiveness, and attract foreign investment.

Legal System and Judicial Independence

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, underscoring the strength of the system. 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 assets. First instance courts are competent for the enforcement of foreign rulings.

Local legislation establishes mechanisms to resolve disputes if they arise. The 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.

Economic difficulties resulting from Spain’s financial crisis led to an increase in litigation, putting the judiciary system under severe pressure. The number of civil claims has grown significantly over the past decade, resulting in an increased openness to alternative dispute resolution mechanisms. Although ordinary proceedings are relatively straightforward, due to the significant number of cases within each court, getting to trial can 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 from months to 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.

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 who have had tax residency in Spain for at least ten of the past 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 say that 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. In 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 FDI in Spain; as a result, many U.S. companies 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 except for those activities directly related to national defense, such as arms production. The decree abolished previous authorization requirements on investments in other sectors deemed to be 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 out of the country. As a result, Spanish law conforms to multi-disciplinary EU Directive 88/361, which prohibits all restrictions of capital movements between Member States as well as between Member States and other countries. The Directive also classifies investors according to residence rather than nationality.

Registration requirements are straightforward and apply equally to foreign and domestic investments. 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. This established new forms for declaration of foreign investments before the Investment Registry, which oblige the investor(s) to declare foreign participation in the company.

Useful websites:

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 investments. Since its economic crisis, Spain has altered its renewable energy policy several 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. In February 2014, Spain’s government announced its plan to cut subsidies for renewable energy producers, a move that producers decried as a dramatic change to the business environment in which they made their initial investment decisions. Additional reforms in 2014 negatively affected U.S. investors in the solar power sector, with some companies arguing that the legal changes were tantamount to indirect expropriation. As a result of these energy reforms, Spain accumulated more than 30 lawsuits, totaling about EUR 7.6 billion in claims. Spain now faces an array of related international claims for solar photovoltaic and other renewable energy projects. Two international panels have ordered the Government of Spain to compensate companies for losses due to cuts in renewable energy support. In May 2017, the World Bank’s International Center for the Settlement of Investment Disputes (ICSID) arbitration panel ordered the Spanish government to pay EUR 128 million to solar thermal investors, and in February 2018, a Swedish arbitration panel awarded a Luxembourg-based investment firm EUR 53 million on a similar energy investment case.

Spain registered two new cases with ICSID in 2017, bringing its total of pending cases to 29 (as of April 2018). By way of comparison, Venezuela has 21 pending cases in ICSID.

Dispute Settlement

ICSID Convention and New York Convention

Spain is a member state to the International Centre for the Settlement of Investment Disputes (ICSID) and a signatory 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 the existence of a court specialized only in arbitration issues.

Investor-State Dispute Settlement

Contractual disputes between U.S persons and Spanish entities are handled accordingly. U.S. citizens seeking to execute American court judgments within Spain must follow the Exequator procedure established by Spanish law.

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 in Spanish territory and aims to promote alternative dispute resolution (ADR) methods, particularly arbitration. The Arbitration Act says 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 institutions have modern and flexible rules that facilitate successful arbitration outcomes. The number of cases–both domestic and international– handled by both institutions, has been rapidly increasing over the past years. In particular, proceedings in the CAM are resolved swiftly, allowing the parties to obtain an award in as few as six months. In December 2017, the Chamber of Commerce of Spain, the Chamber of Commerce of Madrid, and the Civil and Commercial Court of Arbitration Court of Madrid signed a memorandum of understanding (MOU) to unify their arbitration activities and to create a unified Arbitration Court to administer international arbitrations. The MOU will create a commission that will settle the bases of this unified international court. In addition, the new institution’s primary objectives will be the resolution of conflicts related to Latin America, under the principles of autonomy, independence, and transparency.

