The principle of free movement of capital and the exceptions to the same, which contains the right of member states to adopt measures for security reasons or public order, are set forth in articles 63-66 of the treaty on the functioning of the european Union.

In 2017, the european commission proposed the adoption of a community framework that impulsases control of foreign direct investment by member states, to find a balance between the opening of the eu to foreign direct investment flows and the defence of essential interests of the eu.

As a result,EU regulation 2019/452of 19 march 2019, for the control of foreign direct investment in the union, which established a framework for the control of foreign direct investment for security reasons or public order, in line with the instruments that have implemented most of the oecd countries.

The Regulation (EU) 2019/452 expected that the member states can assess the risks by significant changes in the ownership structure of a company, or in the key features of foreign investors, and guides the implementation of the control of investments, provide a non-exhaustive list of factors that may be taken into account in determining whether a foreign direct investment can affect security or public order, and establishes a mechanism for cooperation between member states to promote the effectiveness of investments. In Addition, provides for the development of aAnnual Reporton the implementation of the rules of procedure, on the part of the european commission.

In Spain, since its introduction in 2020, the control of foreign investment is regulated in article 7 bisLaw 19/2003 of 4 july [PDF]on the legal regime of the movement of capital and economic transactions with the outside, the Provision of Transient OnlyReal Decreto-ley 34/2020, of 17 november [PDF]urgent measures of support for the company and the energy sector, and taxation, and,Royal Decree 571/2023of 4 july, on foreign investment.

The regulation provides for the need for prior administrative authorization for a number of foreign direct investment in Spain is regarded as affecting public order, public security or public health, but it has to be:

• that, ultimately, by residents of countries outside the european union and the european free trade association, and representing the investor to hold a share equal to or exceeding 10 percent of the share capital of a spanish company or part of the same, or control over It, and,
• where the object of investment or investor engage in certain circumstances:
  • the object of investment to operate in a number of areas which are detailed in paragraph 2 of article 7 bis of act 19/2003 of 4 july, including critical infrastructure, critical technologies and dual-use items, the provision of key assets, those with access to sensitive information and the media.
  • the foreign investor meet certain characteristics. For example, that is controlled, directly or indirectly, by the government of a third country or is satisfied that there is a serious risk of carrying illegal or criminal activities, affecting public security, public order or public health in Spain, as indicated in paragraph 3 of article 7 bis.
  • Investments in spanish companies with a turnover of less than 5 million euros in the last fiscal year are exempt, except a number of exceptions in the energy sector, communication and raw materials, which are developed in the royal decree 571/2023

Also, in implementation of the Transitional Provision of the royal Decreto-ley Only 34/2020, of 17 november, will also be subject to authorization by the investments of residing in countries of the European Union or the european free trade association when its value exceeds the eur 500 million or go listed companies in Spain, where to invest in any of the areas covered by paragraph 2 of article 7 bis of act 19/2003 of 4 july.

To request the authorizations of investment, is filled in theForm to the scrutiny of Foreign Investment [DOCX] [105 Kb] (Last update to 14 november 2023),and will be transmitted to theelectronic.

The conduct of foreign investments in spain without authorization, should it become mandatory, or with non-compliance with the conditions set out in the same, will take account of very serious offence, the implementation of the sanctions regime envisaged in chapter II of act 19/2003 of 4 july.

Will be subject to its own and will also need of obtaining prior administrative authorization:

• Foreign investment in manufacturing, trade and distribution of weapons, pyrotechnic articles, cartuchería and explosives for civilian use. To request your authorization, or visit the need for application, will be submitted in electronic form the headquartersForm to the scrutiny of Foreign Investment [DOCX] [105 Kb]
• Investments in production or trade in arms, ammunition, explosives and war materiel, or indeed any other activities associated directly with the National defence. To request your authorization,it will uphold the provisions of the ministry of defence.

Also available if an operation of investment must be subject to any of the control regimes investments through the same form and at the same electronic already identified in the basis of the art 9Royal Decree 571/2023. This consultation and with binding within 30 days.

The annual number of transactions subject to control since 2020 can be found here:

• 2020 in figures [PDF] [232 KB]
• 2021 in figures [PDF] [233 KB]
• 2022 in figures [PDF] [489 KB]
• 2023 in figures [PDF] [845 KB]
• 2024 in figures [PDF] [493 KB]

For more information, please contact the detail of the applicable rules. This text has no normative value.