Foreign Investment Act

Spain's corporate and commercial laws are based on the Capital Enterprises Act 1/2010, revised on July 2, 2010.
Spain classifies various legal types of companies, such as corporations, limited liability companies, and joint stock companies, under the same law, and the regulations that form the core of commercial law, along with this law, are as follows:

• 1784/1996 Edict

• 3/2009, edict on structural modifications of commercial enterprises such as establishment of enterprises, mergers and acquisitions, spin-offs, international transfer of assets/liabilities, international transfer of enterprises, international remittances, etc,

• Edict of the Commercial Act of 22 August 1885

• 2/2007 on Commercial Services Enterprises

Basic Direction of Investment Policy

The primary focus of Spain's investment attraction policy is to initially attract foreign direct investment, aiming to achieve balanced development among regions and address unemployment.
Consequently, the procedures for reporting foreign investments and overseas investments are equally simplified to ensure fairness between foreign and Spanish investors and to promote market liberalism.
Furthermore, to enhance national competitiveness, Spain actively seeks investment in high-tech and high-value industries, as well as actively attracting investment capital from the Americas and Asia to diversify foreign investment channels.

To achieve these goals, Spain enacted the Royal Decree 664/1999 Act in 1999, which significantly eliminated regulations that existed previously for various types of transactions.
Under this law, foreign investors are only required to report in specific cases, with reporting options including pre-reporting, post-reporting, and annual reporting.
Investment reports are overseen by Spain's Ministry of Finance and Economy.

When you are obligated to report:

• In the case of initial investment by a non-residential founder

• Securities investment: In the case of a financial institution or investment institution that stores and manages securities

• Investments other than securities: For companies registered with an organization that manage assets

• In the above case, the investment amount must be reported by the fund management company.

Investment-related laws in Spain include Royal Decree 664/1999, a law related to attracting foreign investment and overseas investment, Royal Decree 1816/1991 on foreign exchange management and capital movement liberalization, and other subsequent amendments 42/1993, 1638/1996.

Major Matters of Laws and Regulations Related to Attraction

Definition of foreign investors: Under the Spanish Foreign Investment Act, the following subjects can be classified as foreign investors.

Form of foreign investment: If a foreign investor performs the following activities, it is considered that foreign investment has occurred.

Foreign investment reporting: Spain's foreign investment is subject to post-reporting in principle, but investments flowing from tax havens must be pre-reported and post-reported. In the following cases, the obligation to report afterwards is exempted except for investments from tax havens.

Restrictions on Foreign Investment

Regulations on Acquisition of Enterprises

Suspension of the Deregulation Act

Supervision of Foreign Investment

Supervisory Authority for Foreign Investment

Spain provides various incentives related to human resource development, job creation, downstream industry promotion, regional development, and overseas expansion for the purpose of promoting industry and attracting investment.
The government and each local government provide investment subsidies to foreigners and Koreans without discrimination, so all companies located in Spain can benefit from investment incentives provided by each public institution.
However, the EU Commission restricts the maximum amount of investment support depending on the size of the economy and the number of people in each region to resolve the economic imbalance between regions.
Therefore, regions with lower per-person GDP and population density compared to the EU average have relatively large investment support incentives.
However, the government has been gradually reducing investment-related incentives since 2010 to reduce the high fiscal deficit, worsening the investment environment for foreign companies in Spain.

Spain provides incentives to support human resource development and job creation in accordance with relevant laws (Spain Act 395/2007).
Support for the talent development program is provided through social security tax deductions, and the subsidy is calculated in consideration of the amount paid by the applicant company in the name of human resource development in the previous year's social security tax.
In addition, the number of employees of the entity determines whether or not to provide full or partial support.

Education and Training Grants

• In the case of initial investment by a non-residential founder

  • Companies with 6-9 employees: 100% reduction in social security tax for employers

  • Companies with 10-49 employees: 75% reduction in social security tax for employers

  • Companies with 50-249 employees: 60% reduction in social security tax for employers

  • Companies with 250+ employees: 50% reduction in social security tax for employers

• Full-time employment support (for start-ups): Reduce employer-burdened social security tax for employment of persons with disabilities under the age of 25 or under 30 (up to 1,800 euros for full-time employment)

• Full-time employment support (for general enterprises): Employer-burdened social security tax cuts (up to 1,000 to 1,500 euros) when hiring official unemployed people

R Incentive from R&D investment

• Centre for Industrial Technology (CDTI): various grants and low-interest loans for enterprises with a minimum investment of EUR 175,000 in enterprise technology-related projects

