2013 Investment Climate Statement - Spain

2013 Investment Climate Statement
Bureau of Economic and Business Affairs
April 2013

Openness to, and Restrictions Upon, Foreign Investment

Foreign direct investment (FDI) has played a significant role in modernizing the Spanish economy over the past 35 years. Attracted by Spain's large domestic market, export possibilities, and growth potential, foreign companies in large numbers set up operations. Spain's automotive industry is almost entirely foreign-owned. Multinationals control half the food production companies, a third of chemical firms, and two-thirds of the cement sector. Several foreign banks have acquired networks from Spanish banks, and foreign firms control close to one third of the insurance market. In October 2012, the U.S. automobile firm Ford announced plans to move its Belgian production to Spain. As part of a broader privatization push, GOS began to privatize the railroad system in 2004; the National Rail Network (RENFE) has been dissolved and formed into two new companies, with current plans for the national railroad operator to liberalize passenger transport and be opened to new operators beginning in July 2013 (See SOE section, below). In 2011, Spain ranked 9th globally for FDI inflows.

The Government of Spain (GOS) recognizes the value of foreign investment and the economic importance of attracting more of it, particularly to help spur recovery from Spain’s current economic crisis. Spain’s Finance Minister has repeatedly emphasized the government’s goal to increase Spain’s attractiveness to foreign investors. Spanish law allows 100% foreign ownership and guarantees free capital transfers. Given this high degree of openness, Spain has received significant foreign investments in knowledge-intensive sectors in recent years. The Madrid region is the primary recipient of foreign investment (76 percent) while the Catalonia region attracts some 12 percent. FDI tends to concentrate in manufacturing, financial services, and energy. Yet Spain’s business sector actively seeks to strengthen ties with the United States; for their part, Spanish investors are rapidly increasing their share in the United States, at a current level of some USD 50 billion.

Spain has had a fully liberalized investment regime since 1999, with the exception of national security screening for those in activities "directly related to national defense," such as arms production. Registration requirements are straightforward and apply to foreign and domestic investments equally. To combat the economic crisis, the GOS has implemented significant reforms to enhance the flexibility of the labor market, consolidate savings banks, reduce health care spending, and tackle the pirating of intellectual property, particularly over the Internet. Spain has also embarked on additional structural reforms to instill confidence and recover high levels of foreign investment and competitiveness. However, some elements have negatively impacted foreign investors. For example, Spain’s fiscal consolidation program and changes in renewable energy feed-in tariff rates have been implemented on a retroactive basis. Additionally, a 2012 moratorium on funding for new renewable energy projects and subsequent legal reforms have negatively affected U.S. investors in the solar power sector, with some companies arguing that the changes are tantamount to expropriation.

Global Benchmarks

Following are Spain's rankings on four widely accepted measures of the business and investment environment:




Transparency Intl. Corruption Perceptions Index


30 of 176,[“65” score]

Heritage Economic Freedom


36 of 179, freedom score 69.1 (-1.1 from 2011)

World Bank Doing Business


44 of 185

World Economic Forum Global Competitiveness Report


36 of 144

Capital Conversion and Transfer Policies

Spain imposes no controls on capital flows; 1992 Royal Decree 1816/1991 provides complete freedom of action in financial transactions between residents and non-residents of Spain. Previous requirements for prior clearance of technology transfer and technical assistance agreements have been eliminated. Capital controls on the transfer of funds outside the country were abolished in 1991.

Expropriation and Compensation

Spanish legislation sets up a series of safeguards that virtually prohibit the nationalization or expropriation of foreign investment. No expropriation or nationalization of foreign investment has taken place in recent years. However, the GOS made retroactive changes to its renewable energy feed-in tariffs in December 2010, resulting in losses to U.S. companies’ earnings and investments. Fourteen institutional investment funds and energy companies, including some U.S. companies and funds, filed a suit in November 2011 to begin an international arbitration procedure against the Spanish state, claiming compensation of hundreds of millions of euros for the retroactive cuts. The suit is based on the Treaty on the Energy Charter, a multilateral investment treaty designed to protect long-term energy investments.

The GOS announced a moratorium on funding for new renewable energy projects in February 2012. In December 2012 the government enacted a comprehensive energy sector reform plan in an effort to address a 25 billion euro energy tariff deficit caused by user rates insufficient to cover system costs. These reforms negatively affected U.S. investors in the solar power sector, with some companies arguing that the changes to the legal regime are tantamount to expropriation.

Dispute Settlement

The Spanish judicial system is independent of the executive branch, and open and transparent, although sometimes slow-moving. Judges are in charge of prosecution and criminal investigation, which permits greater independence. The Spanish prosecution system allows for successive appeals to a higher Court of Justice, with the European Court of Justice as the court of final appeal. In addition, the GOS Spain abides by rulings of the International Court of Justice at The Hague. Foreign investors have access to international tribunals: Spain is a member of both the International Center for the Settlement of Investment Disputes (ICSID) and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (UNCITRAL).

