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The government plants obstacles in the way of foreign investors in Spain



“I believe that we must once again turn Spain into an attractive destination for investment and attractive for the best talent, and for this we need a competitive framework and legal certainty in all areas.” The head of one of the main Spanish multinationals, Rafael del Pino (Ferrovial), took advantage of a few days before the presence of the candidate of the People’s Party for the presidency of the government, Alberto Núñez Figo, at the ABC Forum, to focus on an issue that since businessmen and investors have been interested for a while Long: the proliferation of regulations and regulatory solutions that weaken Spain’s attractiveness as an investment destination. This is not an isolated opinion. This is evidenced by the latest measure of the business climate in Spain, promoted by the Ministry of Industry and the platform of multinational companies of the Spanish brand and prepared by IESE based on the opinions of 720 multinational companies, which indicates that the regulatory environment is the worst side. By companies that have foreign capital established in Spain. Aspects such as bureaucratic burdens, tax costs, framework and even the performance of business fairness are called into question, i.e. almost all aspects depend on management decisions. In favor of Spain as an investment destination, on the contrary, the quality of life, the size of the market and the provision of infrastructure play. A minefield for investors The report also reveals that the climate for doing business in Spain has deteriorated in 2022 compared to the previous year, and again points to regulatory problems. “We’ve had a few years where the regulatory framework has been very clear. There are more regulated sectors and the regulation is more severe,” says a partner in one of the “Big Four” business consultancies. The list of measures approved in recent months that have managed to influence foreign investment is long. Perhaps most telling is the foreign investment control mechanism Direct in Spain, which, like the extinct gold quota that Brussels forced Spain to cancel more than a decade ago, leaves the government the final decision on attempts by foreign companies (including EU companies) to take control positions in Spanish companies deemed strategic. The mechanism as a temporary device to prevent big money from controlling the leading national companies, taking advantage of the collapse in stock market valuation during the epidemic, but the government decided to extend it until 2024 and expanded its scope of work.The maneuver made the companies that welcomed this protection now look at the mechanism with suspicion and a fear that it might conceal an attempt by the government to interfere in its management.Since its implementation, the device has given the government a voice to interfere in dozens of companies’ operations, the most famous of which is the takeover bid. By the Australian IFM Fund for Naturgy. “I do not think that these measures respond so much to a protectionist trend as to an attempt to increase the regulation of productive sectors, which is the worst thing that can be done in a context like the current one,” says Vice President from CEOE, Íñigo Fernández de Desk. Direct investment in Spain is regaining pre-pandemic levels. The record inflow of €22,457 million received between January and September, up 55% over last year, and investment announcements from large multinationals in Spain support the government’s view of the attractive investor in the country. Reservations of multinational companies about the Spanish regulatory framework did not prevent foreign direct investment from recovering pre-pandemic levels in 2022. Between January and September, Spain received investments of €22,457 million, up 55% from in 2022. 2021 (an exercise still weighed down by the pandemic) and slightly above the average for 2018-2022. First Deputy Prime Minister Nadia Calvino estimated these data on Tuesday at the press conference after the cabinet as “a clear sign that Spain’s business climate and confidence in the recovery plan make it an attractive destination for foreign investors. In his opinion, the investment announcements in Spain made by Multinational companies such as Google, Maersk, Volkswagen, Intel or Cisco to support European funds endorse Spain’s position as a preferred destination for foreign investment and investors have noticed government activity in other areas.Large technology multinationals have been committed since 2021 to pay the so-called Google price, which It was implemented in Spain without waiting for the European consensus, which caused a trade dispute with the United States; Since that year, investors have also had to pay a tax to buy shares of large companies included in the so-called Tobin tax; Taxes have increased on companies located in Spain; The government’s attack has caused an increase Real estate tax, according to sources in the field of tax consultancy, in large fortunes to reconsider their plans to establish their residence and center of operations in Spain. “We are witnessing a series of regulations of a political nature that cause confusion and a general feeling that Spain does not take its tax system seriously, which is the first tool of economic policy in any country,” condemns Stella Raventos, president of the Spanish Association of Tax Advisers (AIDAF). “If you make a decision not to compete in tax attractiveness with other countries, at least provide legal certainty, otherwise the capital will leave.” More information Tax increases leave Spain behind Portugal or Greece in fiscal competition. The Royal Decree that approved the new taxes on banking, energy and great wealth included a change in the wealth tax that obligates non-resident investors with shares in companies whose portfolio consists of real estate located in Spain and its latest milestone was the regulation of the obligation of companies closing in Spain to reinstatement, social assistance and bonuses received during the past four years.

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