Bankruptcy Regulations

Spain has a fair and transparent bankruptcy regime. Bankruptcy proceedings are governed by the Bankruptcy Law of 2003, which entered into force on September 1, 2004, and applies to both individuals and companies. The main objective of the law was to ensure the collection of debts by creditors, to promote consensus between the parties by requiring an agreement between debtor and creditor, and for companies to enable their survival and continuity, if possible. However, given the law’s requirement for agreement between debtor and creditor—primarily banks, many of which refused to negotiate debt reductions—relatively few companies and individuals were able to declare bankruptcy, even at the height of Spain’s economic crisis. To address the issue, in 2014, the government approved a reform of the bankruptcy law to promote Spain’s economic recovery by establishing mediation mechanisms. These reforms—nicknamed the Second Chance Law—aimed to avoid the bankruptcy of viable companies and to preserve jobs by facilitating refinancing agreements through debt write-off, capitalization, and rescheduling. However, even with the new legislation, declaring bankruptcy remains much less prevalent in Spain than in other parts of the world.

Investment Incentives

A range of investment incentives exist in Spain, and they vary 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 that are considered priority industries (e.g., mining, technological development, research and development, etc.), given these industries’ potential effect on the nation’s overall economy. Regional governments also 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.

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

The European Union

Since Spain is a European Union (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 (EIB) provides guarantees, microfinance, equity investment, and global loans for small and medium enterprises (SMEs) as well as individual loans focused on innovation and skills, energy, and strategic infrastructure. Projects aiming to extend and modernize infrastructure in the health and education sectors may also qualify for 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 SMEs. 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 EIB or the EU.

There are various structural and investment funds designed to fund initiatives that 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) are concentrated in four key priority areas: 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. The European Social Fund (ESF)’s Cohesion Fund provides funding for programs aiming to reduce economic and social disparities and to promote sustainable development.

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

The Central Government

Spain’s central government provides numerous financial incentives for foreign investment, which are designed to complement European Union financing. The Ministry of Economy and Competitiveness (MINECO) assists businesses seeking investment opportunities through the Directorate General for International Trade and Investments and the Directorate General for Innovation and Competitiveness. These Directorates provide support to foreign investors in both the pre- and post-investment phases. Most grants seek to promote the development of select economic sectors; however, while these sectoral subsidies are often preferential, they are not exclusive.

A comprehensive list of incentive programs is available at the website: 

Using this tool, companies can access up-to-date information regarding grants available for investment projects. Users can also sign up for the automatic alert system, which provides customized updates as suitable grants or subsidies are published. Applications for these incentives should be made directly with the relevant government agency.

Spain provides certain subsidies for job training and job creation, although funding is constrained by Spain’s fiscal obligation to the EU to continue reducing its budget deficit. 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 June 2012 increased hiring bonuses for youth and long-term unemployed. In February 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 also 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 geared toward long-term unemployed with family responsibilities. In December 2017, Spain adopted a new Activation Strategy for Employment for 2017-2020 with the goal of promoting the creation of more and better quality jobs—particularly for youth—and addressing technological and demographic changes. The Strategy will be implemented through Annual Employment Policy Plans, which are drafted jointly each year by national and regional employment services.

Despite these measures, many SME owners report that hiring/firing laws and social security costs still pose a challenge to hiring more full-time employees. While Spain’s unemployment rate has dropped by nearly ten percentage points since its peak of 26.9 percent in 2013, much of the job creation has been in temporary contracts rather than permanent positions and also in labor-intensive but low value-added sectors such as tourism.

Spain provides some support to SMEs through a national program designed to strengthen innovative business groups and networks and boost their competitiveness. In 2013, Spain passed the “Law of Entrepreneurs,”  which established an entrepreneur visa for investors and entrepreneurs. Entrepreneurs may apply for the visa with a business plan that has been approved by the Spanish Commercial Office. Entrepreneurs must also demonstrate the intent to develop the project in Spain for at least one year. Investors who purchase at least EUR 2 million in Spanish bonds or acquire 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 of at least EUR 500,000 are also eligible.