• MINETAD (Spain's Ministry of Industry, Trade and Tourism): Supporting low-interest loans of at least EUR 200,000 and up to EUR 1 million to companies aiming to invest in the technology sector

• ICEX (Spain Trade and Investment Promotion Agency): Provides up to EUR 200,000 to foreign companies for high-level research and development and investment, and provides free office space, visa procedures, business subsidies of EUR 10,000, mentoring services to foreign startups selected for the "Rising Up in Spain" program

• ICO (Instituto de Credito Official), a credit institute under the Ministry of Economy, Trade and Industry of Spain: low-interest loans to companies with sales of more than €5 million aimed at investing in energy, environment, transportation and infrastructure

• FEDER (EU Fund): Grant up to about 2 million euros to foreign companies investing in Spain related to R&D technology projects

• ENISA (Spain Innovation Promotion Public Company): Support for SMEs in the form of participating loans up to EUR 1.5 million (low interest, no guarantee)

The Spanish government is providing a Rising Startup Spain support program through the Spanish Trade and Investment Administration (ICEX) to attract foreign start-ups wishing to enter the Spanish market.

Supported by: Foreign startups

• Selection criteria

  • A startup that already operates a business in a foreign country and has launched a product or service that is well-received in the market

• Selection procedure

  • ICEX (Spain Trade and Investment Administration) recruits foreign startups wishing to enter Spain through overseas trade centers every year → selects 15 startups every year through internal screening

• Details and scale of support

  • Free co-working office space for 6 months

  • Support for application and issuance of work permit visas and residence cards (fast-track)

  • Provision of Business Subsidy of EUR 10,000

  • Customized mentoring services for entering the Spanish market and raising business funds

  • Social Media Promotion Support

How to Support Investment Advancement:

Co-working spaces are provided through Barcelona Activa (Barcelona City Hall Start-up Support Center), Madrid International Lab (Madrid City Hall Innovation & Overseas Expansion Center), and Wayra (Telefónica Startup Incubator).

Restrictions and Prohibitions (Industry):

Spain has completely liberalized foreign investment, but it allows restrictions in certain cases through Cabinet meetings.
Foreign investment, which has had limited involvement in Cabinet meetings so far, pertains mainly to the manufacturing of weapons, munitions, and explosives directly related to national security, as well as the use of live animals for experimental or scientific purposes, according to data from the Investment Agency.

Moreover, when non-EU member states acquire real estate for diplomatic purposes, they must obtain investment approval in advance at a Cabinet meeting to proceed with the investment.
Meanwhile, investments in aviation, strategic minerals, raw materials, mineral mining rights, broadcasting, communication, manufacturing, and selling of weapons and explosives, as well as investments affecting national security, must adhere to the requirements specified by the Patent Office.

Spain has a total of five free trade areas (Barcelona, Vigo, Cadiz, Las Palmas Islands, and Seville).
Like other countries, companies that move into free trade zones in Spain can be exempted from tariffs and VAT.
In addition, some free trade zones are providing office rent to actively attract investment.

Meanwhile, the Canary Islands jointly operate the Free Trade Area (FTZ) and the Zona Special Canada (ZEC).
In other words, if certain conditions (investment size and number of employees, etc.) are met among companies operating in the region, special corporate tax rates (1-5%) for ZEC-designated companies can be applied as well as exemptions from tariffs and VAT.

Madrid

• Basic information

  • Population (July 22, 1,000): 6,825

  • Number of foreigners (July 22, 1,000): 917

  • GDP GDP ('21, 1 million euros): 234,639

  • GDP per capita ('21, Euro): 34,821

  • Export ('22, 1 million euros): 59,079

  • Import ('22, 1 million euros): 110,618

  • Foreign investment ('93~'22 years cumulative, 1 million euros): 344,349

• Investment Promising Industries: Renewable Energy, Architecture, Distribution, Telecommunications

• Investment Support Areas: Incentives and Low Interest Bank Loans (Corporate R&D, Fixed Asset Investment, Job Creation, Vocational Training, Renewable Energy Related Projects)

• Investment Attraction Agency

  • Organization: Ministry of Economy, Madrid City Hall

  • Address: Calle Alcala, 45, 28014, Madrid, Spain

  • Phone: (34)915-881-000

  • Email: ag.economiayhacienda@madrid.es

  • Website: None

  • Note: In the past, the Invest in Madrid was operated, but now the Ministry of Economy of Madrid City Hall is in charge of attracting investment

Barcelona (Catalonia)

