- 🏆 Why Invest in Spain?
- 🏆 Spanish Economy
- 🏆 Spanish Infrastructures
- 🏆 Quality of life in Spain
- 🏆 Spanish Talent
- 🏆 Spanish Taxation and incentives
- 🏆 How to Invest in Spain?
- 🏆 ETFs
- 🏆 ADRs
- 🏆 Investing in Real Estate
- 🏆 Buying Spanish Businesses
- 🏆 Spanish Bonds
- 🏆 Spanish Stocks
- 🏆 How To Invest Money in Spain?
- 🏆 Impact Investing in Spain
- 🏆 Can Foreigners Invest In Spain?
Why Invest in Spain?
Currently, Spain is one of the most attractive and competitive business markets in the European Union (EU). The country is also the third-largest investment market in the European Union. After the pandemic/economic crisis, Spain’s legislation body provided lucrative and financially rewarding incentives for the private sector.
This has helped to bolster foreign investors’ confidence. Legally, the actions of the legislative body have transformed Spanish investments into the second-largest recipient of “inversiones extranjeras directas” – Foreign Direct Investments. These are just a few of the factors for attracting foreign investments to Spain.
Many of these foreign investment factors were achieved through the Spanish Act 14/2013. This law was created with the purpose of assisting investors who want to start a business in Spain. The Spanish Act was further designed to create a new job market. Its success has helped to sustain the employment market. The key proponents for Spain’s increased economic prowess are due to the following:
Spain has the least restrictive regulations for international investments. Last year Spain’s economy surpassed its European counterparts in a pre-pandemic environment. Additional factors that invite individuals and companies to invest in Spain include the fact that the country has 70 of the world’s top 100 companies that have set up a branch in Spain. Spanish investments feature just under 13,000 foreign companies successfully operating on its local market.
Spain is a strategic transportation hub. The country has the largest expansion of highways and freeways in the EU. Spain has two of Europe’s busiest airports. Its high-speed rail network is a leading infrastructure in the EU. Its geographical position. Its maritime access to the EU, North Africa, Latin America, and the Middle East, create a great shipping and container port industry.
Quality of life in Spain
Globally, Spain has the longest life expectancy. This is contributable to the country’s healthiest Mediterranean dietary lifestyles and its universal healthcare system for expats and Spain’s citizens. Spain is one of the safest countries to live and work in. Also, its educational system consisting of public, private, and international schools features English and Spanish language courses.
A majority of the Spanish population is highly educated. Businesses can easily find the specialized talent needed to cover their Information and Communication Technology, more so than in neighboring countries. Also, skilled human talent can be acquired at a more competitive cost through Spanish investments, more so than other major European economies.
Spanish Taxation and incentives
Spain has instituted tax incentives similar to the EU median. The country offers subsidies and grants for continued Spanish investments. There is a successful comprehensive system of tax incentives and exemptions to promote innovation, i.e., RDI activities, knowledge with an industrial application for innovative benefits, and the creation of jobs.
How to Invest in Spain?
There are two easy and rewarding ways to invest in Spain without establishing a foreign brokerage account and paying taxes. This involves the Spanish ETFs and ADRs:
The exchange-traded fund (ETFs)is based on the Nasdaq-100 Index. ETFs provide diversification in a portfolio. Investors don’t have to worry about concentration risks or buying and selling a portfolio of individual stocks. ETFs also charge a modest expense ratio, which can reduce overall returns over time. This means that investors should invest in ETFs because of their lower expense quotient.
American Depositary Receipts or ADRs also do not require opening a foreign brokerage account. These securities are tied directly to a variety of foreign stocks. ADRs are traded on a U.S. stock exchange, meaning that investors should not be concerned with any tax implications on foreign capital gains. ADRs are traded on major exchanges like the NYSE. As a note, many ADRs trade significantly fewer shares every day than domestic stocks, which can make it risky when an investor is trying to buy or sell at fair prices.
Investing in Real Estate
Expats and foreigners are welcomed to buy and resell different types of property structures in Spain. Firstly, you must obtain a financial number with your passport at the local police station. Also, Spain has a program called a “Golden Visa” for foreign property owners. If you invest more than £500,000 in Spanish properties, you are eligible to get a residency visa.
Next, if you wish to invest in realty on the market, the 2021 Spanish property value and returns are remaining positive (+5.6%). The El Banco de España (Central Bank of Spain) has forecasted that this expected return reflects an increase from last year.
The percentage of increase is a result of gross rental yields and capital gain increases. Investors will like the fact that mortgage rates are at 1.8% which is the lowest level ever. This means that the financial markets are on the plus or positive side of the realty market. To be honest, Spain and the world are favorably watching the economic impacts for next year due to the pandemic.
You can obtain the Spanish residence permit if you invest in real estate for an amount higher than 500.000€, it is the golden visa.
Buying Spanish Businesses
All legal citizens of Spain can start a business in the country. The legal steps to buying a business is nearly the same for everyone unless you are a foreigner who plans to become a legal citizen in Spain. Despite the beauty of Spain, it’s great foods, and warm climate, you must perform your due diligence in buying a business.
Foreigners can buy businesses by starting with a working or self-employed visa or an entrepreneur visa. To form a start-up business, a work permit and the visa programs are based on what your business idea is for the betterment of Spain. One of the easier forms of buying businesses is for EU nationals to set up partnerships or trade as sole traders which do not require any minimum investments.