In 2015, changes to the Personal Income Tax Law, Article 95 bis, affected the transfer of investments of SMEs outside of Spain by creating a tax on unrealized gains from investment. Spanish tax residents who have resided in Spain for at least 10 out of the previous 15 years are subject to a tax of 19-23 percent 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 percent or more in a venture whose market value exceeds EUR 1 million.

The central government provides financial aid and tax benefits for certain industries that it considers priority sectors given their potential growth resultant effect on the nation’s overall economy. Such activities include, for example: new industrial plants, increases in production capacity, relocations that industries undertake to boost competitiveness, new infrastructure projects, and the extension of projects which are already mature. Preferred sectors are transportation, energy and environment, and social infrastructure and services. Furthermore, priority activities also include those involving Research &Development (R&D) and innovation—including the acquisition, upgrade and maintenance of scientific-technological equipment for R&D activities, private technology centers, and private centers of innovation support. Regional governments also offer similar incentives for most of these industries. Financial aid includes both nonrefundable subsidies and interest relief on loans obtained by the beneficiaries—or combinations of the two. Companies are classified according to size, which can be a limiting factor in accessing certain types of public aid. According to the current usage, the term “micro” company refers to those employing fewer than 10 employees, with a turnover of less than EUR 2 million, and with a EUR 2 million limit for 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” enterprises have less than 250 employees, annual turnover not exceeding EUR 50 million, and total assets less than EUR 43 million.

The state-owned financial institution (Instituto de Credito Oficial, ICO), which is attached to the Ministry of Economy and Competitiveness, has the status of State Financial Agency. Its mission is to promote economic activities that contribute to economic growth and development as well as the improved distribution of wealth within Spain. As part of this mission, the ICO seeks to foster the growth of small- and medium-sized companies, to encourage technological innovation and renewable energy projects, and to provide financial relief to those affected by natural disasters. The ICO’s 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 which are economically, financially, technologically and commercially sound and involve a Spanish interest.

Other official 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 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 that are entitled to receive aid, along with their 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 the provision of funding (i.e., due to 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.).


Municipal corporations offer incentives for direct investment by facilitating infrastructure needs, granting licenses, and allowing for the operation and transaction of permits, although these have been reduced significantly due to budget constraints. Municipalities such as Madrid also offer varied 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

The most notable incentives include those aimed at fostering innovation, technological improvement (TI), and research and development (R&D) projects, which have been priorities of the Spanish government in recent years. The Science, Technology and Innovation Law 14/2011, of June 1, 2011, establishes the legal framework for promoting scientific and technical research, experimental development, and innovation in Spain. On February 2013 the Council of Ministers approved, in a combined document, “the Spanish Strategy for Science and Technology and for Innovation” for the 2013-2020 period, the essential purpose of which 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).

Participation may be in the form of:

  • R&D and TI programs and projects used to foster the creation of knowledge, its application and innovation in all its dimensions;
  • Contracting and aid targeted at R&D and TI human resources for the training and incorporation of doctors, researches, technologists, technicians and managers;
  • Scientific and technical infrastructures and the acquisition of equipment required for the pursuit of R&D and TI activities;
  • Supplementary actions associated with R&D and TI projects and programs;
  • Revitalization actions for the execution of strategic and priority actions;
  • And, joint programming initiatives carried out as transnational cooperation with a view to facing major scientific challenges.

In 2013, the European Commission implemented Horizon 2020, the largest-ever EU research and innovation program with nearly EUR 80 billion of funding available from 2014 – 2020. The goal of the program is to attract additional private investment to promote breakthroughs and discoveries and take new ideas from the laboratory to the market. Horizon 2020 is open to all EU Member States and seeks to promote public and private collaboration in delivering innovation. EU Members States are eligible for funding on international collaborations; however, Horizon 2020 expressly prohibits funding on international collaboration with advanced economies outside of the EU.

