A range of investment incentives exist at the national and regional levels, and they vary according to the authorities granting incentives and the type and purpose of the incentives. Because Spain is a European Union Member State, potential investors can access European aid programs, which provide further incentives for investing in Spain. Through 2027, European financing under the Multiannual Financial Framework and the “Next Generation EU” recovery instrument is expected to contribute about EUR 150 billion to help repair the COVID-19 pandemic’s economic damage and support digitalization and the green transition, two long-term EU goals. Spain is prioritizing funding for twelve strategic areas: 1) electric vehicles; 2) health; 3) renewable energy, renewable hydrogen, and storage; 4) agriculture; 5) language (including AI, science, and the promotion of the Spanish language); 6) circular economy; 7) naval industry; 8) aerospace; 9) digitizing the water cycle; 10) microelectronics and semiconductors; 11) social and caring economy; and 12) industrial decarbonization.
Spain’s central and region governments provides numerous incentives, financial aid, and tax benefits for activities pursued in certain priority industries, which are designed to complement EU financing and boost key economic sectors (i.e., mining, technology, and research and development), given these industries’ potential effect on the nation’s overall economy. Financial aid includes both nonrefundable subsidies and interest relief on loans obtained by beneficiaries, or combinations of the two. Some foreign investors report that tax and other incentives are slow to be applied or terms change after the fact.
The Ministry of Industry, Trade, and Tourism assists businesses seeking investment opportunities through the Directorate General for International Trade and Investments and the ICEX Spain Export and Investment office. These offices support 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: http://www.investinspain.org .
The Ministry for the Ecological Transition and Demographic Challenge, through the Institute for Energy Diversification and Saving (IDAE), makes grants to promote renewable installations for energy production, both thermal and electrical. These grants, financed by the European Regional Development Fund (ERDF), are executed through calls for proposals made by the IDAE in each autonomous community/regional government. The grants are non-refundable and are governed by the principle of competitive competition with the aim of optimizing their application as widely as possible.
In September 2022, Spain passed the “Law of the Science, Technology and Innovation,” which aims to provide resources, rights, and stability for research, development, and innovation, as well as ensure growing public funding and private investment, in support of meeting the EU’s research and development funding target of 3 percent. From the outset of the pandemic in 2020, the Ministry of Science and Innovation launched various lines of subsidies and special loans in the budget, targeted at research and development projects related to COVID-19.
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 approved by the Spanish Commercial Office. Entrepreneurs must 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.
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 sets out the areas 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 established in the Royal Decrees. Most are granted on an annual basis. In addition, companies that set up business in Spain can gain access not only to the Spanish national market, but also to the markets of Europe, Middle East, North Africa, and Latin America, given its privileged geostrategic position, and the strong presence of Spanish companies in these regions.
Incentives from national, regional, or municipal governments and the European Union are granted to Spanish and foreign companies alike without discrimination. The most notable incentives include those aimed at fostering innovation, technological improvement, and research and development projects.
Foreign Trade Zones/Free Ports/Trade Facilitation
Both the mainland and islands (and most Spanish airports and seaports) have 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 Las Palmas de Gran Canaria – 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 Value-Added Tax (VAT) rate, and exemptions for transfer taxes and stamp duties. The Spanish enclaves 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
Spain does not have performance and localization requirements for investors. The Spanish Data Protection Agency and the Spanish Police request data from companies, although the companies may refuse unless required by court order.