Investment control

The principle of free movement of capital and the exceptions to it, including the right of Member States to take measures on grounds of public security or public policy, are set out in Articles 63 to 66 of the Treaty on the Functioning of the European Union.

In 2017, the European Commission proposed the adoption of an EU framework to enable the control of foreign direct investment by Member States, in order to strike a balance between the general openness of the EU to foreign direct investment flows and the defense of the EU's essential interests.

As a result EU Regulation 2019/452 of 19 March 2019 for the control of foreign direct investment in the Union was adopted, which established a framework for the control of foreign direct investment on grounds of security or public order, in line with the control instruments put in place by most OECD countries.

Regulation (EU) 2019/452, provides that Member States may assess risks due to significant changes in the ownership structure of an enterprise, or in the key characteristics of foreign investors, and guides the application of investment screening, by providing a non-exhaustive list of factors that may be taken into account in determining whether a foreign direct investment may affect security or public order, and establishing a mechanism for cooperation between Member States to promote the effectiveness of investment screening. It also provides for the preparation of an Annual Report on the application of the Regulation by the European Commission.

In Spain, since its introduction in 2020, the control of foreign investments is regulated in Article 7 bis of Law 19/2003, of July 4 [PDF], on the legal regime of capital movements and economic transactions abroad, the Second Transitory Provision of Royal Decree-Law 11/2020, of March 31 [PDF], which adopts urgent complementary measures in the social and economic field to face COVID-19, the Sole Transitory Provision of Royal Decree-Law 34/2020, of November 17 [PDF], on urgent measures to support business solvency and the energy sector, and on tax matters, and Royal Decree 664/1999, of April 23, on foreign investments.

The regulations provide for the need to obtain prior administrative authorization for a number of foreign direct investments in Spain that are considered to affect public order, public safety or public health, provided that they are operations:

  • which are ultimately carried out by residents of countries outside the European Union and the European Free Trade Association, and which involve the investor acquiring a holding equal to or greater than 10% of the capital stock of a Spanish company or part thereof, or acquiring control thereof, and,
  • in which the object of the investment or the investor incurs in certain events:
    • that the object of the investment operates in a series of areas detailed in section 2 of article 7bis of Law 19/2003, of July 4, 2003, among which are included critical infrastructures, critical and dual-use technologies, the supply of fundamental inputs, those with access to sensitive information and the media.
    • The foreign investor must meet certain characteristics. For example, it must be directly or indirectly controlled by the government of a third country or there must be a serious risk that it is carrying out criminal or illegal activities that affect public safety, public order or public health in Spain, as stated in paragraph 3 of Article 7bis.
  • And whose amount exceeds 1 million euros.

Likewise, in application of the DTU of Royal Decree-Law 34/2020, of November 17, investments by residents of European Union or European Free Trade Association countries will also be subject to authorization when their value exceeds 500 million euros or they are directed to companies listed in Spain, provided that they invest in any of the areas contemplated by section 2 of Article 7bis of Law 19/2003, of July 4.

To request investment authorizations, the Form for the Foreign Investment screening procedure [DOCX] [89 Kb] must be completed and sent to the electronic headquarters. It is also possible to consult whether an investment operation should be subject to investment control through the same form and at the same electronic headquarters.

The making of foreign investments in Spain without authorization, if required, or in breach of the conditions established therein, will be considered a very serious infringement, for the purposes of the application of the penalty regime provided for in Chapter II of Law 19/2003, of July 4.

They will be subject to their own regime and will also require the obtaining of prior administrative authorization:

The aggregate data of operations subject to investment control in 2020 and 2021 can be consulted here:

A new draft Royal Decree on Foreign Investment is currently being processed to replace the current Royal Decree 664/1999, of April 23, 1999, in order to improve the quality and international comparability of statistics, reduce administrative burdens for the investor, and, in particular, to specify more precisely the cases of suspension of the foreign investment regime and its authorization procedure.

For further information, it is recommended to consult the details of the applicable regulations. This text has no normative value.

¡Contacta con Nosotros!

Formulario de Contacto