Foreign Trade Zones/Free Ports/Trade Facilitation

Both the mainland and islands (and 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. 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. The entire province of the Canary Islands is a Special Economic Zone (SEZ), offering fiscal benefits that include a reduced corporate tax rate, a reduced VAT rate, and exemptions for transfer taxes and stamp duties. The Spanish territories of Ceuta and Melilla also offer unique tax incentives; they do not impose a VAT but instead tax imports, production, and services at a reduced rate. Spanish customs legislation also 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 must 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.

Real Property

The recovery of the Spanish economy since the global financial crisis has been reflected in Spain’s real estate market. In 2017, total property sales or purchases rose 15 percent over 2016 levels—reaching 465,000 units, marking the highest annual total since 2008. In 2017, property prices increased an average of 7.6 percent compared to 2016 but remain around 20 percent below 2007 levels, which marked the peak of the real estate bubble. Foreign investment in real estate is particularly evident in sales of 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 to support recovering real estate prices. Investment in real estate is made directly through a permanent establishment or a Spanish company. Special vehicles may also be used to invest in real estate. Access to bank finance for the acquisition of real estate has been limited in Spain since 2007 as the financial sector continues to take steps to reduce non-performing loans (NPLs) associated with real estate assets. Investment financing for the real estate sector has come primarily from foreign funds and individuals.

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 and functions efficiently. It provides legal certainty to all parties involved in a transaction. Public or private acts that affect the property are included in the land register. The Property Registry is responsible for managing 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. Anyone who can prove a legitimate interest in the information contained in the register may access the register. It is not possible to make changes to the ownership of the real estate by electronic means. 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 related data 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. Mortgages are made by public deed and registered at the land registry. 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; enforcement is carried out at the administrative and judicial levels. Intellectual property protection has improved in recent years and is generally effective. However, several municipalities struggle to curb the sale of counterfeit apparel. Spanish patent, copyright, and trademark laws all approximate or exceed European Union 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 remains a problematic area in terms of respect for intellectual property rights in Spain.

Since its removal from the USTR Special 301 watch list in 2012, Spain has undertaken extensive, multi-year reform measures to strengthen its framework for intellectual property rights (IPR) protections. As a result, Spain now has a stronger legal framework and corresponding criminal procedures to address IPR violations. However, digital piracy in Spain persists 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 European Union (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 need to do so in 27 different countries currently) – 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 will 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.


Despite high-profile, high-impact raids in 2016 to halt physical sales of counterfeit goods, storefronts selling counterfeit goods have reopened and sales have rebounded. Spanish National Police note that the removal of IP from the EUROPOL Strategic Plan will diminish attention to IP crime in Spain.

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 be destroyed once an official report has been made regarding the items, unless a judge formally requests that the items be retained.

Spain’s Els Limits de La Jonquera market in Girona is listed in the USTR’s 2017 Out of Cycle Review (List) of Notorious Markets for widespread sale of counterfeit goods.

The Spanish Tax Agency releases statistics on seizures of counterfeit goods sporadically via its website. In 2015—the most recent data available—Spain confiscated nearly 2.6 million counterfeit products in more than 2,500 operations.

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:

Capital Markets and Portfolio Investment

The convergence of monetary policy following the adoption of the euro led to a significant lowering of interest rates; however, the eurozone crisis and the downgrade of Spanish sovereign debt had a negative effect on public financing costs. Foreign investors do not face discrimination when seeking local financing for projects. A large range of credit instruments are 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 publicly traded in the U.S. There is a significant amount of portfolio investment in Spain, including by American entities. In 2016, foreign investment flows in negotiable securities decreased by 46.3 percent over 2015, while accumulated foreign investment amounted to EUR 391.9 billion. The vast majority (99.6 percent) of which was in equity securities, while 0.4 percent was in shares of investment funds. Investors were mainly from the Organization for Economic Co-operation and Development (OECD) countries (99.5 percent), especially from EU countries (91.8 percent) and the United States (6.2 percent).