Contractual disputes between U.S. investors and Spanish entities are normally handled appropriately. There is no U.S.-Spain agreement on the mutual recognition of judgments, so U.S. citizens seeking to execute American court judgments in Spain must follow Spanish law, in this instance a complicated procedure known as the "exequator" process. In light of the Embassy's past experience in attempting to assist American citizen claimants with the process, the Embassy recommends that Americans who conclude contracts with Spanish entities specifying the United States as the venue for adjudicating disputes also obtain an agreement regarding how a possible U.S. judgment will be executed in Spain.

Spain has a fair and transparent bankruptcy regime. Bankruptcy proceedings are governed by the Bankruptcy Law of 2003, which applies to individuals and companies. The main aim of this law is to ensure the collection of debts by creditors, to promote consensus between the parties and, if possible, to enable the survival and continuity of the company.

Performance Requirements and Incentives

A range of investment incentives exist in Spain, provided according to the authorities’ granting incentives and the type and purpose of the incentives. Programs are listed below under each of the four levels of government administering these programs: EU, national, regional or municipal governments, all of which are granted to Spanish and foreign companies alike without discrimination. Performance requirements are not used to determine the eligibility or level of incentives granted to investors.

The European Union

Since Spain is an EU Member State, all potential investors are able to access European aid programs:

The EU provides incentives primarily to projects that focus on economically depressed regions or that benefit the EU as a whole.

The European Investment Bank provides global loans for small and medium enterprises as well as individual loans based upon Innovation 2010 Initiative criteria.

The European Investment Fund provides guarantees and venture capital to small and medium-sized enterprises, focusing on the transportation, telecommunications and energy industries.

There are various structural funds designed to fund initiatives which reduce the wealth disparity between member states. Most autonomous regions of Spain qualify for these programs in 2013; however, they may no longer qualify following the adoption of a new EU budget in 2014.

Financial incentives are routed through major Spanish banks, such as the Instituto de Credito Oficial (ICO) and Banco Bilbao-Vizcaya Argentaria (BBVA), and must be applied for through the financial intermediary.

The Central Government

Spain’s central government provides numerous financial incentives for foreign investment, generally designed to complement EU financing. The Ministry of Economy and Competitiveness (MINECO) runs the Directorate General for Trade and Investments and Directorate General for Innovation and Competitiveness to assist businesses seeking investment opportunities. They provide support to foreign investors in both the pre- and post-investment phases. Most grants are aimed at encouraging the development of certain economic sectors, but often for a given subsidy, there may be sectors that are not exclusive but are preferential. A comprehensive list of incentive programs is available at the website, www.investinspain.org. Using this tool, companies can gain access to updated information regarding the grants available for investment projects. Users can sign up to the automatic alert system which prompts a tailor-made newsflash as suitable grants or subsidies are published. Applications for these incentives should be made directly to the relevant government agency.

Spain provides certain subsidies for job training and job creation, although they have been recently reduced due to budget constraints. Projects designated as Investment and Employment may be eligible for further subsidies from the Government Employment Public Service (formerly the National Employment Institute). Labor law reforms adopted in June 2012 increased hiring bonuses for youth and long-term unemployed.

Spain is emphasizing the development of green energy, R&D, and innovation capabilities. In an attempt to bolster investment in R&D by enterprises, the Spanish government approved the INGENIO Program, aimed at increasing both public and private investment in R&D.

The central government provides financial aid and tax benefits for activities carried out in certain priority sectors, in view of their growth potential and their impact on the nation’s overall economy (e.g., activities in the agrofood industry, energy, mining, technological development, research and development, etc.). In addition, the regional governments provide similar incentives for most of these industries. Financial aid includes both nonrefundable subsidies and interest relief on the loans obtained by the beneficiaries, or combinations of the two. Companies are classified according to the size of business, which is a limiting factor in accessing certain types of public aid. According to the current usage, the term “micro” company refers to those employing fewer than 10 employees, with a turnover of less than 2 million euros and with the same limit for its total assets. A “small company” has fewer than 50 employees, a turnover below 10 million euros and total assets also below 10 million euros. “Medium-sized enterprises” are those with fewer than 250 employees, annual turnover not exceeding 50 million euros and total assets lower than 43 million euros.

The state-owned corporate entity (Instituto de Crédito Oficial, ICO) attached to the Ministry of Economy and Competitiveness, has the status of State Financial Agency. Its activity seeks to boost small and medium companies and to encourage technological innovation and renewable energy projects as well as to help alleviate critical situations. ICO direct financing programs are aimed at financing large-scale investment projects in strategic sectors in Spain, backing large-scale investments by Spanish companies abroad, and supporting projects that are economically, financially, technologically and commercially sound and involve a Spanish interest.

