During 2025 hotel investment in Spain broke a record by going above €4 billion (+ 21% higher compared to 2024). The investor profile encompasses hotel groups, family offices, private investors, funds and investment firms. Although home investors took center stage once again, international capital also played an important role, predominantly European investors, although capital from non-European countries also made a showing. Where there are potential non-European purchasers it is essential to discuss the foreign direct investment or FDI rules from when negotiations begin.
An analysis of potential application of the foreign direct investment (FDI) rules where the potential international investor is non-European allows it to be determined at this initial stage whether they are not applicable or whether, based on the investor’s characteristics, clearance of the investment will be needed. Broadly speaking, most foreign investments in Spain are not subject to prior control, but the rules contain a suspension regime where the investment takes place in certain strategic sectors or where the investor meets certain characteristics.
The main provisions of the statutory FDI control regime in Spain are contained in (i) Law 19/2003, of July 4, 2003, on the legal regime on movements of capital and cross-border economic transactions and on certain money laundering measures; (ii) Royal Decree 571/2023, of July 4, 2023, on foreign investments; and (iii) the sole transitional provision of Royal Decree-Law 34/2020, of November 17, 2020, which has been extended for application every year since it was approved.
A direct foreign investment is characterized in these rules as one where the investor acquires at least a 10% of the share capital of a Spanish company or obtains control thereof totally or partially, provided that the investor is resident outside the European Union (EU) or the European Free Trade Association (EFTA). It is also considered as such if the investor is resident in the EU or in the EFTA but its beneficial owner is resident in a country outside these spaces. It is considered beneficial owner that person who owns more than a 25% of the investor’s capital or voting rights, or who directly or indirectly controls the investor via other means.
Once it has been determined that the investment is classed as a foreign investment, it must be assessed whether the objective and/or subjective criteria determining the obligation to obtain clearance are met. Since in principle the hotel industry is not included among the strategic sectors having an impact on public policy, public safety or public health, it needs to be assessed whether the foreign investor meets any of the subjective criteria in the rules, namely whether (i) it is controlled directly or indirectly by, or has received funds from, a government; (ii) has previously made investments or participated in activities in sectors having an impact on safety, public order or public health in another member state; or (iii) there is a serious risk that it engages in criminal or illegal activities, which have an impact on public safety, public order or public health in Spain. In the latter case, consideration will be given to any administrative or judicial penalties imposed on the investor in the preceding three years for matters related to money laundering, the environment, tax or protection of sensitive information.
If it turns out that the foreign investor meets any of these criteria (the investor is a sovereign fund or any other entity controlled by a state outside the EU, for example), an application for clearance of the investment must be filed with the Sub-Directorate General of Foreign Investment (attached to the Ministry of Economy, Trade and Business) before it is completed. This will require contractual mechanisms to be applied to allow the transaction to be signed and completed separately, and the contractual consequences arising from the investment potentially being subject to conditions or obligations will need to be stipulated.
To conclude, although not related to the FDI rules, a non-European foreign investor also needs to bear in mind the requirement for prior military clearance where the real estate investment is located in the areas with restricted access to ownership in Spain (coastal areas, border areas and islands), as stipulated in Law 8/1975 of March 12, 1975 on areas and infrastructure of interest for national defense implemented by the regulations on areas and infrastructure for national approved by Royal Decree 689/1978 of February 10, 1978.
