Guide to business in Spain Guía de negocios en España


4. Incentives for investment in certain regions


4.1. Granted by the State

Regional incentives are financial subsidies granted by the State to productive investment to promote business activity in previously-determined areas, thus helping to alleviate territorial imbalances and to reinforce each region's endogenous potential for development.

The State grants such aid in accordance with the demarcation of eligible areas and maximum aid intensities stipulated by the European Commission. The functions relating to regional incentives are attributed to the Directorate-General of Community Funds, under the Secretariat of State of Budgets and Expenses of the Ministry of the Finance and Public Administrations.

These incentives are aimed at promoting business activity and directing its location toward previously determined areas, and they consist of financial aid for the financing of investment projects to be executed in areas with the lowest level of development, or in those whose special circumstances so recommend.

The main objective of this regional policy is to achieve economic equilibrium between the different Spanish regions (measured in terms of per capita GNP). In practice, this policy involves the promotion of start-ups, expansions or modernization of investment projects undertaken by enterprises located in the less developed geographical regions and in areas experiencing particular economic difficulties.

The incentives available for grant are, in general, (i) non-returnable subsidies; (ii) subsidies for the interest on loans obtained by the beneficiary from financial institutions; (iii) subsidies for the repayment of those loans; (iv) a combination of the foregoing; (v) reductions in the employer's social security contribution for common contingencies, etc.

They are granted for investment in projects that must be located in one of Spain's eligible areas.

The geographic demarcation of the eligible areas and the specific definition of the maximum financing limits, as well as of the specific industry requirements regarding economic sectors, eligible investments and conditions, are regulated in the respective Royal Decrees demarcating economic development areas.

The Royal Decrees in force were prepared on the basis of the contents of the "Guidelines on National Regional Aid for 2007-2013" approved by the European Commission. However, these Guidelines have been replaced by the "Guidelines on regional State aid for 2014-2020" published on July 23, 2013 in the Official Journal of the European Union (OJEU)Similarly, within the framework of the Guidelines, the European Commission approves an aid map for each Member State, stipulating the maximum limit of financial aid or subsidies that can be received by each region under regional incentives during the reference period. The new "Regional Aid Map for Spain (2014-2020)" was approved by the Commission on May 21, 2014. According to the Map, the Spanish regions for which the greatest incentives are envisaged are the Autonomous Communities of Extremadura and the Canary Islands, with maximum aid intensity percentages of up to 25% and 35%, respectively, of the eligible investment.

Guide to business in Spain

Investment aid and incentives in Spain


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