Other official bodies that grant aid and incentives:

MINHAP - Ministry of Finance and Public Administration

MINETUR - Ministry of Industry, Energy and Tourism

ENISA - National Innovation Company S.A. (under MINECO)


IDAE - Institute for Energy Diversification and Saving (under MINETUR)

CERSA - Spanish Guarantee Company S.A. (under MINETUR)

CDTI - Centre for Industrial Technological Development (under MINECO)

Tripartite Foundation for training in employment (under Ministry of Employment and Social Security)

CESGAR - Spanish Confederation of Mutual Guarantee Companies

The Regional Governments

Spain’s 17 regional governments, known as autonomous communities, provide additional incentives for investments in their region. Many are similar to the incentives offered by the central government and the EU, but they are not all compatible. Additionally, some autonomous community governments grant investment incentives in areas not covered by state legislation but which are included in EU regional financial aid maps. Most are granted on an annual basis. No investment project can receive other financial aid if the amount of the aid granted exceeds the maximum limits on aid stipulated for each approved investment in the legislation defining the eligible areas. Therefore, the subsidy received is compatible with other aid, provided that the sum of all the aid obtained does not exceed the limit established by the legislation of demarcation and EU rules do not preclude it (incompatibilities between Structural Funds).

Types of incentives available:

  • Financial loans and subsidies
  • Exemption from certain taxes
  • Preferential access to official credit
  • Reduction of burdens, with social security discounts to companies
  • Bonuses for acquisition of certain material
  • Customs exemption for certain imported goods
  • Real estate grants and gratuitous or favorable landgrants
  • Guarantees granted in credit operations
  • Loans with low interest, long maturities, and grace periods
  • Guarantee of dividends
  • Professional training and qualification
  • Indirect aid by means of supplying infrastructure facilities (accesses, services, communications, etc.)


Municipal corporations offer incentives to direct investment by facilitating infrastructure needs, granting licenses, and allowing for the operation and transaction of permits. Municipalities such as Madrid offer numerous support services for potential foreign investors. Local economic development agencies often provide free advice on the local business environment and relevant laws, administrative support, and connections to human capital in order to facilitate the establishment of new businesses. Usually they are designed to help ease the initial operations of direct investment.


Spain and the United States share a Bilateral Taxation Treaty (1990), which was amended on January 14, 2013 (the amendment must be ratified by both the Spanish parliament and the U.S. Senate before it goes into effect).

Some U.S. and other foreign companies operating in Spain have felt disadvantaged by the Spanish Tax Administration’s (AEAT) interpretation of Spanish legislation designed to attract foreign investment. For the past several years, AEAT has investigated and disallowed deductions based on operational restructuring at the European level involving a number of U.S.-owned Spanish holding companies for foreign assets (Empresas de Tenencia de Valores Extranjeros or ETVEs). This situation has become so significant that many U.S. companies reportedly now channel their Spanish investments and operations through third countries. In 2010, the Prosecutor General’s Office opened a criminal investigation into one U.S.-origin, Spain-based multinational holding company and several of its employees. The company eventually settled by paying a large fine and significant alleged tax arrears. Other cases related to the Spanish holding companies of U.S. multinationals are currently pending in administrative tribunals.

Right to Private Ownership and Establishment

The Constitution and Spanish law establishes clear rights to private ownership, and foreign firms receive the same legal protections as Spanish companies. There is technically no discrimination against public or private firms with respect to local access to markets, credit, licenses and supplies. However, American construction companies have noted difficulty in winning public sector construction contracts. Foreign investors have also experienced some discrimination in sectors dominated by state-owned entities (see SOE section, below).

Protection of Property Rights

Property protection is effective in Spain, although the system is slow. Any administrative decision pertaining to property rights can be appealed first at the administrative and then at the judicial level, which has three levels of court appeals. Mortgages are common in Spain.

Spanish patent, copyright, and trademark laws all approximate or exceed EU levels of intellectual property protection. Spain is a party to the Paris Convention, Bern Convention, the Madrid Accord on Trademarks and the Universal Copyright Conventions.

Internet Protection

The Internet presents the most problematic area in terms of respect for intellectual property rights in Spain. While law enforcement agencies are combating street piracy, Internet piracy has increased sharply over the past several years. U.S. copyright-dependent industries - music, movies, and entertainment software - continue to report a steady decline in sales attributable to digital piracy and cite Spain as having one of the worst problems in the world in this regard.

Spanish cultural industries have also been hit hard by piracy. In February 2011, more than a year after the GOS introduced it, parliament passed the Sustainable Economy Law (LES), which contains provisions giving the government authority to shut down or block websites found to host or link to infringing content. The law provides for an administrative process with two separate judicial interventions before action can be taken against a site. The GOS approved implementing regulations on December 30, 2011 and the administrative body that accepts complaints from rights holders was established in March 2012. A "Circular" issued in 2006 by the Prosecutor General's Office to guide prosecutors stated that peer-to-peer (P2P) downloading of protected content should not be prosecuted as a criminal offense unless a commercial profit motive can be established. While the Circular defines such activity as a civil wrong, it contributes to a widespread public perception that P2P activity is legal. A number of legal obstacles also impede copyright holders from obtaining redress via civil litigation. The government is currently considering reforms to the intellectual property law, civil procedure law, and penal code to strengthen the legal framework.

