Foreign Direct Investment in Spain

September 2022

Spain is the 13th recipient of the world’s foreign direct investment (FDI). In fact, 68% of its FDI’s stock comes from world-leading economies: Switzerland, The United States, The United Kingdom, France, Germany, and Sweden.

Its attractiveness comes from its extensive and comprehensive system of grants and incentives, offered by the state, the regions, and the EU. Furthermore, it offers a consistent range of public institutions, which provide financing under favorable terms.

Investing advantageous factors

In terms of positioning, Spain represents the gateway to EMEA (Europe, Middle East, and North Africa) and Latin American markets. This connection offers access to over 600 million consumers in an expanding economy.

While Spain’s strategic geographical location is a great advantage, investors should consider the country’s large domestic market. Spain provides more than 47 million consumers, in addition to the 83.7 million tourists who visited the nation in 2019. As reported by Guide to business in Spain (2020), Spain ranks second as the country with the highest number of inbound tourists.

Moreover, Spain has signed bilateral agreements with nearly 90 countries. In addition to government aid, each of the 17 autonomous communities has its own system of incentives. Investors can contact the authorities of the region where they are going to set up, and take advantage of these and EU’s aid schemes.

Main invested sectors

Over 14,600 foreign firms have set up their business in Spain. Strategic sectors such as ICT, finance, and renewable energies offer huge opportunities. Equally lucrative industries are biotechnology, aerospace, and automotive.

According to Invest in Spain (2021), the ICT sector had a turnover of 120 billion euros in 2019. And the ratio has kept growing since 2021, bringing the numbers close to the county’s pre-pandemic position. The digitalization of the Spanish population has also contributed to turning ICT into one of the fastest-growing industries.

Regarding the financial sector, investors can be reassured as Spanish markets boast great transparency, liquidity, and efficiency. The country’s financial system has undergone a far-reaching restructuring process. This has helped to clean up the accounts and solvency of the main players in the financial sector.

Regions that attract the most FDI

The capital area directs most of Spain’s foreign direct investment. Madrid alone makes up 60.2 % of the country’s FDI. Close behind the Spanish main region, Catalonia provides a percentage of 19.1%.

The Canary Islands are considered a Special Economic Zone (SEZ), which grants numerous tax advantages. For instance, a reduced rate of corporation tax, a reduced rate of value-added tax (VAT), and exemptions for transfer taxes and stamp duties.

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