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Why Is Spain an Attractive Country for Foreign Investors?

The Spanish economy began its recovery several years ago, after the end of the economic crisis that hit European countries, when the local institutions saw relevant improvements of the local market. The Spanish economy increased in the last years due to the employment market, which expanded at a fast pace; the growth was also driven by the level of investments. 

Currently, Spain is one of the most attractive business markets in Europe, providing a set of competitive advantages. At the level of 2018, the economic growth in Spain stood at 2.6%, one of the key pillars of the country’s growth being the tourism sector, which placed the country as one of the most  Our specialists in company formation in Spain can offer you an insight of the most thriving industries in the country.

Spain, the third largest investment market in the EU

After the economic crisis, Spain has improved its legislation related to foreign investments and provided more incentives for the private sector, which raised foreign investors’ confidence and transformed Spain into the second largest recipient of Foreign Direct Investments (FDI) and the third largest investor in the European Union.

Among Spain’s strong points are the increasing number of multinational companies operating in Spain, the ever increasing tourism industry, its efficient infrastructure, the land transport network and the recent development of the renewable energy industry. Spain also aims to become one of the largest key players in the research and development sector in the world. The Spanish Government has enabled the Malaga Valley project, that is created with the purpose of hosting the largest research and innovation center in Europe designed for the information and communications technologies.

main reasons to invest in spain

Spain has a competitive economy 

Spain is one of the most competitive countries in the EU, with more than 46 million inhabitants. At the moment, Spain represents a top economy in the EU and foreign investors can benefit of full access to the larger European consumer market. Investors can access various aid programs applicable in the EU; they can also benefit from the strategic geographical position of the country.

Tourism industry in Spain 

Tourism industry is very developed in Spain and it is one of the top financial sectors; in 2015, Spain reached a new record in terms of the total number of tourists, which accounted for 60 million personsour team of Spanish company formation agents can offer more details on the main touristic regions

Telecommunication industry in Spain 

A solid industry in Spain is represented by the telecommunication sector, highly developed in the field of mobile telecommunicationSpain measures, at the moment, more than 58 million mobile phone lines, while the fixed line telecommunication increased at a slower pace. 

An important aspect of the local environment is that Spain is the top economy for broadband usage in the corporate domain, as more than 99% of the Spanish companies use internet services.

What are the strong points of the Spanish economy? 

Spain represents a gateway to other markets. Since it is a member state of the European Union (EU), investors can easily access the European market (and its consumer market of 500 million citizens) when opening a company in Spain. As a member state of the EU, the country applies a set of investor friendly policies and businessmen can expand their business operations to other EU countries with almost no restrictions. 

Besides the EU market, the geographical position of the country opens the possibility of connecting with other important business markets, such as the North Africa, Latin America or the Middle East. Spain also stands out as an excellent market when referring to its infrastructure. For example, in 2016, the country was the 10th jurisdiction at a global level in matters related to infrastructure and logistics (as presented by the Global Competitiveness Report). 

Since the country has sea access on a wide proportion of its territory, the maritime sector is very well developed here. Thus, those interested in opening a company in Spain in the shipping sector can find relevant business opportunities here (the country’s ports are connected with the most developed ports that can be found across the world); our team of specialists in company registration in Spain can advise businessmen on the procedures necessary for entering the shipping industry. 

Another strong asset of the business market in Spain is the fact that the local authorities are actively involved in attracting foreign investments here. This was achieved through the Spanish Act 14/2013, which was created with the purpose of assisting investors who want to open a company in Spain

The legislation, which can be presented by our team of specialists in company formation in Spain, was designed to sustain both local businessmen and foreign investors wanting to participate on the local business market. The rule of law was also designed to increase the creation of new jobs, thus sustaining the employment market. Some other important matters that make Spain an attractive investment market are presented below:

  • Spain ranks as the 9th global jurisdiction on the openness to foreign investments;
  • it is also one of the largest recipients of foreign direct investments (the 12th jurisdiction at a global level);
  • it has more than 12,500 foreign companies operating on the local market;
  • it is estimated that 70 of the world’s top 100 companies have set up a branch in Spain;
  • it is also necessary to know that the country is a large research and development (R&D) market, having 90 of the top 100 foreign companies operating here through a subsidiary.   

What are the advantages of opening a Spanish company? 

One of the main aspects that influence the decision of opening a company in a given country is the initial investment costs and the level of taxation. One of the main reasons for investing in Spain is that the country is considered a very competitive economy. When referring to costs, foreign businessmen must know the following: 

  • the costs associated with employment in Spain are 29% lower compared to the Eurozone region;
  • compared to the EU average, the employment costs are 16% lower;
  • in industry, the costs associated with one hour of labor are EUR 23 in Spain;
  • wages and social security in industry in the Eurozone average for the same index stands at EUR 33/hour;
  • electricity costs are much lower in Spain compared to similar economies (in UK, electricity costs are 55% higher than in Spain).

What are the characteristics of the Spanish workforce? 

The workforce is another relevant matter when opening a business in a foreign country, as the quality of the company’s services or products is highly influenced by the manner in which the employees are able to carry out their business activities. In Spain, almost 50% of the country’s population is considered an active population, with a high degree of knowledge. 

At a EU level, Spain stands out as the 2nd most important market on the number of enrollments in tertiary studies. It is also a great business destination for those operating in the science or technology related sectors, being the 6th jurisdiction in Europe for specialists in the field of STEM (science, technology, engineering, mathematics) sciences. It also has one of the highest number of foreign citizens (6 million) in Europe; our team of consultants in company formation in Spain can provide in-depth assistance to those who want to hire foreign workforce in a Spanish company

The foreign investments regime in Spain

The Spanish law regarding foreign investments is aligned with the EU principles, exchange controls, capital movements and liberalization. In general, foreign investments must be notified after the investment has been made.

Investments in certain areas are subject to more control and are regulated by laws which are specific to the sector in question. Some of the regulated business sectors in Spain include: air transportation, radio and television, gaming, telecommunications, private security, certain manufacturing industries, the marketing, manufacturing or distribution of fire arms and national security activities. Business owners in Spain will also need to obtain special permits and licenses if they decide to operate in a business sector that requires additional approvals. Foreign investments made directly in connection to national security and defense will need special approval from the Council of Ministers.

Any company incorporated in Spain, whether owned by a foreigner or having foreign shareholders, will need to observe the taxation laws and the requirements for VAT registration depending on its activities.

Setting up a company in Spain

There are several types of companies that can be opened in Spain and investors can choose the one that suits their business needs best in terms of management, size, tax and auditing compliance.

Foreign companies can also choose to open a branch in Spain or, if they want to have more maneuverability in the country they can open a subsidiary. The choice belongs to the investor but a company formation specialist in Spain can help any entrepreneur decide what legal form suits his interests.

More details on the main reasons for investing in Spain are offered in the video below:

Why invest in Spain?

Adaptability and flexibility are Spain’s strongest points when it comes to welcoming foreign investors. There are no restrictions applied to foreign citizens coming to set up businesses in Spain. Foreign investors benefit from the same conditions for opening a company in Spain as any other local enterpriser.

Spain has signed bilateral agreements with over 50 states in order to establish the legal framework for foreign investments. Also, investment portfolios from companies within the EU are not required to submit any declaration, no matter the amount invested, thus reducing significantly the administrative burden on the foreign investors.

Additionally, the Spanish Government supports investors by providing them with several incentives in various industries. If you want to open a company in Spain and need details about the legislation related to foreign investments, please contact our team of consultants in Spanish company formation