Money and Banking System

Spain’s domestic housing crisis, which began in 2007, was linked to poor lending practices by Spanish 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 11 as of April 2018 (Santander, BBVA, Banco Popular, Bankinter, Banco Sabadell, CaixaBank, Bankia, Banco Ibercaja, Kutxabank, Liberbank, Abanca, and Unicaja Banco).

Since the financial sector’s peak in 2008, the number of financial institution branches that accept deposits has been reduced by 38 percent, according to Bank of Spain and European Central Bank data. Since 2008, more than 14,000 Spanish bank branches have closed, representing around 40 percent of the existing network in 2008. After this reduction there were 27,320 banking offices in Spain. The sector has also shed nearly 95,000 workers, and downsizing continues as banks reassess profitability. Early retirement for those over 50 years old has been the mechanism of choice for banks seeking to downsize their workforce. In 2017, two significant banking consolidations occurred. Banco Santander (Spain’s largest bank by market capitalization) acquired Banco Popular in June 2017 after the EU’s Single Resolution Board (SRB)—the centralized banking authority for the EU, established in 2015—deemed Banco Popular as “failing or likely to fail.” Later in June, Bankia agreed to acquire Banco Mare Nostrum—a deal finalized in January 2018, making Bankia Spain’s fourth-largest bank in terms of market capitalization.

Financial sector reforms announced in 2012 sought to increase bank transparency with regard to exposure to toxic assets, to reduce oversupply of financial services by encouraging further consolidation, and to 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 European Stability Mechanism (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. The IMF conducted a Financial System Stability Assessment of Spain in August 2017—the first such review since 2012—and deemed that Spain’s financial system has made steady progress strengthening its solvency and reducing nonperforming loans (NPLs) since 2012.

Total assets for the five biggest banks in Spain at the close of 2017 were EUR 2.92 trillion:

  1. Banco Santander: EUR 1.4 trillion;
  2. Banco Bilbao Vizcaya Argentaria (BBVA): EUR 690.1 billion;
  3. CaixaBank: EUR 383.2 billion;
  4. Banco Sabadell: EUR 221.3 billion;
  5. Bankia: EUR 213.9 billion.

Foreign Exchange and Remittances

Foreign Exchange Policies

There are no controls on capital flows. In February 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

Spain and its companies are at the center of attention of sovereign wealth funds (SWFs), not only in these funds’ traditional sectors of operation, such as energy and finance, but also in real estate, technology and infrastructure. In 2010 and 2011—in the middle of Spain’s economic crisis—SWFs recognized the economic opportunity and looked to invest in Spain and have continued investing as the economy has recovered. The growth of SWFs offers both financial and industrial opportunities for Spain.

As of September 2017, SWFs had invested more than EUR 36.4 billion in Spain, making Spain a priority target in Europe. Spain continues to consolidate its position as an attractive destination for global sovereign investment. Norway’s SWF has investments in Spain of about EUR 14.4 billion. SWFs from the Middle East (Kuwait, Qatar, Oman, United Arab Emirates) and Asia (China, Singapore and Malaysia) have also invested in Spain since 2014, reflecting Spain’s economic recovery and growth prospects. In late 2016 and 2017, major sovereign wealth funds targeted new investments in Spain in the areas of finance, energy, and manufacturing. In 2016, numerous transactions were carried out by funds involving foreign subsidiaries of Spanish multinationals or Spanish companies in a range of sectors, such as energy, real estate, construction, infrastructure, and the financial sector. Sovereign wealth funds are also increasingly betting on innovation and technology.

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

Corporate Governance of Spain’s SOEs uses criteria based on principles and guidelines from the Organization for Economic Co-operation and Development (OECD). These include the state ownership function and accountability, as well as issues related to performance monitoring, information disclosure, auditing mechanisms and the role of the board in the companies.

