Spain: Investing

FDI in Figures

After a sharp fall in 2009, FDI flows have recovered and in 2010, Spain became one of the world's fifteen largest FDI receivers (UNCTAD 2011). This trend continued in 2011 and despite the economic downturn in the eurozone, investors seem to have remained confident.

In terms of FDI appeal, the country’s strengths include: cultural proximity to Latin America, with the presence of a number of Spanish multinational companies, boom in tourism, its highly efficient transport network and development of renewable energies. In 2013, Seville will have the world's largest photovoltaic power generation platform. Moreover, Spain aspires to becoming one of the world's key research actors. To provide the means for its ambitions, it has developed the "Malaga Valley" project, whose promoters are hoping to construct the largest European research and innovation center dedicated to information and communication technologies.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	73,293	9,135	24,547
FDI Stock (million USD)	623,215	634,909	614,473
Performance Index*, Ranking on 141 Economies	59	114	-
Potential Index**, Ranking on 141 Economies	28	-	-
Number of Greenfield Investments***	548	387	-
FDI Inwards (in % of GFCF****)	15.9	9.9	-
FDI Stock (in % of GDP)	39.1	45.9	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows By Countries and Industry

Main Investing Countries	2010, in %
The Netherlands	22.4
Luxembourg	15.3
UK	10.5
USA	9.9
France	6.8
Italy	6.6
Germany	6.6

Main Invested Sectors	2010, in %
Transport and storage	17.0
Real estate	17.0
Manufacturing	14.8
FInancial and insurance activities	12.9
Energy distribution	11.9
Scientific and technical professional activities	8.4

Source: Invest in Spain. Ministère de l´industrie, du tourisme et du commerce. - Last Available Data.

Form of Company Preferred By Foreign Investors: Public Limited (Sociedad Anónima) or Limited Liability Corporation (Sociedad Limitada (S.L.))
Form of Establishment Preferred By Foreign Investors: Subsidiary company
Main Foreign Companies: There are around 9,000 foreign companies set up in Spain, of which 34% in the Barcelona area.
To browse through news about foreign companies who invest in Spain, visit the website of Interes (Investment promotion agency).
Sources of Statistics: INE
Bank of Spain
Treasury Department
Ministry of Industry, Tourism and Commerce

Why You Should Choose to Invest in Spain

Strong Points: The country's main strong points are flexibility and adaptability of economic operators and in the quality of life the country offers.
Weak Points: The country's weak points are the low productivity of its manpower, its weak competitiveness as well as a growing trade balance deficit. The complexity of the regulation system with regard to the 17 Autonomous Communities is also a hindrance to investment.
Government Measures to Motivate or Restrict FDI: Spain applies the principle of free establishment and non-discrimination. Foreign investors can operate any type of business and under the same conditions as a local investor. The CEE Council Directive no. 88/361/CEE dated June 24, 1988, concerning the free movement of capital between the residents of member States was adopted in the Spanish legislation by Law no. 18/1992 of July 1, 1992, and came into effect on July 4, 1992 and by Royal Decree 1816/1991 no. 1816/1991 of December 20, 1991 on Foreign Economic Transactions.

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

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Spain: Spain has signed bilateral agreements with more than fifty countries. 47 agreements can be downloaded from the website of UNCTAD: click here to download these agreements. They define the framework for foreign investment protection in Spain for each of the signatory countries.
Organizations Offering Their Assistance in Case of Disagreement: ICCWBO , International court of arbitration, International chamber of commerce
ICSID , International Center for settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency: Spain has signed the MIGA convention.