Public and private sector enforcement actions (especially private sector initiatives) using Spain's patent, copyright and trademark legal framework have increased, though less so in cases involving alleged Internet piracy. Industry groups praise police enforcement actions; their concerns have to do more with the judiciary than with Spain's police forces. Despite enforcement efforts, piracy remains a significant problem. Industry sources estimated the following digital piracy levels in early 2012: 98% for music, 74% for films, 62% for videogames and 49% for books. In June 2010, the government modified the penal code to provide alternatives to prison sentences for persons of modest means who sell counterfeit or pirated merchandise at a profit of less than 400 euros. Right-holders have expressed concern that by reducing such activity from a crime to a misdemeanor, the GOS is signaling that it is not deemed a serious offense. Furthermore, they note that the new penal code provisions may make it harder for law enforcement authorities to pursue retail sales of IPR-protected merchandise (especially fake brand-name products) over the Internet. Spain has ratified the World Intellectual Property Organization's (WIPO) Copyright Treaty (WCT) and the WIPO Phonograms and Performances Treaty (WPPT), the so-called Internet treaties. In 2006, Spain passed legislation implementing the EU Copyright Directive, thereby also making the Internet treaties part of Spanish law.


A non-renewable 20-year period for working patents is available if the patent is used within the first three years. Spain permits both product and process patents. In December 2012 the European Parliament approved regulations that would establish a single patent for the EU; the EC plans for the first European patents to be issued in the spring of 2014. Spain and Italy have decided to opt out, however, due to discrepancies with the patent’s linguistic regime (English, French, and German). A special court will be created to resolve disputes arising from the 25 country signatories. Companies or individuals who want to protect their innovations throughout the EU will have to request a patent in three places – in Munich, the headquarters of the European patent, in Spain, and in Italy (compared to the need to do so in 27 different countries currently) – and will be exposed to litigation in many other jurisdictions. Patents will be issued in English, French, or German, although applications may be presented in any official EU language, along with a summary in one of the three aforementioned languages.

Pharmaceutical companies have expressed concern over recent government cost-cutting measures that affect market access and reference pricing for brand-name medications. They are also concerned with practices by the governments of several of Spain’s 17 autonomous regions that the companies believe are incompatible with central government policies. Further, industry reported that Spain’s lack of patent harmonization with the majority of EU member states has left holders of pharmaceutical process patents with weaker patent protection than required by the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.


The law extends copyright protection to all literary, artistic or scientific creations, including computer software. Spain and the United States are members of the Universal Copyright Convention.


Spanish authorities published a new Trademark law in 2001 (Law 17/2001), which came into effect in July 2002. The Spanish Office of Patents and Trademarks oversees protection for national trademarks. Trademarks registered in the Industrial Property Registry receive protection for a 10-year period from the date of application, which may be renewed. Protection is not granted for generic names, geographic names, those that violate Spanish customs or other inappropriate trademarks.

Businesses may seek a trademark valid throughout the EU. The Office for Harmonization in the Internal Market (OHIM) for the registration of community trademarks in the EU started its operations in 1996. Its headquarters are located in Alicante:

Office for Harmonization in the Internal Market (Trade Marks and Designs)
Avenida de Europa, 4
E-03008 Alicante
Tel: (34) 96-513-9100

The World International Property Organization (WIPO, headquartered in Geneva) oversees an international system of registration. Applicants must designate the countries where they wish to obtain protection. However, this system only applies to U.S. firms with an establishment in a country that is a party of the Agreement or the Protocol.

Transparency of the Regulatory System

Spain modernized its commercial laws and regulations following its 1986 entry into the EU. Its local regulatory framework compares favorably with that of other major European countries. Bureaucratic procedures have been streamlined and much red tape has been eliminated, though permitting and licensing processes can still suffer delays. Efficacy of regulation at the regional level is uneven. The GOS has announced plans to approve a bill to guarantee market unity in January 2013, with the intention of facilitating the free flow of goods and services in Spain. With a license from only one of Spain’s 17 regional governments, companies will be able to operate throughout the Spanish territory, rather than having to requests licenses from each region. The measures are expected to reduce business operating costs, improve competitiveness and attract foreign investment.

Quasi-independent regulatory bodies exist in several sectors; however, they are for the most part still finding their role and fighting to assert their independence. Making the transition from state-owned monopolies to promoting full and open competition has been a slow, but steady, process. The parliament is currently considering a bill to merge the entities that regulate energy (CNE), telecoms (CMT), and competition (CNC), into a new entity, the National Securities Market and Competition Commission (CNMC).

