Control of foreign investments in Spain: the transitional regime for investments made by EU and EFTA residents is extended until December 31, 2026

Faced with the global crisis caused by COVID-19, Spain amended its legislation on the control of foreign investments from outside the European Union (EU) on March 17, 2020 through Royal Decree-Law 8/2020, by introducing the prior authorization regime provided for in Article 7 bis of Law 19/2003, (see here).

Likewise, in order to mitigate the consequences of the economic impact derived from the health crisis, Spain decided on November 17, 2020 to extend on a transitory basis the protection established for certain investments made by residents of both the EU and the Spanish Free Trade Association (EFTA), by means of Royal Decree-Law 34/2020 (see here). Since then, this transitional regime has been successively extended until December 31, 2024.

On December 24, 2024, the Council of Ministers approved through Royal Decree-Law 9/2024, among other issues, a new extension of the transitional regime due to the current context of increasing geopolitical tensions and instability, and with the aim of continuing to maintain protection against risks in terms of public order, health and safety.

Consequently, foreign investments in Spain carried out by EU and EFTA residents will continue to be subject to the prior authorization regime established in Article 7 bis of Law 19/2003, until December 31, 2026, if they comply with the following three cumulative requirements:

• The investor becomes a shareholder of 10% or more of the capital of a Spanish company or acquires control over it in accordance with the provisions of Article 7.2 of Law 15/2007.
• The investment is made in: (i) a listed company in Spain whose shares are totally or partially admitted to trading on an official Spanish secondary market and whose registered office is in Spain; or (ii) in an unlisted company, when the value of the investment exceeds 500 million euros.
• The Spanish company that is the object of the investment is engaged in a sector considered to be strategic, in accordance with the provisions of Article 7 bis, paragraph 2 of Law 19/2003.

Likewise, this transitional regime will also continue to apply to investments made by Spanish residents whose beneficial ownership corresponds to residents of other EU and EFTA countries. For these purposes, beneficial ownership is defined as: (i) the direct or indirect ownership or control of more than 25% of the capital or voting rights of the investor; or (ii) the possibility of exercising direct or indirect control over the investor by other means.