Foreign direct investment; why it is a good idea to invest in Spain

Foreign direct investment in Spain has recovered in the recent years following the financial crisis due to the confidence of overseas investors in the country’s potential for financial growth.

The proximity of Spain to Latin American countries makes it a bridge to those countries where the market may cater not only to Spanish locals, but to a diverse public that includes its neighboring countries, Latin America and the millions of tourists that visit the country each year. According to ICEX, Spain is the 2nd country worldwide in international tourist arrivals and receipts, being on top in Europe; no wonder entrepreneurs do not hesitate to invest in the country.

There is a wide range of foreign direct investment opportunities in Spain aside from tourism-related sectors, such as financial and insurance services, real estate, manufacturing, scientific, professional, technical, administrative support service activities, wholesale and retail trade, etc; whereas the 70% of this foreign direct investment is represented by the Netherlands, Luxembourg, the United Kingdom, France, Germany and Italy. In fact, the FDI stocks of 2019 increased to reach USD 751,5 billion after a marked decrease in 2018, according to the 2020 World Investment Report.

The Spanish Government has put measures in place that benefit foreign direct investment, welcoming possible investors that are eyeing on stepping into the land of financial opportunities. Spain applies the principle of free establishment and non-discrimination of international investors; whereby foreign investors may operate any type of business under the same conditions as their local counterparts. Not only FDI has benefits from the Spanish Government, but foreign direct investment is also under the protection of Spain. The Government also provides various incentives for foreign direct investors, such as grants, tax benefits, professional training, preferential access to credit, etc., such as not charging withholding tax on interest and dividends paid to EU recipients, and for partnerships of local and foreign companies. In addition, if a Spanish company holds a participation of at least 5%, the business activities carried out abroad are tax exempt in the country. Since Spain is among the EU Member States, international investors can benefit from European aid programs and residence permits that allow the primary holders and their family to live, work and study in the country, as well as traveling within the Schengen area, among other advantages.

According to Banco de España, there are around 5,500 foreign companies investing in Spain, of which 54% is in Catalonia. More specifically, the steady growth of its capital, Barcelona, has welcomed more international direct investors over the last 15 years, making it the home for more than 7,000 foreign offices and accounts for 91% of foreign companies settled in Catalonia. For its high demand on tourism, rich culture and Mediterranean lifestyle, Barcelona has been proclaimed top destination for FDI in continental Europe and first among European cities without a native English-speaking population. For entrepreneurs that are planning on establishing a business, Barcelona is known for its talented and skilled labor, which have a comparatively low wage compared to other cities in Western Europe, despite being capable of offering an international level of service. Barcelona has worked to create a business ecosystem in various sectors (including ICT and biotechnology) which has resulted in collaboration through foreign direct investments.

In addition, the high quality but low-cost lifestyle attracts foreign investors that are planning to move, or have a getaway located in one of the best cities in Spain. Every financial opportunity does not only benefit the investor, but also contributes to surpassing the economic barriers that Barcelona has, with insufficient capital for startups. Wise entrepreneurs that see the potential in investing in the country will be signing up for a long-term program that will benefit them, and their family, for a lifetime.

If you want to invest in Spain, do not hesitate to contact us. We can help you.