The comment process for proposed rule-making changes is not as formal as in the United States. Spain does not have an official public comment procedure for government regulations similar to what exists in the U.S. system. Most new laws and regulations are published as drafts before they go into force, but by the time they are published, there are often limited opportunities to change them. Government officials do seek out stakeholder comments before finalizing significant regulations, but the comment system is geared towards collecting input from officially recognized industry sector associations or consumer organizations. The general public will not necessarily be aware of a regulation until it is finalized and published.

Capital Markets and Portfolio Investment

The convergence of monetary policy following the adoption of the euro led to a significant lowering of interest rates; however, the eurozone crisis and recent downgrades of Spanish sovereign debt have had a negative impact on public financing costs. Foreign investors do not face discrimination when seeking local financing for projects. There is a large range of credit instruments available through Spanish and international financial institutions. Many large Spanish companies rely on cross-holding arrangements and ownership stakes by banks rather than pure loans, however, these arrangements do not act to restrict foreign ownership. Several of the largest Spanish companies that engage in this practice are also traded publicly in the U.S. There is a significant amount of portfolio investment in Spain, including by American entities. During 2011, Spain saw a fall in foreign investment flows in negotiable securities of 3.5% over the previous year, so that accumulated foreign investment amounted to 746 billion euros. 99.9% of this amount was in equity securities, and 0.1% in shares of investment funds. Investors were mostly from EU countries (90.2%) and the United States (7.4%).

Total assets for the six biggest banks in Spain as of late 2012 were 2.926 trillion euros:


Total Assets (billions euros)

Banco Santander


Banco Bilbao Vizcaya Argentaria (BBVA)






Banco Sabadell


Banco Popular


A domestic housing slump that began in 2007 had a great impact on savings banks (“cajas de ahorro”), many of which were heavily exposed to troubled construction and real estate companies. The government created a Fund for Orderly Bank Restructuring (FROB) through Royal Decree-law 9/2009 which restructures credit institutions to enhance their equity. The number of Spanish financial entities has shrunk significantly since 2009 with 50 entities consolidated into 15 as of December 2012 (Santander, BBVA, CaixaBank, Bankia, Banco Sabadell, Banco Popular, Unicaja, Catalunya Caixa, NovaCaixaGalicia, Kutxa Bank, Banco Mare Nostrum, Ibercaja/Caja3, Bankinter, Liderbank, and Banco de Valencia [to be sold to Caixabank]). Many of these mergers involve savings banks. Since the beginning of the crisis, banks have closed more than 6,200 offices and shed 27,814 workers. Officials emphasize that further consolidation is necessary to eliminate weak financial institutions.

Financial sector reforms announced in 2012 sought to increase transparency with regard to toxic assets, reduce oversupply of financial services by encouraging further consolidation, and alleviate the credit crunch by stabilizing bank balance sheets so they will increase lending. Two phases of Spanish government-mandated provisioning in February and May added 84 billion euros in coverage to risky construction sector loans held by banks. At the end of May, the government partially nationalized Spain’s fourth largest financial institution, Bankia, which announced it needed 23.5 billion euros in public assistance. The nationalization and the unexpectedly high bailout numbers contributed to a deepening of the confidence crisis that had been dogging Spain for more than two years, forcing the government to seek funding for a broad bank recapitalization from its EU partners in June 2012. The EU committed to provide up to 100 million euros in financing, without macroeconomic or fiscal conditionality. Drawing on EU funds, the Governing Committee of the FROB approved capital injections of 37 billion euros for four nationalized banks, including Bankia, in December 2012. The four nationalized banks transferred 36 billion euros in toxic assets to an asset management company (SAREB) created to help sanitize bank balance sheets the same month.

State-Owned Enterprises

A process of privatization of state-owned firms began in the mid-1980s and was carried out by both Socialist and Popular Party governments in several stages. Between 1996 and 2000, numerous large utilities and industrial groups, such as Telefonica, Tabacalera, Repsol, and Endesa, among others, were completely privatized. However, several of these companies maintain a de facto monopoly position under private ownership, and a high degree of sector concentration persists years after the main privatizations, reflecting the slow progress of competition in those sectors. U.S. companies have reported difficulty competing particularly in regulated sectors, yet have successfully participated in several purchases.

The Spanish government has liberalized the energy, electricity and telecommunications markets to varying degrees. These efforts have opened Spain's economy to new investment, including by U.S. companies. However, many observers believe these changes have not been broad enough to fully stimulate competition. It is frequently difficult for new entrants to gain traction in sectors dominated by former state-run monopolies such as Telefonica. Moreover, in the energy sector, the GOS seems to favor domestic control of "national champion" companies.

In 2004 GOS began to privatize the railroad system; effective January 1, 2005, the National Rail Network (RENFE) was dissolved and formed into two new companies, ADIF and RENFE-Operadora, both of which remain under state control. Current plans are for the national railroad operator to liberalize passenger transport and be opened to new operators beginning in July 2013. RENFE will eliminate mid-distance lines that are inefficient, and will be divided into four companies. Airlines and private bus companies have complained about unfair competition from the state-owned rail company, claiming that high speed passenger tickets are being sold below costs in a manner “that can be considered state aid.” The rail company RENFE announced that in 2010 it had for the first time turned a small operating profit on its commercial and long-distance operations and that, in keeping with European regulations, it no longer receives a state subsidy.