Companies with a Majority Interest:

  • Agencia Efe;
  • Cetarsa;
  • Defex (company in liquidation);
  • Ensa;
  • Grupo Cofivacasa;
  • Grupo Correos;
  • Grupo Enusa;
  • Grupo Hunosa;
  • Grupo Mercasa;
  • Grupo Navantia;
  • Grupo Sepides;
  • Grupo Tragsa;
  • Hipodromo de la Zarzuela;
  • Mayasa;
  • Saeca.

Companies with a Minority Interest:

  • Airbus Group, NV;
  • Alestis Aerospace;
  • Enagas;
  • Enresa;
  • Hispasat;
  • Indra;
  • International Airlines Group;
  • Red Electrica Corporacion;
  • Ebro Foods.

Attached companies:

  • RTVE- Corporacion de Radio y Television Espanola.

Reference: .

Privatization Program

As the size of its public enterprise sector is relatively small, Spain does not have a formal privatization program.

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 have influenced companies’ decision to implement RBC, and companies continue to increasingly adhere to its principles. 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 implementation 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 undertaken RBC projects, and such practices are spreading throughout the economy. The Spanish government has taken some measures to promote RBC since 2002.

The Spanish government has taken some measures to promote RBC since 2002. The government endorsed the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, and the national point of contact is the Ministry of Industry, Energy, and Tourism.

Spain has a wide variety of laws, regulations, and penalties to address corruption. The legal regime has both civil and criminal sanctions 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 European Union money laundering Directive (Directive 2005&60/CE) of the European Parliament and the Council of October 26, 2005. Law 7/2012, passed October 29, 2012, restricts the size of cash transactions, a measure to reduce Spain’s large underground economy. In December 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 EUR 100,000 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 USD 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. In 2017, Spanish courts conducted 97 corruption cases involving 411 defendants. The courts issued 126 sentences, with 93 including a full or partial guilty verdict. As of October 1, 2017, there were 78 people jailed for political or administrative corruption crimes and a further 12 in detention. Several high-profile political corruption cases are expected to be resolved in 2018, including cases involving individuals from or linked to the ruling Popular Party and the Spanish royal family.

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 entrenched incumbents have frequently attempted and at times succeeded in blocking the growth of U.S. franchises and technology platforms in both Madrid and Barcelona. As a result, Spain has been perceived by some as the least welcoming country in Europe for some of the U.S.’s leading technology companies, such as Airbnb, Uber, Lyft, and Expedia. 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 rank in Transparency International’s annual Corruption Perceptions Index continued to fall in 2017, with the country falling to position 42 (from 41 in 2016 and 36 in 2015); its overall score (57) is one of the lowest among Western European countries. Transparency International criticized the systemic political corruption that persists in Spain and called for improvements between the institutional and legal infrastructure to ensure a viable judiciary. Among the Spanish public, corruption continues to be one of the main concerns, second after 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. GRECO highlighted the “limited progress made by Spain in adopting 11 of the group’s recommendations from 2013 to combat corruption. GRECO criticized Spain for failing to adopt of a code of conduct in its Congress and Senate, conduct a thorough review of the financial disclosure regime, or establish an enforcement mechanism for when misconduct occurs.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

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

Transparency International
National Chapter – Spain
Fundacion Jose Ortega y Gasset
Calle Fortuny, 53, 28010 Madrid
Telephone: +34 91 700 4105

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.

In 2017, Spain’s GDP surpassed its pre-crisis level for the first time, underscoring Spain’s emergence from its economic crisis. This marked economic improvement can also be seen in the 2017 unemployment numbers. The unemployment rate continued to fall, ending the year at 16.6 percent, a significant reduction from its peak of nearly 27 percent in 2013. However, Spain continues to have the second-highest unemployment rate in the EU, behind only Greece. Popular Party (Partido Popular, PP) President Mariano Rajoy promised to create half a million jobs per year and exceeded this goal in 2017 with 611,000 new jobs created. Steady job creation is due, in part, to Spain’s flourishing tourism industry. In 2017, Spain set a new record with more than 82 million visitors who spent more than EUR 87 billion—a 12 percent year-over-year increase.

