Key facts
Spain has three alternative regimes of foreign investment (FI) screening, introduced by law in 2020 and adjusted in 2023 through an implementing regulation (applicable to FI proceedings initiated on or after 1 September 2023, irrespective of the date of signing):
- A general regime, applicable to non-EU or non-EFTA investors, under which the acquisition of 10% or more of the shares in a Spanish company or control of such company or a part of it (by means of a corporate transaction or an investment in assets or branches of activity), is subject to prior authorisation (from the Council of Ministers or, if the transaction value is below EUR 5 million, from the Directorate General of International Trade and Investment) if (a) the target company operates in a sensitive sector or (b) the foreign investor has certain characteristics (i.e. is controlled by a foreign government, has previous sensitive investments or has a history of illegal activity).
- A temporary regime, applicable to non-Spanish EU or EFTA investors, under which the acquisition of 10% or more of the shares in a Spanish company or control of such company or a part of it (by means of a corporate transaction or an investment in assets or branches of activity), is subject to prior authorisation (from the Council of Ministers or, if the transaction value is below EUR 5 million, from the Directorate General of International Trade and Investment) if (a) the target company operates in a sensitive sector, and (b) the target company is listed in Spain or the value of the investment is more than EUR 500 million. This regime applies until 31 December 2024, but it could be extended.
- Finally, a special regime for investments in the field of national defence, applicable to non-Spanish investors, under which the acquisition of 5% or more of the share capital of a Spanish company with any activities directly related to national defence, or the right to appoint (directly or indirectly) one member of its managing body, is subject to prior authorisation from the Council of Ministers. Under the 2023 implementing regulation, investments in the field of national defence in which the investor reaches between 5% and 10% are exempted from authorisation if the investor notifies the transaction to the Directorate General of Armaments and Materiel (within the Ministry of Defence) and the Directorate General of Foreign Trade and Investments (within the Ministry Industry, Trade and Tourism) and includes with this notification a document in public deed committing not to use, exercise or assign to a third party its voting rights nor to take part in the management bodies. Activities directly related to national defence include the production or trade of weapons, munitions, explosives and war materials, but also could include less obvious areas, such as IT, engineering, communications systems or logistical services that are necessary to military operations.
Key thresholds
For the purposes of the general regime, foreign investments are defined as investments carried out, in Spain, by investors who are residents of countries outside the EU/EFTA, or by residents in the EU/EFTA whose beneficial owners are foreign investors (i.e. where the foreign investor possesses or ultimately controls, directly or indirectly, more than 25% of the capital or voting rights in the investor, or where by other means it exercises direct or indirect control of the investor), in cases where, as result of the transaction, the foreign investor reaches ownership of 10% or more of the Spanish company, or acquires control of that company or a part of it (including by acquiring assets or branches).
Under the temporary regime, the same notion applies in largely the same way: covered investments are those carried out by residents of EU/EFTA countries (other than Spain) or by Spanish residents whose beneficial owners are (non-Spanish) EU/EFTA investors (i.e. where such investor possesses or ultimately controls, directly or indirectly, more than 25% of the capital or voting rights in the investor, or where by other means it exercises direct or indirect control of the investor) where, as result of the transaction, the foreign investor reaches ownership of 10% or more of the Spanish company, or acquires control of that company or a part of it (including by acquiring assets or branches).
For an investment under the temporary regime to trigger approval, the target company or the transaction must also meet the following conditions or thresholds:
- The target must be a listed company in Spain (“companies listed in Spain are those whose shares are, in whole or in part, traded on a Spanish regulated market and have their registered office in Spain”), or
- The “investment value” must be more than EUR 500 million.
If such investments also meet the additional requirements under each regime (see “Transactions covered by the rules” below), they will require prior approval by the Spanish Council of Ministers or, if the transaction value is below EUR 5 million, from a Directorate General of International Trade and Investment.
Finally, under the special regime for investments in the field of national defence, the notion of foreign investor is the same as above: those who are residents of countries outside Spain or Spanish residents whose beneficial owners are non-Spanish investors (i.e. where such investor possesses or ultimately controls, directly or indirectly, more than 25% of the capital or voting rights in the investor, or where by other means it exercises direct or indirect control of the investor) or, if they are natural persons, that hold a foreign nationality. In those transactions, the relevant investment threshold is 5%, and there is no express minimum threshold.
Transactions covered by the rules
Under the general regime, transactions covered are investments by non-EU/EFTA investors (above the thresholds and with the conditions mentioned above) that meet either of the two following alternative criteria:
- the investment is made in one of the sectors that affect “public order, public security and public health” (for a detailed explanation, see “Key Sensitive Sectors” below; for example, critical technologies and dual-use items: artificial intelligence, robotics, semi-conductors, cybersecurity, quantum technology, aerospace, defence, energy, nuclear technologies, nanotechnologies and biotechnologies); or
- regardless of the sector of the investment, the foreign investor is controlled directly or indirectly by the Government of a third country or has been involved in administrative or judicial proceedings in another Member State, its State of origin or a foreign State for criminal or illegal activities or has made investments in the past in an EU company within one of the sectors “affecting security, public order” (listed above).
Under the temporary regime, transactions covered are investments by non-Spanish EU/EFTA investors (above the thresholds and with the conditions mentioned above) in one of the sectors that affect “public order, public security and public health” (for example, critical technologies and dual-use items: artificial intelligence, robotics, semi-conductors, cybersecurity, quantum technology, aerospace, defence, energy, nuclear technologies, nanotechnologies and biotechnologies). Under this regime, the characteristics of the investor are not relevant.
Under the special regime for investments in the field of national defence, transactions covered are those that affect companies that have any activities directly related to national defence. These include not only weapons, munitions, explosives and war materials but could also cover other sectors with a less obvious connection with the military world, such as IT, communications, engineering or software, if the target company has supply agreements with the Spanish armed forces or other military institutions.
Key sensitive sectors
The following sectors are considered sensitive:
- Critical physical or virtual infrastructure (including transport infrastructure) and the key land and property used (the content of the catalogue of critical infrastructure is secret).
- Critical technologies and dual-use products, or key technologies for leadership or industrial capabilities, or technologies developed under programs or projects of particular interest for Spain, including: telecommunications, artificial intelligence, robotics, semiconductors, cyber security, aerospace, defence, energy storage, quantum and nuclear technologies, nanotechnology, biotechnologies, advanced materials, and advanced manufacturing systems.
- Supply of critical inputs. In particular: energy, strategic connectivity services, raw materials and food security.
- Sectors with access to confidential information. In particular: personal data, or those with the capacity to control such information.
The Spanish government may extend this regime to other sectors if it considers that they may affect public security, public order or public health, but this extension has not happened yet.
Conversely, the Spanish government may clarify the perimeter of these sectors. This happened in the 2023 FI implementing regulation – please refer to the implementing regulation for further information.
For more information, see our publications below: