The new foreign investment declaration regime in Spain

DEC 19 / 2024

The Spanish regulations on the control of foreign investments[1] have been thoroughly updated with the approval of Royal Decree 571/2023 of 4 July 2023 on Foreign Investment.

The prior authorisation regime for certain types of investments by non-EU/EFTA companies[2] has been reintroduced and significant changes have been made to the reporting regime for direct investments in Spain, and developed by Order ECM/57/2024, of 29 January 2024 and the DGCII Decision of 31 January 2024.

From now on, the following foreign investments, as well as their liquidation, will have to be declared to the Investment Register of the Ministry of Industry, Trade and Tourism[3]:

• The acquisition of a stake in the capital of Spanish private or public companies, whether listed or not, through the creation, acquisition or subscription of shares or units, subscription rights or bonds convertible into shares and similar products, which make it possible to acquire or achieve a stake equal to or greater than 10% of the share capital or voting rights.

• The acquisition of shares or shares in institutions (IICs) and closed-ended collective investment entities (EICCC) - investment companies, investment funds, real estate, venture capital, alternative and similar investments - including the management company at its residence in Spain, allowing the acquisition or the right to acquire a stake equal to or greater than 10% of the assets or share capital.

• Contributions to the equity of Spanish companies without an increase in the share capital
  -i.e. write-off of debts and contributions in the replenishment of equity capital by partners holding a stake in the share capital or voting rights, equal to or greater than 10%-.

• The establishment and increase of the endowment of branches in Spain of non-resident companies.

• Financing by any means - deposit, credit, loan, or any other debt instrument - of Spanish companies or branches by foreign companies belonging to the same group as the beneficiary, for an amount exceeding 1,000,000 euros and with an amortization of more than one year.

• Any other form of investment such as the formation of joint venture agreements, temporary groups of companies, foundations, economic interest groupings or communities of property, or the acquisition of shareholdings in them representing a percentage equal to or greater than 10% of the total value and the amount of which exceeds the sum of EUR 1,000,000.

This notification is also mandatory for investments in Spanish real estate with an amount exceeding 500,000 euros. This amount is understood by building and not by transaction, so that the simultaneous purchase of two properties whose unit amount does not exceed this threshold will not have to be notified[4].

The change of registered office of legal persons, and of residence of natural persons, has the consequence of triggering the corresponding reporting obligations of investment or liquidation.

This regime has also been strengthened for investments originating directly or indirectly in a non-cooperative jurisdiction[5]. They must be the subject of a declaration prior to their realisation[6] when the foreign shareholding exceeds 50% of the Spanish company to which the investment is made, as well as in the case of real estate investments. Finally, they must also be notified in any event, regardless of the amount, time limit or percentage they represent.

[1] Framed by Law 19/2003 of 4 July 2023 on the legal regime for capital movements and economic transactions with the outside world and various measures to prevent money laundering

[2] Defence, critical infrastructure and key technologies, dual-use,

[3] The declaration must be made within one month by the investor, the notary or the management company using forms D-1A - investment - and D-1B - liquidation, accompanied by the document attesting to the operation:

[4] Declaration using forms D-2A -investment- and D-2B -liquidation-.

[5] Identified in Order HFP/115/2023 of 9 February

[6] Model Forms DP-1 and DP-2