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  • Writer's picture Zoltan Mezei Alvarez

Rules for Foreign Investments in Spain

General Introduction

Spain has approved the adaptation text of the EU 2019/452 standard that regulates the review mechanisms of direct foreign investment in Spain that enters into force on September 1, 2023 (RD 571/2023).

Spain applies the principle of free establishment and non-discrimination. Foreign investors can carry out any activity with the same conditions as a local investor. The EEC Council Directive number 88/361/CEE, of June 24, 1988, on the free movement of capital between residents of the member states was adopted in Spanish legislation by means of Law number 18/1992, of July 1992, which entered into force on July 4, 1992, and by Royal Decree number 1816/1991 of December 20, 1991 on foreign economic operations. Investors residing outside of an EU member country are restricted from investing in the gaming, television, radio and air transport sectors are restricted to; the same is true of the production and trade of arms. In the latter case, these restrictions also apply to investors from the EU.

Rules Related to Foreign Investment

  1. Foreign investors are entitled to the freedom to settle in Spain.

  2. Regulations relating to the acquisition of participation: The acquisition of the majority interest in a Spanish company by a foreign company is allowed as long as the business is not part of the regulated production sector or arms trade.

  3. Obligation to Declare: Portfolio investments from an EU member state are exempt from any type of declaration regardless of their amount. Direct investments may require a prior declaration but in general it is not necessary for investments in companies whose turnover is less than 5 million Euros, except for strategic sectors such as those of special interest to Spain. Certain operators of electronic communications and research activities and use of deposits of strategic raw materials.

Foreign Investments Exempted from Prior Authorization

1.The Energy Sector: Regardless of their amount, operations in which the investor does not meet any of the objective circumstances that determine the subjection of the investment to the authorization regime will not be considered essential inputs, regardless of the sector, in accordance with section 3 of article 7 bis of Law 19/2003, provided that the following conditions are met:

  • That the companies or assets acquired do not carry out regulated activities.

  • That, as a result of the operation, the company does not acquire the status of dominant operator in the sectors of generation and supply of electrical energy, production, storage, transport and distribution of fuels or biofuels, production and supply of liquefied petroleum gases or production and supply of natural gas, in accordance with Royal Decree-Law 6/2000, of June 23, on urgent measures to intensify competition in markets for goods and services.

  • When the foreign investment involves the acquisition of electrical energy production assets, provided that the share of installed capacity by resulting technology is less than 5 percent, in accordance with the criteria established by RD 571/2023 itself for the purposes of calculating said quota.

  • When the foreign investment involves the acquisition of companies that carry out the activity of commercializing electricity, provided that the number of clients of the acquired company is less than 20,000.

2. Foreign direct investments in which (i) the turnover of the acquired companies does not exceed 5,000,000 euros in the last accounting year closed, (ii) the acquired companies are not in the following sectors, and (iii) their technologies have not been developed under the protection of programs and projects of particular interest to Spain:

  • Critical and dual-use technologies, key technologies for leadership and industrial training.

  • Fundamental materials.

  • Sectors with access to sensitive information.

  • Social communication media (without prejudice to the specific regulation on audiovisual communication services).

  • Investments in electronic communications operators in which any of the following conditions occur:

- That they are holders of concessions for the use of the radioelectric public domain.

- That they are holders of enabling titles for the use of orbit-spectrum resources within the scope of Spanish sovereignty or

- That they have been qualified as operators with significant weight in a relevant market in the electronic communications sector.

  • Investments related to research activities and exploitation of mineral deposits of strategic raw materials.

3. Investments in Real Assets: properties acquired will not affect any critical infrastructure and are not essential and non-substitutable for the provision of essential services.

4. Calls, transitory investments, that is, those of a short duration (hours or days) in which the investor does not have the capacity to influence the management of the acquired company because they are underwriters and insurers of share issues and public offerings for the sale or subscription of shares (it will be the final investors who, where appropriate, need authorization).

The introduction of these exemptions through regulatory development makes the de minimis exemption for investments with a value of less than 1,000,000 euros, in force until now, disappear.

About the Author:

Zoltan graduated from the University of La Laguna, Spain, with a diploma in law in 1994, during which time he received a scholarship for foreign trade studies from the Government of the Canary Islands and worked from November 1984 to November 1985 at the Spanish Commercial Office in Dakar.

Zolta has worked as a commercial representative of the Banco General de Canarias in Mali and has also prepared reports on the Ivory Coast for the Canary Islands Revenue Authority.

From 1994-1995 Zolta worked as a lawyer in Tenerife, where he was responsible for labour matters (including participation in corporate litigation) and portfolio management for overseas clients and the administration of the Antigua City Council.

Since 1995 Zolta has had an independent legal practice in the south of Tenerife (specialising in foreign investment, commercial and administrative matters).

During this period, Zolta headed the Legal Department of a British supermarket chain throughout the Canary Islands, Spain and Portugal from 2006.

Working languages: English, Spanish


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