SPAIN 2018 1 Table of Contents Doing Business in Spain _____________________________________________ 4 Market Overview ____________________________________________________ 4 Market Challenges __________________________________________________ 5 Market Opportunities ________________________________________________ 6 Market Entry Strategy _______________________________________________ 7 Political Environment _______________________________________________ 8 Selling US Products & Services _______________________________________ 9 Using an Agent to Sell US Products and Services ________________________ 9 Establishing an Office _______________________________________________ 9 Franchising _______________________________________________________ 10 Direct Marketing ___________________________________________________ 12 Joint Ventures/Licensing ___________________________________________ 13 Selling to the Government __________________________________________ 13 Distribution & Sales Channels _______________________________________ 14 Express Delivery __________________________________________________ 15 Selling Factors & Techniques ________________________________________ 15 eCommerce _______________________________________________________ 15 Trade Promotion & Advertising ______________________________________ 17 Pricing ___________________________________________________________ 19 Sales Service/Customer Support _____________________________________ 21 Protecting Intellectual Property ______________________________________ 21 Due Diligence _____________________________________________________ 23 Principal Business Associations _____________________________________ 24 Limitations on Selling US Products and Services _______________________ 25 Web Resources ___________________________________________________ 25 Leading Sectors for U.S. Exports & Investments ________________________ 28 Aerospace and Defense ____________________________________________ 28 Business Investment Services _______________________________________ 31 Education and Training _____________________________________________ 34 Energy____________________________________________________________ 35 Franchising ________________________________________________________ 40 Green Technology ___________________________________________________ 46 Outbound Travel and Tourism _______________________________________ 54 Safety & Security ____________________________________________________ 57 Agricultural Sector _________________________________________________ 61 Customs, Regulations & Standards ___________________________________ 66 Trade Barriers _____________________________________________________ 67 Import Tariff ______________________________________________________ 69 Import Requirements & Documentation _______________________________ 69 Labeling/Marking Requirements ______________________________________ 71 U.S. Export Controls _______________________________________________ 73 Temporary Entry __________________________________________________ 73 Prohibited & Restricted Imports ______________________________________ 75 Customs Regulations ______________________________________________ 76 Standards for Trade ________________________________________________ 77 Trade Agreements _________________________________________________ 81 Licensing Requirements for Professional Services ______________________ 81 Web Resources ___________________________________________________ 82 Investment Climate Statement _______________________________________ 83 Executive Summary ________________________________________________ 83 Openness To, and Restrictions Upon, Foreign Investment ________________ 85 Bilateral Investment Agreements and Taxation Treaties __________________ 87 Legal Regime _____________________________________________________ 87 Industrial Policies _________________________________________________ 92 Protection of Property Rights ________________________________________ 97 Financial Sector __________________________________________________ 100 State-Owned Enterprises __________________________________________ 102 Responsible Business Conduct _____________________________________ 103 Corruption _______________________________________________________ 104 Political and Security Environment __________________________________ 105 Labor Policies and Practices _______________________________________ 106 OPIC and Other Investment Insurance Programs _______________________ 107 Foreign Direct Investment and Foreign Portfolio Investment Statistics _____ 107 Contact for More Information _______________________________________ 109 Trade & Project Financing _________________________________________ 110 Methods of Payment ______________________________________________ 110 Banking Systems _________________________________________________ 110 Foreign Exchange Controls ________________________________________ 113 Project Financing _________________________________________________ 115 Multilateral Development Banks _____________________________________ 117 Financing Web Resources _________________________________________ 117 Business Travel __________________________________________________ 119 Business Customs ________________________________________________ 119 Travel Advisory __________________________________________________ 119 Visa Requirements ________________________________________________ 120 Currency ________________________________________________________ 121 Telecommunications/Electronics ____________________________________ 121 Transportation ___________________________________________________ 122 Language _______________________________________________________ 122 Health __________________________________________________________ 122 Local Time, Business Hours and Holidays ____________________________ 122 Spanish National Holidays _________________________________________ 123 Temporary Entry of Materials or Personal Belongings __________________ 124 Travel Related Web Resources ______________________________________ 125 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2018. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. Doing Business in Spain Market Overview Spain, with a GDP of USD 1.3 trillion and a population of 46.6 million people, is the fourth-largest economy in the Eurozone, post-Brexit. Its economy grew 3.1% percent in 2017. Record tourism and export levels, coupled with a revived domestic consumption, helped drive the recovery. Forecasts for the next several years suggest growth around 2.7 percent. Spain entered into a recession in the second quarter of 2008, from which it emerged in the third quarter of 2013. Responding to the crisis, the Popular Party PP government undertook major initiatives in 2012 to reduce the deficit and reform labor laws, public services, and the financial sector. These reforms have made Spain much more competitive in comparison to costs in other European countries. Spain has a structurally high unemployment rate, which economists estimate at 8 percent, but the crisis lied to a dramatic rise in unemployment, which grew to almost 27 percent in 2013. The unemployment rate decreased to 16.4 percent in 2017, down from 18.5 percent the previous year. Youth unemployment —including those under the age of 25— decreased to 37.5 percent in 2017, down from 42.9 percent in 2016, and 56.9 percent in 2013. Spain has traditionally represented a significant export market for the United States. According to the U.S. Department of Commerce, U.S. exports of goods to Spain in 2017 amounted to USD 11.014 billion, up from USD 10.4 billion in 2016. The actual U.S. export numbers to Spain are substantially higher than the reported numbers, since many of Spain’s imports from the U.S. arrive in Europe via ports of entry in other European countries. Services exports from the U.S. to Spain continue to be strong at USD 6.7 billion in 2015. Spanish exports to the U.S. in 2017 were USD 15.6 billion. As a member country of the European Union EU, Spain adheres to EU legislation, as is the case of all member countries. The Spanish government generally aligns with the EU consensus, and the Spanish public has broadly favorable views of the EU. Investment plays a key role in the bilateral economic relationship. Most of the large U.S. names are present, many of which are in the industrial sector – automobiles, chemicals, pharmaceuticals, industrial machinery, etc. U.S. investment in Spain was estimated at USD 55 billion in 2016. It is estimated that U.S. firms in Spain employ over 163,000 people. The presence of large well-known foreign names serves as a catalyst for innumerable local suppliers and service providers and, in almost all cases, increases exports. Over 50 percent of Spanish exports are made by foreign multinationals located in Spain. U.S. investors also hold significant portfolio investment in shares of some of Spain’s largest companies. Spain’s recovery has enabled it to increase its foreign direct investment. Spanish investments in the United States have increased substantially in recent years, making Spain the tenth largest investor in the United States in 2016, according to data from SelectUSA and the U.S. Bureau of Economic Analysis. Much of the investment has taken place in the past seven years, growing from a stock of USD 14 billion in 2006 to USD 67 billion in 2016 Ultimate Beneficial Owner. The United States is the fifth-largest destination of FDI from Spain, according to data from the Spanish Ministry of