What the New Royal Decree Means for Investors

12th July 2023
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Obstacles are Removed for Foreign Investments

A new Royal Decree on Foreign Investments in Spain has been approved by the Council of Ministers. The new Decree will remove obstacles and red tape tasks that will make operations easier for investors. Turnaround times will also be faster and more efficient as the timeframe for resolutions to be completed has been reduced from six months to three months. In addition to this measure, for the administration side of things, the potential for voluntary and obligatory consultation has been introduced, with a response time of up to thirty days. The Royal Decree will come into immediate effect from the 1 st September 2023. The various types of foreign companies and other operations that do and do not require any kind of authorisation has also been established and outlined in the new rule. This should aid in the positive development on predictability within such regulations. Additionally, some of the previous exemptions have been established.

The Ministry of Industry, Trade and Tourism claim that the outcome is a “clear, predictable, and legally secure” regulation of Spanish Investment controls. Héctor Gómez, the politician in charge, says “The attraction of foreign investments to Spain has been a fundamental element in driving the modernisation of the economy and the creation of productive, stable, and high-quality employment”.

Among the other revisions, another included development in the new Decree is in relation to statistics in the Registry of Foreign Investments and their overall quality. The regulations are to be aligned with the global standard contained in the OECD’s (Organisation for Economic Co-operation and Development) “Framework Definition of Foreign Direct Investment”.

The Demands from Investors

This new Royal Decree improves the prior investment control regime that was introduced through the establishment of Article 7bis of Law 19/2003 in March 2020, accomplishing one of the central demands of investors and other similar entities.

For foreign investments to be properly monitored and regulated, it was essential for an updated Royal Decree to come into effect that would improve on the national regulatory structure that was altered in March 2020 by the introduction of Article 7bis of Law 19/2003. The change which suspended the freedom of administration for specific foreign direct investments in Spain, subjecting them to prior authorisation.

Furthermore, the new Royal Decree now authorises the alteration of Spanish rules to European Union law in the subject area of investment regulation.

Particularly, the regulation on Investment

Control of the European Union that came into action during October 2020. Thus, initiating a regulatory outline for entities to hold control over foreign investments from outside of the European Union in member states for the reasons of security and public order.

To Conclude

The new decree has removed many bumps in the road for investors and similar entities. Some unresolved issues do still continue to leave room for a level of legal scepticism. However, the approval of this new Royal Decree has provided some stable foundation and represents developmental moves in favour of foreign investors in Spain.

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