The unemployment rate among youth, defined in Spain as those aged 16 to 25, remains high (37.5 percent at year end), leaving a significant portion of the next generation currently without skills, posing a significant risk to Spain’s long term competitiveness. There is a significant shortage of workers who possess the technological skills needed by the labor market in Spain. To make matters worse, the size of the labor force keeps shrinking. The number of people willing and able to work remained stable at 22.7 million individuals in the final quarter of 2017, for an economic activity rate of 58.8 percent. The number of employed persons increased by 2.7 percent to 19 million. About 19 percent of wage earners in Spain are employed by the public sector. By sector, compared with 2016, jobs were created across all major sectors: services (+258.7 thousand), industry (+125.2 thousand), construction (+54.5 thousand), and agriculture (+45 thousand) The estimated number of foreigner workers in Spain in 2017 was 2.1 million. The most representative groups of workers come from EU Member States (818,000) and South America (639,000).

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 many fewer 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 union representatives 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 February 2012 that included new provisions related to collective bargaining, hiring, and job placement. On June 28, 2012, the parliament definitively approved the labor reform bill presented by the government. The new law makes dismissal quicker and cheaper and gives more power to businesses to change working conditions and wages. On November 25, 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 December 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 revalorization of pensions, and the creation of an independent fiscal authority that will be responsible for producing reports about the effects of the law on the adequacy of pensions.

In December 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 March 2015, the government approved an extraordinary credit of EUR 850 million in funding for the Activation Program for Employment, which is aimed at long-term unemployed with family responsibilities. The program’s estimated total annual cost is EUR 1 billion. In December 2017, Spain adopted a revised Activation Strategy for Employment for 2017-2020 with the goals of promoting the creation of more and better quality jobs—particularly for youth—and addressing technological and demographic changes.

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.

As Spain is a member of the European Union, Overseas Private Investment Corporation (OPIC) insurance is not offered. 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).

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) 2016 USD 1,200,000 2016 USD 1,237,000 
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 Partner Country (M USD, stock positions) 2015 USD 50,046 2016 USD 37,388 BEA data available at
Host Country’s FDI in the United States (M USD, stock positions) 2015 USD 66,857 2016 USD 68,169 BEA data available at
Total Inbound Stock of FDI as % host GDP 2015 45.2% 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), 2016
Inward Direct Investment Outward Direct Investment
Total Inward 545,954 100% Total Outward 516,851 100%
Netherlands 119,954 22% United Kingdom 85,445 17%
Luxembourg 75,143 14% United States 77,644 15%
United Kingdom 70,578 13% Brazil 60,864 12%
France 49,476 9% Mexico 32,832 6%
Germany 41,775 8% Chile 29,333 6%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets, June 2017
Top Five Partners (US Dollars, Millions)
Total Equity Securities Total Debt Securities
All Countries 662,236 100% All Countries 307,827 100% All Countries 354,409 100%
Luxembourg 146,378 22.41% Luxembourg 139,984 45.5% Italy 117,116 33.0%
Italy 120,842 18.2% France 42,000 13.6% Netherlands 29,861 8.4%
France 62,634 9.5% Ireland 39,756 12.9% United States 29,691 8.4%
Ireland 49,049 7.4% United States 15,814 5.1% United Kingdom 21,332 6.0%
United States 45,505 6.9% United Kingdom 15,803 5.1% France 20,634 5.8%

Tara Haase
Economic Officer
Tel.: (34) 91 5872465

Ana Maria Waflar
Economic Specialist
Tel.: (34) 91 5872290

2018 Investment Climate Statements: Spain
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