Foreign investment plays a crucial role in any country´s economy. Spain, in the past few years, has been attracting growing interest as an attractive destination for foreign investments, especially in the acquisition of real estate, and likewise, for foreign participation in Spanish companies.
Foreign investment in Spain, as well as Spanish investment practices abroad, are subject to specific regulation, and in this regard, one must especially bear in mind that it is necessary to communicate this type of operation through the filing of declaration forms – which have recently been updated to simplify the procedure – established by the Ministry of Industry, Trade and Tourism of the Spanish Government.
Legal system
On 1st September 2023, the new Royal Legislative Decree 751/2023, from 4th July on foreign investments came into force (hereinafter, the “Decree”) which updated the set of rules on foreign investments in Spain, which has already been discussed in our previous article NEW DEVELOPMENTS IN THE REGULATION OF FOREIGN INVESTMENT IN SPAIN.
The Decree introduced a new system of exemptions, updates regarding control of investments and a reduction in the general deadlines for resolving authorisation requests from six to three months, amongst others. However, following its entry into force, it was necessary to pass a ministerial order to develop it, and in particular, to regulate the procedures applicable to the regime for the submission of foreign investment declarations.
On 31st January 2024, the Ministry of Industry, Trade and Tourism published Order ECM/57/2024 from 29th January 2024 (hereinafter, the “Order”) that develops the Decree and establishes the applicable procedures for the declarations of investments, divestments and the submission of annual reports. Amongst its main updates, highlights include:
- The elimination of the need for the declaration to be signed by the parties involved, neither that of declarant nor the countersignature of the notary.
- Unification of the criteria for filing investment declarations by electronic means, including filing by individual investors.
- Reduction of the deadline for the declaration of a change in the condition of an investor´s resident or non-resident status from six (6) months to one (1) month from the effective date of the change of the registered office of the investing company or the change of residence of the individual investor.
- The deadline for submitting annual reports of the investments has been reduced from the first nine (9) to the first seven (7) months following the end of the previous financial year, i.e. they must be submitted no later than 31st July of each year, for financial years ending 31st December.
- From the entry into force of the Order, information relating to the reinvestment of profits in companies by investors with a stake of 10% or more of their capital must be included in the annual reports on foreign investments.
Likewise, the standard forms for processing and declaring foreign investments in Spain and those for Spanish investments abroad have been published and approved by the Resolution of 31st January 2024, issued by the Directorate-General for International Trade and Investment.
In conclusion, the Order, which entered into force on 1st February 2024, made the legal framework already introduced in the Decree complete, and has led to a significant simplification of the process of submitting foreign investment declarations, streamlining and facilitating their digital processing.
Julio González Valverde
Vilá Abogados
For more information, please contact:
26th April 2024