In January 2011, Iberia Airlines completed a multi-billion-euro merger with British Airways upon the listing of the shares in the International Airlines Group (IAG). The merger created Europe’s third largest airline and the world’s sixth largest carrier. In June 2011, the Socialist government announced its plans to partially privatize (up to 49%) Spain’s airport authority AENA, Madrid Barajas, and Barcelona El Prat airports, and the State Lotteries and Bets (LAE). However, these plans were suspended in January 2012 due to a decline in market values.

Corporate Governance

Corporate scandals in the United States and Europe, further integration of European capital markets, and efforts to make Spain a more attractive destination for foreign investment led to several initiatives to improve the transparency of capital markets and corporate governance. Spanish business organizations and private economic think tanks are proactive on corporate governance issues. In 2003 and 2004, Spanish business leaders created a progressive code of business practices and ethics. In 2004, Spanish regulatory agencies and lawmakers codified the business codes and required Spain's listed companies to follow a rigorous set of corporate governance and transparency rules.

Due to extensive cross-ownership within a small universe of dominant companies, Spanish corporations have traditionally not had truly independent board members. This situation is slowly changing, with several leading Spanish companies introducing independent members to their boards in an effort to improve transparency. Hostile takeover rules and the threat of a government "Golden Share" veto were used in the past to prevent takeovers of companies. While surfacing on occasion in purely Spanish transactions, these defenses were most often used when the acquiring company was partially or wholly owned by other governments, with the Spanish government and securities regulators acting to prevent what they interpret as another government taking over a privatized Spanish company. A European Court of Justice decision ruled such practices illegal. In 2006, parliament passed legislation abolishing the "Golden Share" whereby the government had to approve the sale of more than 10% of the shares in strategically important companies such as Telefonica, Endesa, Iberia and Repsol.

Corporate Social Responsibility (CSR)

Spanish companies consider corporate reputation, competitive advantage, and industry trends to be the major driving forces of CSR. Initiatives undertaken by the EU and international organizations have influenced companies' decision to implement CSR, and companies continue to increasingly adhere to its principles. Associations and fora that bring together the heads of leading corporations, business schools and other academic institutions, NGOs and the media are actively contributing to implementation of CSR in Spain. Although the amount of CSR is still moderate by international standards, in the last two decades there has been a growing interest in adopting CSR. Today, almost all of Spain’s largest energy, telecommunications, infrastructure, transport, financial services and insurance companies, among many others, have undertaken CSR projects, and such practices are spreading throughout the economy. The GOS has taken some measures to promote CSR since 2002. As an OECD member, Spain adheres to the OECD Guidelines for Multinational Enterprises; Spain’s National Contact Point is located in the Ministry of Industry, Energy, and Tourism.

Political Violence

The GOS is involved in a long-running campaign against the significantly weakened but still viable Basque Fatherland and Liberty (ETA), a terrorist organization founded in 1959 and dedicated to promoting Basque independence. ETA has traditionally targeted Spanish government officials, members of the military and security forces, journalists and members of the Popular Party and Socialist Party for assassination. More broadly, symbolic targets include representatives of the Spanish state, security forces and prominent industrialists, as well as infrastructure linked to railroad construction and television repeaters. U.S. citizens and U.S. companies have not been direct ETA targets. ETA's main methods are car bombs and assassinations with firearms. ETA has killed more than 40 persons since January 2000 and more than 850 persons since its campaign began in 1968. Its last attack in Spain was in 2009.

In the past suspected ETA operatives have extorted "revolutionary taxes" from businesspersons and professionals living in the Basque region, sometimes bombing their property or sending the demands to their children to intimidate them into paying. Although such extortion has ceased according to local business organizations, there remains the possibility that ETA may reinstitute the practice. ETA supporters have also engaged in street violence and vandalism against government facilities, economic targets (particularly banks), and the homes and property of persons opposed to ETA's cause. ETA gunmen in late 2008 killed a Basque businessman whose construction company is involved in the construction of a high-speed rail known as the “Basque Y” linking the Basque cities of Bilbao, San Sebastian, and Vitoria to Madrid. In mid-2009, the group marked its 50th anniversary with a series of high-profile and deadly bombings. On July 29, 2009, ETA detonated an explosive-laden van outside a Civil Guard barracks in Burgos. The blast injured more than 60 Civil Guards, spouses, and children. The following day, ETA murdered two Civil Guards in Mallorca with a car bomb.

