When it comes to foreign investment, Spain offers several advantages to foreigners looking to build wealth through either foreign direct investment in Spain or adding Spanish equities to an investment portfolio. The country’s cultural proximity to Latin America has been lauded as a benefit for potential investors by the World Bank, and it has shown healthy growth in a number of industries, not the least of which are tourism and ICT (information and communications technologies).
Foreign direct investment in Spain
Foreign direct investment in Spain is an option for outside investors with a substantial amount of capital who are looking to have a controlling interest, or at least some influence, in a company that is operating in Spanish territory. This type of investment can be achieved through the opening of a subsidiary company in Spain, a merger or joint venture with a Spanish company, or by acquiring a controlling interest in an existing Spanish country.
FDI in figures
Spain has been one of the top countries for foreign investment for several years now. In 2012, the country ranked number 4 in the EU and number 14 worldwide in the amount of money from foreign direct investment. There has been a very slight downward trend lately, with a 3% decrease in FID in Spain, compared to a global decrease of 23%. In UNCTAD’s 2018 report, Spain ranked 17th in the world for foreign direct investment, with a total of some $644 billion in FDI stock.
Approximately 70% of foreign direct investment stock in Spain comes from six countries: Netherlands, Luxembourg, UK, France, Germany and Italy. The main investment industries are manufacturing, financial services, energy, retail, IT and communications. In 2017, this included 640 so-called green field investments, in which a parent company begins operations in a foreign company by building new facilities.
Protection of foreign investment
Protection of foreign investment has been an important part of international trade law for many years, and Spain is party to bilateral agreements in this regard with nearly 90 countries. Each agreement has slightly different conditions, so for detailed information, you should find Spain’s agreement with your home country on the UNCTAD website, or ask your legal advisor about foreign investment protection. Doing Business rates Spain as 5.0 out of 10 in terms of transaction transparency, and an impressive 10.0 for their index of shareholder’s power, indicating that it is very easy for shareholders to take legal action if necessary.
Foreign portfolio investment in Spain
For those who have less capital on hand, who want to diversify or who simply want their investments to have more liquidity, another option for foreign investment in Spain is via portfolio investments. In this case, the investor will purchase securities, usually shares in a Spanish company, but they will not own enough to have a controlling interest in that company. The threshold for a foreign investment to be considered a portfolio investment is 10% or less of a company’s total shares. Geographic diversification through this type of foreign investment in Spain is one way of potentially reducing the risk profile of your portfolio.