• Basic information

  • Population number (July 22, 1,000): 7,710

  • Number of foreigners (July 22, 1,000): 1,143

  • GDP GDP ('21, 1 million euros): 229,418

  • 1 GDP per capita ('21, Euro): 29,942

  • Export ('22, 1 million euros): 94,926

  • Import ('22, 1 million euros): 111,798

  • Foreign investment ('93~'22 years cumulative, 1 million euros): 87,801

• Investment Promising Industries: IT and Electronic Equipment, Biopharmaceuticals, Food and Beverage, Aviation, Architecture

• Investment Support Areas: Investment incentives and low-interest loans for businesses (corporate R&D, fixed asset investment, job creation, vocational training, renewable energy projects)

• Investment Attraction Agency

  • Organization name: Kadalunya Overseas Promotion Agency (ACCIO)

  • Address: Pg. de Gracia 129, 08008 Barcelona, Spain

  • Phone: (34)934-767-200

  • Fax: (34)934-767-300

  • Website: www.accio.gencat.cat

  • Email: info.accio@gencat.cat

Valencia

• Basic information

  • Population ('July 22, 1,000): 5,106

  • Number of foreigners (July 22, 1,000): 793

  • GDP ('21, 1 million euros): 112,603

  • 1 GDP per capita ('21, Euro): 22,289

  • Export ('22, 1 million euros): 39,621

  • Import Revenue ('22, 1 million euros): 39,298

  • Foreign investment ('93~'22 years cumulative, 1 million euros): 17,292

• Investment Promising Industries: IT and Electronic Equipment, Biopharmaceuticals, Food and Beverage, Aviation, Architecture

• Investment Support Areas: Investment incentives and low-interest loans for businesses (corporate R&D, fixed asset investment, job creation, vocational training, renewable energy projects)

• Investment Attraction Agency

  • Organization name: Kadalunya Overseas Promotion Agency (ACCIO)

  • Address: Pg. de Gracia 129, 08008 Barcelona, Spain

  • Phone: (34)934-767-200

  • Fax: (34)934-767-300

  • Website:www.accio.gencat.cat

  • Email: info.accio@gencat.cat

Spain's corporate and commercial laws are based on the Capital Enterprises Act 1/2010 revised on July 2, 2010.
Spain classifies various legal types of companies such as corporations, limited liability companies, and joint stock companies under the same law, and the edicts that occupy the core of commercial law along with the law are as follows:

Types of investment advancement may include opening new offices and investment advancement through mergers and acquisitions of local companies.

By law, a corporation includes a stock company, a limited company, a joint venture/joint venture company, and a single-person investment company.
The most common forms are Stock Company (S.A.) and Limited Liability Company (S.L.).
The legal minimum capital is 60,000 euros for Sociedad Anónima, 3,000 euros for Sociedad Limitada, and 3,000 euros for Nueva Empresa (New Limited).

A corporation is a legally independent entity separate from its headquarters, possessing its own legal personality and operating independently.
Consequently, Spanish domestic law governs its business activities and taxation.

If you wish to conduct business not only in Spain but also in other European Union member countries, you can establish a Sociedad Anónima Europea (SE).
Through this structure, you can establish an integrated management system for operations within the European region.
The legal minimum capital required to establish a European corporation is 120,000 euros.

In general, the establishment process follows these steps and typically takes about a month.
The process is as follows:
Delegation of representatives of local corporations → Confirmation of mutual name to commercial registry → Opening of bank corporate account → Granting of certificate of incorporation by notary → Provisional business registration number (NIF) → Tax settlement → Commercial registry registration → Issuance of formal business registration number → Establishment completed

Since it is not a corporation, it does not have a legal personality, and there is no legal minimum capital, but cash payments are made as euros, such as stock companies, and in-kind payments require a measurement price of an independent institution.
On behalf of the headquarters, it carries out all business activities such as imports and exports in Spain, but it is highly dependent on the headquarters for most operations and is not legally independent.
The general procedure is as follows, and the establishment process takes about 6 to 8 weeks.

Application for a trade name → Provisional Business Registration Number (NIF) and nombramiento de representante de la sociedad matrizante administration tripanola → Public certificate of establishment by the promoter → Public certificate of establishment of a public office inscripcion en el registro mercantil) → Census procedure (Tramites censales)

In addition, the necessary documents for establishment are as follows:

• Temporary business registration number (NIF)

• Certificate of trade name certification

• Tax settlement certificate

• Power of attorney for local branch representatives (notarization required)

It is a company that is legally completely subordinate to its headquarters, and direct sales in Spain are prohibited, and only incidental business activities such as marketing and promotion are allowed.
You also do not need to register with the Commercial Registry.
This form of liaison office establishment is useful for prospective investors.
Liaison offices can provide various types of information that are based on investors' investment decisions without complicated legal procedures.
In other words, the most ideal means for the liaison office to conduct market research and research on the level of competition in the industry to invest in can be used.