There were no terrorist attacks within Spain in 2010. Arrests and seizures in 2010, combined with the cumulative effect of years of intense crackdown, effectively decapitated ETA’s leadership and neutralized its capacity to sustain a prolonged operational campaign. Nevertheless, the group retains the capacity to kill. The lone fatality attributed to ETA in 2010 occurred outside Paris, France in March, when ETA members shot a French policeman during a botched car-theft attempt. In January 2011, ETA announced a “permanent” ceasefire; however, similar declarations made by the group previously were followed by new terrorist attacks, giving rise to skepticism on the part of Spanish government officials. In October 2011, ETA declared a “definitive cessation of armed activities.” ETA reaffirmed the “definitive cessation” in January 2012. The October 2012 second place finish for left-wing separatist Basque political coalition Bildu led ETA political wing Batasuna to dissolve itself on January 3, 2013. Batasuna claimed it would continue its struggle for an independent Basque Country through other political tools (alluding to the recently-elected Bildu). Spanish authorities continue to question the credibility of such messages, given ETA has neither disarmed nor disbanded.

On March 11, 2004, Islamic terrorists killed 191 people on commuter trains headed for Madrid's central Atocha train station. Several foreign nationals died in the attack, although there were no American citizen casualties. Although U.S. citizens and companies in Spain have not been direct targets of terrorists, the potential for violent extremism exists in Spain. In the aftermath of the train bombings, the Spanish government mobilized against the threat and continues to fight aggressively against international terrorism.


Spain holds a fairly stable position at 30th of 176 countries in Transparency International’s annual Corruption Perceptions Index. Spain is a signatory of the OECD Convention on Combating Bribery, and Spanish officials attach importance to combating corruption. The GOS amended domestic law in 2010 to make the Convention a more useful investigative and prosecutorial tool. Following a December 2012 review of Spanish implementation of the OECD Convention, the OECD noted that “Spain’s enforcement of its foreign bribery laws has been extremely low, with not a single prosecution out of seven investigations in 13 years….” The OECD report concluded that “Spain must vigorously pursue foreign bribery allegations and strengthen its legal framework for fighting bribery by addressing gaps in its Penal Code.”

Spain has a wide variety of laws, regulations, and penalties dealing with corruption. The legal regime has both civil and criminal sanctions for corruption, bribery, financial malfeasance, etc. Giving or accepting a bribe is a criminal act; corporations (legal persons) can be held criminally liable for their actions. Both corporations and individuals are prohibited from including bribes as tax deductions.

In April 2010 Spain’s parliament passed Law 10/2010, bringing Spain’s standards in line with EU directives on money laundering and terrorist financing and applying broadly to the financial services sector. Some portions of the law entered into force immediately, but others are still awaiting implementing regulations. Law 7/2012, passed in October 2012, restricts cash transactions in an attempt to reduce the size of Spain’s large underground economy. The law prohibits cash payments equal to or above 2,500 euros (USD 3,250) involving business deals by entrepreneurs and freelancers. Non-residents have a higher limit of 15,000 euros (USD 19,500).

The General State Prosecutor is authorized to investigate and prosecute corruption cases involving funds in excess of roughly USD 500,000. The Office of the Anti-Corruption Prosecutor, a subordinate unit of the General State Prosecutor, has a staff of some 15-20 prosecutors in Madrid, Barcelona, and Valencia who are tasked with investigating and prosecuting domestic and international bribery allegations. There is also the "Audiencia Nacional," a corps of magistrates with broad discretion to investigate and prosecute alleged instances of Spanish businesspeople bribing foreign officials.

Spain enforces anti-corruption laws on a generally uniform basis. Public officials are probably subjected to more scrutiny than private individuals, but several wealthy and well-connected business executives have been successfully prosecuted for corruption. There is no obvious bias for or against foreign investors. U.S. firms have not identified corruption as an obstacle to investment in Spain. Although no formal corruption complaints have been lodged, U.S. companies have indicated that they have been disqualified at times from public tenders based on reasons that these companies’ legal counsels did not consider justifiable.

Bilateral Investment Agreements

Spain and the United States have shared a Friendship, Navigation and Commerce (FCN) Treaty since 1795. They also share a Bilateral Taxation Treaty (1990), which was amended on January 14, 2013 (this amendment must be ratified by both the Spanish parliament and the U.S. Senate before going into effect).

Spain has concluded bilateral investment treaties (BITs) with: Hungary (1989), the Czech Republic (1990), Russia (1990), Argentina (1991), Chile (1991), Tunisia (1991), Egypt (1992), Poland (1992), Uruguay (1992), Paraguay (1993), Philippines (1993), Algeria (1994), Honduras (1994), Pakistan (1994), Kazakhstan (1994), Peru (1994), Cuba (1994), Nicaragua (1994), Lithuania (1994), South Korea (1994), Bulgaria (1995), Dominican Republic (1995), El Salvador (1995), Gabon (1995), Latvia (1995), Malaysia (1995), Romania (1995), Indonesia (1995), Venezuela (1995), Turkey (1995), Lebanon (1996), Ecuador (1996), Costa Rica (1997), Croatia (1997), Estonia (1997), India (1997), Panama (1997), Slovenia (1998), South Africa 1998), Ukraine (1998), the Kingdom of Jordan (1999), Trinidad and Tobago (1999), Bolivia (2001), Jamaica (2002), Iran (2002), the Federal Republic of Yugoslavia (2002), Bosnia and Herzegovina (2002), Nigeria (2002), Guatemala (2002), Namibia (2003), Albania (2003), Uzbekistan (2003), Syria (2003), Colombia (2005), Macedonia (2005), Morocco (2005), Kuwait (2005), China (2005), the Republic of Moldova (2006), Mexico (2006), Vietnam (2006), Libya (2007), Bahrain (2008), and Senegal (2008).