Country Comparison For the Protection of Investors

	Spain	OECD	الولايات المتحدة	Germany
Index of Transaction Transparency*	5.0	6.0	7.0	5.0
Index of Manager’s Responsibility**	6.0	5.2	9.0	5.0
Index of Shareholders’ Power***	4.0	6.8	9.0	5.0
Index of Investor Protection****	5.0	6.0	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment: Yes.
Acquisition of Holdings: The acquisition of majority interest by a foreign company in a Spanish company is authorized provided that the business is not in the regulated sector of production and trade of weapons.
Obligation to Declare: Investment portfolios from an EU member state are exempt from all declarations whatever their amount. Direct investments can require a prior declaration, when the investment amount or the granted loans exceed 30,000 Euros for a foreign interest holding higher than 50%. The request is to be made with the Register of Foreign Investments, from the Directorate General of Commercial Policies and Foreign Investments (DGPCIE).
Competent Organization For the Declaration: Sub-secretary of state for Commerce
Requests For Specific Authorizations

Office Real Estate and Land Ownership

Possible Temporary Solutions: There are several of them: the domiciliation of the company in the private residence of the manager, domiciliation in a business center, hosting in shift workshops, company backbones as well as renting of professional sites.
The Possibility of Buying Land and Industrial and Commercial Buildings: Yes.
Risk of Expropriation: Legislation practically prohibits the nationalization or expropriation of foreign investments.

Investment Aid

Forms of Aid: Employment aid (Ministry of Labor and Social Affairs), special government grants, credits.
In parallel to the government aids, each of the 17 autonomous communities have their own system of incentives. The investors must approach the regional authorities of the place of establishment to benefit from these aids as well as the community aids (especially for the depressed areas).
Privileged Domains: Job creation, training, research and development, renewable energies, tourism sector, broadcasting sector. The preferred sectors are TIC, renewable energies and environment.
Privileged Geographical Zones: Special aids are granted to companies investing in regions which are lagging behind in economic development (3/4th of the territory). There are community aids as in support provided by the European Union in the least favored regions.
The regions concerned by the European FEDER program,
Free Zones: The free zones of Spain.
Organizations Which Finance: To learn about all the aids for investment, search the database of the investment promotion agency.
The EU via FEDER.
The Official Credits Institute (ICO),
Le Ministry of Industry, Tourism and Commerce.
The governments of the regions and municipalities also finance the incentives for foreign investments.

Investment Opportunities

The Key Sectors of the National Economy: Chemical industry, automobile, naval construction, textile and leather industry, paper manufacturing, telecommunications, banking, infrastructure, energy.
High Potential Sectors: The website Invest in Spain suggests a range of investment opportunities. Regional websites also propose other opportunities (Invest in Asturias, Andalucia, etc.). In Andalucia, investments considered as offshore are possible not far from Gibraltar taking advantage of favorable tax regulations.

In the energy sector, the government plan for renewable energies represent an opportunity for investments in technological innovation. The biotechnology sector has developed four times faster in Spain than any other countries of the EU. The investments in this sector exceed 25% per year, making Spain the fourth biggest contributor of the world in scientific production in the biotechnology sector. According to the Spanish Institute for External Trade, the chemical, pharmaceutical and plastics industry represent real investment opportunities.

Spain has become one of the most attractive destinations for call-centers. It has attracted several multinationals (Avis, Hewlett-Packard, Citigroup, etc.) thanks to a labor cost 30% less expensive than in other European countries. R&D in the Information Technology (IT) and data processing (software development, artificial intelligence, supercomputers, etc.) is also one of the spearheads of Spain. A center for the development of technological industry to encourage technological research in Spain exists since 2006. In fact, many real-estate investments are going to be made on the Costa del Sol, Costa de la Luz, Costa Tropical, Costa Almeria especially for developing infrastructures for tourism.
Privatization Programs
Tenders, Projects and Public Procurement: Visionnetware, Competitions and Tenders
Ted - Tenders Electronic daily, Business opportunities in EU 27
Globaltenders, Tenders & Projects from Spain
Tenders Info, Tenders in Spain
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
Sectors in Decline: Textile, agriculture.

Finding Assistance For Further Information

Investment Aid Agency: Interes
Other Useful Resources: The investment aid agencies of the autonomous communities
Doing Business Guides: «Doing Business» guide from Lexmundi
The "International Tax and Business Guide" from Deloitte
Spain Commercial Guide 2010 - Buy USA

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