Spain

Ease of Doing Business Rank: 30

Overview

 

Geographic location

Spain is a Western European country. Portugal lies to the west, Gibraltar and Morocco to the south, the Balearic Sea to the east and France and the Bay of Biscay to the north.

Spoken language

The official language of Spain is Spanish spoken by about 99% of Spaniards as a first or second language.

Spain also has several co-officials languages recognized in particular regions. These include Galego, Basque, Catalan/Balearic/Valencian and Occitan (Aranese).

According to Spain’s CIS state research institute, English is the most-spoken second language in Spain (27.7%), followed by French (9%), German (1.7%) and Portuguese (1.2%).

Population

The 2019 population is approximately 47 million.

The majority of the population lives in large urban cities. Madrid is the largest city (7.03 million), followed by Barcelona (5.14 million), Valencia (2.3 million) and Seville (1.36 million).

Spain also has 52 cities with populations between 100,000 and 1 million.

Popular industries

The top industries in Spain are tourism, manufacturing, innovation and technology, agriculture and energy.

Education

The Times Higher Education World Rankings includes 8 Spanish universities in the top 500 and a further 18 in the top 1,000 in the world.

The Legatum Prosperity Index ranks Spain’s education system 36th out of 149.

Popular entity types

The most common type of business entities in sole proprietor, limited liability company, public limited company, European public limited company, private partnership and general partnership.

The overwhelming majority of businesses are in the form of a limited liability company.

Spanish incentives for business

Spain offers many incentives, especially when they benefit specific regions and industries.

For instance, qualifying companies may enjoy a 50% tax credit on income in Ceuta and Melilla. Businesses supplying local public services may qualify for a 99% tax credit. The Canary Islands also enjoy 80% higher tax credits than mainland Spain.

Overall, the country offers a 25% tax credit for expenses incurred from R&D activities, which may increase to 42% on the excess in years a company incurs higher than normal expenses.

An additional tax credit of 17% for R&D staff is also available. Companies may also qualify for an 8% tax credit on tangible fixed assets investments and intangible assets investments for R&D.

Qualifying companies may also enjoy a 12% tax credit for technological innovation. Investments in foreign film productions or live performing arts and musicals may qualify for a tax credit of 20% of expenses.

Spain also offers special tax regimes including the Spanish and European Economic Interest Groupings (SEIGs and EEIGs), Temporary Consortia of Entities (TCEs), and EU Directive 2009/133a for restructuring operations. Companies may be exempt for tax or enjoy tax relief under specific circumstances.

Venture capital companies and funds may benefit from a tax exemption on dividends, capital gains, and profit distributions. Collective Investment Institutions are subject to a 1% tax.

Small and medium-sized companies may qualify for accelerated depreciation/amortization or more favorable bad debt provision treatment.

History & Features

 

Main cities for business

The principal cities for business are Barcelona, Madrid, and Valencia. Madrid is the capital city and economic center of the country.

Popular historical & tourist attractions

Spain has a rich history and it is home to an amazing 48 UNESCO World Heritage sites, the third highest in the world.

Sites span centuries and include the Tower of Hercules guarding the entrance to La Coruña harbor built by the Romans in the 1st century AD. The Real Alcázar palace complex in Seville blends Christian and Mudéjar architecture. It was built as a fort in 913, but revamped many times over 11 centuries. Most recently, it was used as a set in the Game of Thrones TV series.

Seville’s nearby cathedral built between 1434 and 1517 is the largest Gothic building in Europe and houses the tomb of Christopher Columbus. The stunning Moorish vernacular architecture of the Alhambra built during the 13th and 14th centuries demonstrates North African influence on the region.

Fast forward to the 20th century and you’ll discover the architectural works of Antonio Gaudi in Barcelona. His curved forms revolutionized modern design and his seven buildings attract millions of visitors annually.

The Museo Guggenheim Bilbao is one of modern architecture’s most iconic buildings. Shiny glass and titanium cover the exterior of the wavy design built in the Basque Country to help revitalize the area.

Madrid is home to one of the most highly regarded museums in the world: Museo del Prado. It houses over 7,000 paintings, including works by Goya and Velázquez. Centro de Arte Reina Sofía offers a premier collection of contemporary artists including Picasso, Dalí, and Miró.

Spain also includes many outstanding areas of natural beauty. These include the Fuente Dé nature reserve with a cable car dangling over an 800 meter glacier. The densely wooded Parque Natural de Las Laguna de Ruidera has fifteen lagoons and lakes and caves to explore.

History

By 4,000 BC, much of Spain was settled by the Iberians who immigrated from the east. Later, Celts settled in the northern third of the Iberian Peninsula.

Around 1100 BC, Phoenician seafarers from present-day Lebanon began trading in Cadiz and other areas along the southern Spanish coast. Greeks traded in the north-east of the region.

Phoenicia fell and the Carthaginians overtook the Iberian Peninsula. However, the Romans defeated them during the Punic Wars between 264 BC and 146 BC. The Romans held the area for over six centuries and established the foundations for Spanish language and culture.

When Rome fell in the fifth century AD, the Germanic Visigoths ruled until the Moors of Northern Africa invaded in 711 AD. They occupied the area for seven centuries until Christian forces drove them from the kingdom in 1492 AD.

Christopher Columbus discovered the New World which led to great exploration and plundering by Spanish forces abroad. The country amassed great treasures and became a formidable force. However, constant warfare drained their resources.

In 1700, at the death of Charles II of Spain, the Spanish Habsburgs became extinct in the male line and the French Bourbon dynasty ascended to the Spanish throne. Napoleon tried to seize control of the peninsula during the Napoleonic Wars, but failed.

Spain underwent many changes of government during the 19th century with the country divided between conservatives and liberals, and rural and urban society. By 1931, the working class had a strong presence, the king abdicated, and the country declared itself a republic.

This sparked the Spanish Civil War between 1936 and 1939 in which Germany and Italy heavily assisted General Francisco Franco. Despite the assistance, Franco did not commit to Hitler and resisted German occupation of the Iberian Peninsula during World War II. He ruled as Head of State and dictator from 1939 to 1975. After his death, the new king led Spain towards democracy and the country flourished.

Today, the Kingdom of Spain is a constitutional monarchy and the fifth largest mixed capitalist economy in Europe.

Other relevant facts

As of June 2019, 68.9% of Spaniards identify themselves as Catholic. A further 27.1% did not associate with a religion. A small percentage (2.8%) practices other religions.

Native-born Spanish citizens of all ethnic groups make up 88% of the total population, and 12% are immigrants. Over half of all these immigrants come from Spain’s former colonies in Latin America.

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Spain is the 18th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Spain 57th globally and states, “The government’s minority status constrains its ability to implement its controversial and costly program of labor, pension, health care, tax, and education reforms, and a budget deal with the populist left Podemos (We Can) party includes plans for more public spending, higher taxes, and a 22 percent increase in the minimum wage in 2019.”

World Bank’s “Doing Business” rankings rate Spain 30th for ease of doing business in the world.

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