Using a specialist legal advisor can help with the Spanish rules and registrations regarding NIE numbers, Modelo 036 or 037 (tax registration forms), and filling out an IRPF form, etc. An IRPF form is the tax equivalent of income tax. A legal advisor can help handle all the detailed transactions to move you toward your dream of buying and starting a business in Spain. As your specialized law firm in Spanish investments, please contact us.
Spanish government securities are represented by STRIPS, Treasury Bills. STRIPS is the acronym for Separate Trading of Registered Interest and Principal of Securities. The economic growth benefits that STRIPS provide in bonds include the following:
- Investors can hold and trade Treasury bonds as separate securities.
- Payments are identified on a specific future date.
- STRIPS are purchased and held through financial institutions and government security brokers.
Medium-term bonds have interest-bearing security with a 2-5 year maturity. Long-term bonds have a maturity of over 5 years, and Spain’s discount bond securities have a maturity between 3 to 12 months. As an EU national or foreigner who is holding bond interests from their country of origin, investors must secure Spanish bonds, there are no exceptions.
Remember that Spanish tax laws on global incomes including investments are different in this country. If you do not change your origin bonds over to a Spanish Bond, you can be subject to a double-tax bill which is quite hefty and would be owed to the Spanish Tax authorities.
Again, your legal advisor can advise you on any investments and bonds when residing in Spain. A Spanish Investment Bond is always a great long-term investment solution, but please seek advice and direction from a trusted financial advisor. They are aware of all the fees associated with the Spanish Bond system.
Bolsa de Madrid – Madrid Stock Exchange (BME) is a trusted stock exchange market that is traded upon by millions of Spanish and foreign investors. BME is one of four major stock exchanges and market operators in the Spanish financial systems. The Spanish equity market operates based on the Spanish Stock Market Interconnection System (SIBE).
The SIBE handles more than 90% of the interconnecting electronic trading platforms consisting of four Spanish stock exchanges. The easiest way to invest in the Spanish stock market is to invest in a broad market index by using ETFs.
The stock market of Spain is expected to return 4.6% a year for the coming years. From the contribution of economic growth, the stock market of Spain is expected to return 10.3% a year. Stock-market trading volume grew 50% and capital gains increased by 17.5% from 2020.
Large investors like Warren Buffett have announced that the Spanish stocks are an undervalued asset. In the first quarter of 2021, the Spanish stock market closed at a twelve-month high. To mark this momentous occasion the Ibex 35 index has already risen above 8,800 points. Granted that Spain has a low EPS and DPS in connection to the market, it continues to trade at a 30% discount compared to Europe which averages at 20%.
How To Invest Money in Spain?
Investing is a good way to make your money grow, but investors must understand what the options include. If you’re looking at investing over the long-term, you are probably opting for investments that can withstand the ups and downs of the global markets.
There are many online investment platforms or apps, like the modern-day robo-advisor solution. Currently, however, Spain has a small industry for robo-advisors, but it is forecasted with the younger generation that robo-advisor systems will more than double by the year 2022
Another option to invest money in Spain is through a specialized law firm. Our specialists advise clients who live in Spain how to invest in all types of Spanish investments by guiding them in the purchase and sale and review contracts. As your legal specialists, we will help you protect your force majeure investments from COVID. Please contact us today to grow your future.
The Spanish market is advantageous to foreign investing entrepreneurs because its financial premise is to focus on helping to grow foreign entrepreneurship. Spain’s main goal is to give a boost to its economy through international investments and has enacted several laws to encourage the country’s economic goals.
Impact Investing in Spain
Impact investments are investments that are designed to make a financial return based on generating goodwill through social and environmental investing. Spain’s growing impact investment market provides capital to address market sectors that affect the world. These areas of impact investments include sustainable agricultural practices, renewable energy, sustainability in conservation, microfinance and related services, housing, healthcare, and education.
Impact investing in Spain is the second fastest-growing strategy with 200% global investments. Two popular social impact funds are responsible for this amazing growth: emerging innovations and start-up operating projects.
These promising social growths were highly encouraged within the county and among investors from outside the country. Spain’s impact investor growth has grown exponentially during the last year. Spain’s impact investments have a reach with over 70 Spanish organisations that provide supply and demand to help grow the impact market. Currently, Spain has one of the top 3 eco-social business systems in Europe.
Can Foreigners Invest In Spain?
The 18/1992 Law established the rules on foreign investments in Spain. The law provides a specific rule for foreigners to invest in sectors that include national defence activities, gambling games, television, radio, and air transportation.
The Spanish law favors expat and non-Spanish investors if their investments are up to 100% equity which is screened by the Spanish government. Spain believes in the principles of free establishment and non-discrimination in investing for foreign investors. Non-Spanish investors can invest in Spain just like the country’s local investors.
No matter whether you are a new investor or an experienced investor, Spain has many financial incentives to help foreigners grow their investments. Of course, though it may seem like a minor tip, you must note that all documents that are submitted in English must be translated into Spanish by a Spanish translator who is certified by the Government of Spain.
Can foreigners invest in Spain? Yes, Spain opens its doors to anyone who wants to invest or establish their residence in the country. Spain leads the way in Europe to assist in foreign investments.
The Spanish government has eased regulations at all levels and increased incentives in an effort to attract foreign firms and investments. Remember to please contact our services to help you make your way through all the investing minutia needed to make you a success in this beautiful country.