The Government has adopted a programme of exceptional economic measures to mitigate the impact of COVID-19. Amid global pandemic the Government has announced R&D projects by foreign companies will be eligible for grants from ICEX Invest in Spain’s investment program
A total of 48 projects were received, under program of investment by foreign companies in R&D activities which represent an investment of approximately $15 million and potentially mobilizing jobs in the regions of Extremadura, Canary Islands, Castile-La Mancha, Murcia and Galicia.
The R&D projects belong to sectors particularly in:
- Health sciences
- The telecommunications
- Industrial sector
- The energy and environmental sector.
The source of the venture capital is primarily Western economies (Europe and North America), which account for 75% of the investment projects. This group includes some of the largest investment companies and subsidiaries of multinationals. 30% of the projects are from recently established companies or companies that are currently in the process of becoming incorporated. The rest are companies already established in Spain that attract new R&D projects, allowing them to position their Spanish subsidiary as a leader in this technology within its corporate group.
About the investment program for foreign companies involved in R&D activities:
- This program of subsidies is co-financed by the European Regional Development Fund (ERDF) within the multiregion OP for Spain (2014-2020). It is aimed at companies that have a foreign stake in their capital of at least 10% and are planning to carry out an R&D project in Spain. The regions that still have funds available are Extremadura, Canary Islands, Castile-La Mancha, Murcia and Galicia.
- Amid the coronavirus pandemic Spain has decided to undertake an urgent modification of its current foreign investment screening mechanism. Foreign direct investments (FDI) are considered to be all investments made by residents of countries outside the European Union and the European Free Trade Association when any of the following two circumstances are met:
- The investor acquires a stake equal to or over 10% of the share capital of the Spanish company.
- The corporate transaction, act or legal procedure enables the active participation in the management or control of the company in question. To these effects, all transactions that are made materially by residents in countries in the European Union or the European Free Trade Association, but whose real ownership corresponds to residents in countries outside the European Union and the European Free Trade Association, shall also be considered to be made by residents in countries outside the European Union and the European Free Trade Association. This real ownership will be understood to exist when these latter subjects ultimately hold or control, either directly or indirectly, over 25% of the capital or of the shareholder voting rights, or when they exercise direct or indirect control over the investor through other channels.
- The new investment regime is governed by the provisions of Royal DecreeLaw 8/2020 of 17 March on urgent and extraordinary measures in response to the economic and social impact of COVID-19. The liberalized regimen for FDI for reasons of public safety, public order and public health, is suspended in the following cases:
- Critical physical or virtual infrastructures and the physical premises those are essential for the use of these infrastructures.
- Critical technologies and dual use items.
- Supply of essential consumables, particularly energy or those concerning commodities or food security.
- Sectors with access to sensitive information, particularly personal data, or that have control over this information.
- Communications media
- The government may suspend the liberalized regime for foreign direct investment in other sectors when they affect public security, public order and public health The liberalized regime for FDI is also suspended in the following cases:
- If the foreign investor is directly or indirectly controlled by their government.
- If the foreign investor has made investments or has participated in activities in sectors affecting security, public order and public health in another member state.
- The Spanish Government has announced welfare packages for citizens and business affected by COVID -19. The Government has adopted a programme of exceptional economic measures to mitigate the impact of COVID-19.
- ICO (Official Credit Institute) credit line guarantees, the State will grant guarantees worth $107 billion to facilitate the provision of loans for companies and self-employed workers.
- The fund will help to continue its operations and protecting economic activity and employment in the country.
- Its scope of application was also expanded to cover companies in all of Spain (it was initially available for the Canary Islands and the Balearic Islands) and a wider range of economic activities connected to tourism.
- Additional credit coverage through CESCE An additional line of State-backed credit coverage is created through CESCE and funded with up to 2 billion euros for financial institutions that grant new credit lines for working capital. The beneficiaries will be SMEs and other larger companies, provided they are not listed, internationalised, or in the process of internationalisation.
- The European Central Bank (ECB), is a central bank of the 19 European Union countries, has decided to provide monetary policy support through additional asset purchases of approximately $129 billion until end-2020 under the existing program (APP). The legislation includes measures that address health and the economy at large, with a particular emphasis on the tourism industry, small and medium size enterprises (SMEs).