One Year after the Passing of Spain’s Law in Support of Foreign-National Entrepreneurs
In the fall of 2013, Spain passed the Law in Support of Foreign-National Entrepreneurs (“Law”)[1] to entice foreign nationals to invest in Spain in exchange for residency permission. According to the latest information from the Spanish Ministry of Economy (“Ministry”),[2] the granting of visas associated with this Law’s provisions recently increased in 2014. From September 2013 to September 2014, the Ministry granted 3,266 visas, whereas in the month of March 2014, only 818 visas had been granted.
Of these visas, 285 have been granted to foreign nationals to invest in Spain for residency (“investment visa”). This includes those foreign investors who opt for the purchase of real estate in Spain, the purchase of Spanish public debt, or the launching of an entrepreneurial project, all of which are investment options for foreign nationals as presented in the Law in exchange for residency permission in Spain.
Considering these 285 visas, 260 of them related to the purchase of property by foreign investors; 17 related to the acquisition of capital by foreign investors; and eight related to foreign investors’ entrepreneurial projects in Spain. According to the first estimations of the Ministry, the investment in these projects is already rising to 497 million Euros, and the labor associated with these projects has resulted in 4,446 jobs.
Unlike the investment associated with property and financial assets, entrepreneurial projects are facing gradual implementation. According to the predictions for these businesses, an investment of 226 million Euros and the creation of 2,410 jobs are predicted. If the growth continues, entrepreneurial projects could become the most significant investment option under the Law, in addition to foreign investment in Spanish property, for which the expense of 218 million Euros is predicted. To apply for the investment visa and obtain residency in Spain, a foreign national must carry out a “significant investment of capital” in Spain.
A “significant investment of capital” is an initial investment:
– Of an amount equal to or greater than two million Euros in Spanish public debt securities, or of an amount equal to or greater than one million Euros in shares, company shares of Spanish businesses, or bank deposits in Spanish financial entities.
– Of a value equal to or greater than 500,000 Euros in the acquisition of property in Spain.
– An entrepreneurial project for development in Spain that is considered and recognized as pertaining to “general interest.”
For the creation of an entrepreneurial project of general interest, the completion of at least one of the following conditions will be valued: the creation of jobs; the performing of an investment with socio-economic impact of relevance in the geographic environment in which the activity is going to be developed; and support relevant to the scientific and/or technologic innovation.
To demonstrate eligibility for the investment visa, a foreign national must confirm[3] that he or she:
(i) Is not present in Spain for any unlawful reason;
(ii) Is of legal age (at least 18 years of age);
(iii) Has no previous criminal record in Spain or in the countries in which he or she has resided for the last five years;
(iv) Is not listed as objectionable in the Schengen countries;
(v) Has public or private medical insurance;
(vi) Has sufficient economic resources for himself or herself as well as for the members of his or her family for the period of residence in Spain.
The investment visa allows a foreign national to reside in Spain for at least one year. If the foreign national is interested in living in Spain for more than one year, he or she may apply for the Authorization of Residence for foreign investors. This Authorization lasts two years, and it is renewable for two additional years. For this application, a foreign national must have first obtained the investment visa. Alternatively, a foreign national may apply for the Authorization within 90 days of the expiration date of the investment visa in addition to proving that the foreign national has:
(1) Travelled to Spain at least once during the authorized period of residence to confirm that the investment has maintained a value of equal or greater value than that originally invested, and
(2) Complied with Spanish tax and Social Security obligations.
The investment visa does not allow foreign nationals to work, but the Authorization does. If the foreign national proves a continued residence for five years in Spain, he or she may apply for a residence of a longer duration.
Considering the visa options and current market conditions in Spain, investment in Spain is attractive. Costs of housing have fallen by 40%, and according to the analysis gathered by Bankinter, property investment in Spain has increased by 15.5% in the first nine months of 2014 from the figure of 2013. In 2013, the cost of property investments rose 112% until it reached 3,800 million Euros[4]. Currently, the total cost of the investments until September 2014 is 10,400 million Euros. Of this figure, 4,900 million Euros come from non-commercial assets; 1,500 million Euros come from the investment in offices; and 1,150 million Euros come from commercial assets. Madrid holds 55% of foreign investment for the year 2013, which is a total of 8,635 million Euros.[5]
According to the Commercial Spanish Secretary of State, Jaime García-Legaz, Spain is the “country of the Euro zone that [has] attracted most direct foreign investment.”[6] He added that the attraction of Spain came from the fact that it allows access to the European market, the largest in the world in front of either the US or China. It is formed by 500 million consumers with a rent per capita of about 25,810 Euros (about 32,000 USD) and a “powerful network of free commerce” with countries from all over the world.
Investing in Spain is becoming profitable. Spain is an attractive European country in which to invest in the property market behind the United Kingdom and Germany, and Madrid is placed as the second most-preferred European city for investing in property assets[7]. Barcelona also finds itself among the 10 most-preferred cities for foreign nationals to invest in property assets.[8]
In summary, Europe seems to be attracting foreign investors once again. According to the report CBRE,[9] 70% of the foreign investors choose Western Europe as the most attractive global region to invest in property assets.
[1] http://www.boe.es/boe/dias/2013/09/28/pdfs/BOE-A-2013-10074.pdf
[2] CincoDías, Los visados para atraer capital y empleo extranjero se multiplican por cuatro, 09/29/2014
[3] Rule 265/2010
[4] Europa Press, Madrid, 02/20/2014
[5] Elconfidencial.com, 03/20/2014
[6] Lainformación.com,10/02/2014
[7] CBRE Report “European Real Estate Investor Intention,” 2014
[8] Id.
[9] Id.
Marina Bugallal & Melanie Glover (Amway Corp., Ada, Michigan, USA)