The documents necessary for establishing the liaison office are as follows:

• Power of attorney to report the establishment of a liaison office

• Copy of the passport of the head office representative

• Copy of the passport of the liaison office representative

• Head office (foreign corporation) board resolution (notarization required)

As the most common form of corporation, capital is divided into equal shares, and the investor, or shareholder, bears the obligation to invest up to the acquisition price of the shares but is not liable for the company's debts.
The statutory minimum capital is EUR 60,000, and 25% must be paid for each denomination share at the time of establishment.
When capital is contributed, it must be in cash, and in the case of in-kind contributions, a valuation from a third-party institution is required.
There is no time limit for cash contributions, but for in-kind contributions, the remaining capital must be paid within five years of establishment.
There is no minimum requirement for the number of promoters (initial investors), but the board must consist of at least three members.
Stock transfers are unrestricted, and listing regulations vary depending on the industry or type of investment.
A corporation to be established must designate a representative or legal representative with a 'Spanish ID number.' Therefore, if the representative or legal representative is a foreigner, they must obtain an alien registration number (NIE) first.

The general corporate establishment process is as follows, and it usually takes about 6 to 8 weeks:

• Business name application

• Company founding consent (investors)

• Provisional Business Registration Number (NIF)

• Account establishment

• Issuance of Initial Capital Deposit Certificate

• Articles of Incorporation drafted by the promoter

• Acquisition of Business Registration Number

In the articles of incorporation, the purpose, name, office location, regulations on assets, rules for appointing directors, membership regulations, and the duration or reasons for dissolution must be stated for the limited liability company.

In principle, a limited liability company consists of shareholders who are only liable for the amount of their investment in the company and have no responsibility for the company's creditors.
The key feature of a limited company is the flexibility it provides to shareholders in amending the company's articles of incorporation.
The legal minimum capital is more than 3,000 euros and must be fully paid at the time of establishment.
When capital is contributed in cash or increased, it must be notarized.
Unlike a stock company, no measurement report from an independent third party is required when capital is contributed in kind.
The board must consist of a minimum of 3 and a maximum of 12 members, and there are limits on the number of shares.
While related regulations are similar to stock companies, limited companies have advantages in terms of cost reduction because the procedures are much simpler.

If individuals perform their business activities individually and meet certain requirements, they can engage in business activities as an ERL (Employedor de reponsabilidad limitada).
In order to work as an ERL locally, an Electronic Integration Application Form (DUE) must be completed and submitted at the Start-up Support Window (PAE) located in major Spanish cities and registered as an ERL with the Spanish Central Commercial Registry.

It is a company consisting of only unlimited employees, and all employees are directly jointly and severally responsible for the company's debts, and each employee has the right to execute and represent the work in response.
Although it is a corporation in form, it has a combination property that cannot ignore the aspect of contractual union between employees.

It is a form of company organized by investors with unlimited liability and investors with limited liability and has the advantage of being able to raise capital from a wider range of investors than general partnerships.
Corporate management is handled by an investor with unlimited liability, and an investor with limited liability receives the distribution of profits from the investment.
The statutory minimum capital is 60,102 euros, as is the case with the corporation. Guitar

It is a modified form of general stock company and is a company with a unified management system that applies only European Union laws without the need to establish a company in each country for companies that must operate in various countries within the European Union.
The legal minimum capital is 120,000 euros, and the regulations related to stocks are the same as those of general corporations.

In a modified form of a limited company, flexible business can be conducted by minimizing the requirements for establishment qualifications of small and medium-sized enterprises.

It refers to a company consisting of only one investor, and its characteristics are termed 'Sociedad de Accionista Único' if it is a stock company and 'Socio Único' if it is a limited company.
This type of single-person investment company is registered and operated in accordance with relevant special regulations and operates independently in terms of accounting and taxation.

It is a company comprising experts in a specific field, known as Sociedad Anónima Profesional or S.A.P. Members of these companies must be involved in activities that require professional knowledge obtained through college courses or higher education, and they are required to participate in the composition of the corporate capital. Organizations and corporations that cannot be registered include political parties, unions, vocational organizations, academic institutions, religious organizations, social welfare corporations subsidized by other laws, and social organizations, which are generally excluded.