OPIC and Other Investment Insurance Programs

As Spain is a member of the European Union, OPIC insurance is not offered. Various EU directives, as adopted into Spanish law, adequately protect the rights of foreign investors. Spain is a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA).


The economic crisis has had a significant adverse impact on employment in Spain. After substantially reducing unemployment between 2000 and 2007, Spain is suffering one of the highest unemployment rates recorded in the last 20 years. The unemployment rate climbed from 8% in third quarter of 2007 to over 25% in the third quarter of 2012, with almost 6 million people jobless. According to 2012 statistics, there are about 17.3 million people employed in the work force out of a total population of 47.1 million. Unemployment among youth (ages 18-30) is exceptionally high at 50%. Immigration has slowed significantly as a result of the severe employment crisis, which disproportionately affects the immigrant community. Spain experienced net emigration in 2012, as it lost more residents than it gained. A number of immigrant workers, especially from Latin America, have returned home. The government introduced an initiative in September 2008 to pay jobless immigrants their unemployment benefits in a lump sum if they returned to their home countries and promised not to return to Spain for three years. A very small number of immigrants are reported to have taken advantage of this program.

With the highest unemployment rate in the European Union, the GOS has declared job creation the most important mid-to-long-term priority. Labor market reforms in 1994 and 1997 eased labor market rigidities but did not fundamentally change the difficult labor regime. The labor market is divided into permanent workers with full benefits and temporary workers with few benefits. Reform legislation enacted by the parliament in September 2010 aimed to encourage the use of indefinite labor contracts by reducing the number of days of severance pay required under these contracts. It was criticized as insufficient and did not stimulate employers to hire more workers on indefinite contracts.

In January 2011, the GOS, business and labor agreed to a pension reform that increases the legal retirement age from 65 to 67 over a 15-year period beginning in January 1, 2013, and gradually increases the number of years of contributions on which pensions are calculated. After consultations between business and labor organizations failed to produce significant agreement on measures to overhaul Spain’s Franco-era contract and negotiating system, the government introduced a labor reform decree in February 2012, later approved by parliament, that included new provisions related to collective bargaining, hiring, and job placement. The new law makes dismissal quicker and cheaper and gives more power to businesses to change working conditions and wages, although private sector wage restraint will continue to depend on business-labor negotiations.

Collective bargaining is widespread in both the private and public sectors. A high percentage of the working population is covered by collective bargaining agreements, although only a minority (generally estimated to be about 10%) of those covered are actually union members. Under the Spanish system, workers elect delegates to represent them before management every four years. If a certain proportion of those delegates are union-affiliated, those unions form part of the workers' committees. Large employers generally have individual collective agreements. In industries characterized by smaller companies, collective agreements are often industry-wide or regional. The reforms enacted in 2012 gave business-level agreements primacy over sectoral and regional agreements and made it easier for businesses to opt out of higher-level agreements. They also required collective labor agreements to be renegotiated within one year of expiration.

The Constitution guarantees the right to strike, and this right has been interpreted to include the right to call general strikes to protest government policy.

Foreign-Trade Zones/Free Ports

Both on the mainland and islands (and in most Spanish airports and seaports) there are numerous free trade zones where manufacturing, processing, sorting, packaging, exhibiting, sampling and other commercial operations may be undertaken free of any Spanish duties or taxes. The largest free trade zones are in Barcelona, Cadiz and Vigo. Others vary in size from a simple warehouse to several square kilometers. Spanish customs legislation allows for companies to establish their own free trade zones, where duties and taxes are payable only on those items imported for use in Spain. These companies must abide by Spanish labor laws.

Foreign Direct Investment Statistics

Source: Directorate General of Trade and Investment, Ministry of Industry, Energy and Tourism Foreign Direct Investment Statistics

FDI Stock by year

(millions euros)




Total new FDI in Spain




New FDI in Spain from the U.S.




U.S. share of total new direct investment (%)




Total new Spanish investment abroad




New Spanish investment in U.S.




U.S. share of total new Spanish investment (%)




New Foreign Direct Investment in Spain (2011) by country of origin

United Kingdom
















United Arab Emirates




New Foreign Direct Investment in Spain (2011) by industry sector destination

Information and Telecommunication


Transportation and Storage


Manufacturing Industry


Financial Services and Insurance