LEGAL SYSTEM FOR FOREIGN INVESTMENTS IN THE BASQUE COUNTRY
01. FREEDOM OF INVESTMENT AS A GENERAL RULE
A foreign investor may invest freely in the Autonomous Community of the Basque Country (hereinafter ACBC) as a general rule without the need for prior authorisation or notification, as foreign investments1 in Spain are subject to an a posteriori declaration system for merely administrative and statistical purposes.
This means that, once an investment has been made, the foreign investor must declare it in the Investment Register of the Directorate General of International Trade and Investments of the Ministry of Economy, Industry and Competitiveness of the Spanish Government within a maximum period of one month.
02. EXCEPTIONS TO AND CLARIFICATIONS OF THE GENERAL RULE
- Investments made from tax havens. As a general rule they require an advance administrative declaration2 with there being exceptions3 for certain investment types and volumes
- Investments made in Defence-related activities. These require the prior authorisation of the Council of Ministers of the Government of Spain
- Investments in property by non-EU Member States for their diplomatic headquarters. These require the prior authorisation of the Council of Ministers of the Government of Spain
03. ADDITIONAL REGULATORY REQUIREMENTS FOR SPECIFIC SECTORS
Investments in the sectors of air transport, radio, raw materials, minerals of strategic interest and mining rights, television, gambling, telecommunications, private security, manufacturing, marketing and distribution of weapons and explosives, and activities related to national defence (in addition to prior authorisation) must meet the criteria required by the competent bodies recognised for this purpose in the specific regulations of each sector of activity.
04. NON-RESIDENT4 HOLDERS WITH AN OBLIGATION TO DECLARE as a general rule (and the notary public where applicable), except for certain transactions5
In general, an investment will be declared by the investor (the non-resident holder). When the transaction has involved a Spanish notary public, the latter is obliged to submit information on said transactions to the Investment Register.
Investor(holder of a foreign investment)
- Individuals not resident in Spain6.
- Legal entities domiciled abroad.
- Public entities with foreign sovereignty7.
Investment target (types of investment transactions subject to declarations8)
- Holdings in Spanish companies9.
- Establishment and expansion of branch offices.
- Subscription and acquisition of securities representing borrowings issued by residents (bonds, debentures, promissory notes). Holdings in investment funds registered in the Registers of the Spanish National Securities Commission.
- The acquisition by non-residents of properties situated in Spain, the amount of which exceeds 3,005,060 euros, or when the investment comes from tax havens, regardless of the amount.
- The constitution, formalisation or holdings in joint venture agreements, foundations, economic interest groupings, cooperatives and joint ownership arrangements, with the same conditions applicable to the acquisition of properties by non-residents.
Obligation to declare
- In general, an investment will be declared by the investor.
- When the transaction has involved a Spanish notary public, the latter is obliged to submit information on said transactions to the Investment Register.
- In the case of investments in securities, investment service companies, credit institutions or other intermediary financial institutions have an obligation to declare.
- In the case of investments made in securities not traded on secondary markets, but where the parties have voluntarily deposited or registered such securities, the depositary or administrator of such securities has an obligation to declare.
- In the case of investments in Spanish investment funds, the fund management company has an obligation to declare.
The Directorate General of International Trade and Investments of the Ministry of Economy, Industry and Competitiveness of the Spanish Government may require Spanish branches of non-resident holders to submit an annual report on the execution of investments or any other type of information they deem necessary.
A1 «Declaration of foreign investment in securities. Monthly or annual summary».
A2 «Declaration of foreign investment in securities. List of monthly transactions or annual deposits».
DP-1 «Prior declaration of foreign investment from tax havens in non-listed companies, branches and other forms of investment».
DP-2 «Prior declaration of foreign investment from tax havens in property».
D-1A «Declaration of foreign investment in non-listed companies, branches and other forms of investment».
D-1B «Declaration of liquidation of foreign investment in non-listed companies, branches and other forms of investment».
D-2A «Declaration of foreign investment in property».
D-2B «Declaration of liquidation of foreign investment in property».
D-4 «Annual report on the development of investment in Spanish companies with foreign holdings in their capital and branches».
1 The types of investment transactions and the holders thereof are those described in the investor and investment target section of the Foreign Investment Regime Table in the ACBC (and in Spain). Transactions other than those in the table are completely liberalised, without any communication being required for them. This is without prejudice to any sectoral regulations that may apply to them and to the provisions of the rules controlling them. Holders other than those in the Table are not considered to be a liable investor and therefore this not considered a foreign investment for all purposes.
2 A prior declaration is not equivalent to prior authorisation, and, once a declaration has been made, an investor can make an investment without waiting for notification from the Administration. In any event, the declaration is valid for six months, meaning that, once notified, the investment must be made within that period.
3 (1) Investments in publicly issued or offered transferable securities, whether traded on an official secondary market or not. (2) Holdings in investment funds registered in the Registers of the Spanish National Securities Commission (CNMV). (3) Cases in which the foreign holding does not exceed 50% of the capital of the Spanish company in which the investment is made. (4) Acquisitions of foreign investments in Spain as a result of lucrative transfers inter vivos or mortis causa.
4 Unless there is an express rule to the contrary, foreign investments must not be formalised before a Spanish notary public. Only as a result of their legal system or by agreement of the parties.
5 Exceptions contained in the Foreign Investment Regime Table in the ACBC.
6 Spaniards or foreigners domiciled abroad, or who have their main residence there. Individuals of Spanish nationality and legal entities domiciled in Spain are presumed to be resident in Spain unless there is evidence to the contrary.
7 A Spanish company which is majority owned by foreign capital is not considered to be an investor. A change in the registered office of legal entities or the transfer of residence of individuals will determine the change in the classification of an investment as being a Spanish investment abroad or a foreign investment in Spain.
8 The types of investment transactions not covered (e.g. equity loans) are fully liberalised, without any communication being required. This is without prejudice to any sectoral regulations that may apply to them and to the provisions of the rules controlling them.
9 This includes both the constitution of the company and the subscription and acquisition of all or part of its shares or the assumption of shares in the company. It also includes subscription rights on shares, debentures convertible into shares or other similar securities which, by their nature, give the right to a holding in the capital, and any legal business by virtue of which political rights are acquired.