The Diplomat
The Council of Ministers yesterday approved a royal decree to modernize and streamline the regulations governing foreign investment in Spain by reducing administrative burdens and obstacles and cutting response and resolution times, “which was one of the main demands of companies and investors”.
According to the Government, the objective of this royal decree is to adapt the regulations on foreign investment in Spain to the legal framework of the European Union in order to “reinforce legal certainty and the accuracy of statistics on direct investment”.
Specifically, this royal decree develops the national regulatory framework that changed with the introduction of Article 7 bis of Law 19/2003 in 2020, which suspended the liberalization regime for certain foreign direct investments in Spain that were subject to prior authorization. This measure affects the so-called ‘anti-IPO’ shield, put in place by Moncloa in the early days of the COVID-19 pandemic in order to be able to control foreign investment operations in strategic Spanish companies.
Thus, the new royal decree on investments “establishes the type of foreign companies and operations that need or do not need to request an investment authorization from the administration, which improves the predictability of the regulation”, and establishes a series of exemptions to the prior authorization regime. The administrative deadlines for foreign investors are also improved and reduced, so that the resolution period is reduced from the current six months to three months. In addition, it provides for the possibility of voluntary consultation, binding for the administration and with a response period of 30 working days.
The royal decree adapts Spanish legislation to EU regulations in this area of investment control, specifically to the European Union (EU) Investment Control Regulation that came into force in October 2020, which establishes a regulatory framework for the control mechanisms of foreign investments from outside the EU in the Member States for reasons of security and public order. The quality of the statistics of the Foreign Investment Register is also improved, adapting the regulations to the global standard, which is contained in the OECD’s Foreign Direct Investment Framework Definition.
“The attraction of foreign investment to Spain has been a fundamental element in driving the modernization of the economy and in the creation of productive, stable and quality employment,” stated the Minister of Industry, Trade and Tourism, Héctor Gómez, during the press conference following the Council of Ministers. According to Gómez, 2022 was the second best year in the historical series in foreign investment in Spain, with more than 34,000 million euros, and the data for the first quarter of 2023 have been “even better”.
