From: OVERSEAS BUSINESS REPORTS (SPAIN)
University of Missouri-St. Louis
Match 20 DB Rec# - 29,256 Dataset-MARKET
Source : USDOC, International Trade Administration
Source key :IT
Program key :IT MARKET
Program :Market Research Reports
Update sched. :Monthly
ID number :IT MARKET 111108200
Title :SPAIN - OVERSEAS BUSINESS REPORT - OBR911000
Data type :TEXT
End year :1992
Date of record:09/15/1992
Keywords 1 :
| EUROPEAN COMMUNITY
| EUROPEAN ECONOMIC COMMUNITY
| ORGANIZATION FOR ECONOMIC COOPERATION & DEVELOPMENT
| ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMET
| WEST EUROPE
| WESTERN EUROPE
| WESTERN EUROPEAN COUNTRIES
SPAIN - OVERSEAS BUSINESS REPORT - OBR911000
Date: October 1991
Source: International Trade Administration, U.S. Dept. of Commerce
Number of pages: 54
Subject: The report discusses the economic and commercial climate in Spain,
with emphasis on information useful for potential U.S. sellers and
investors. It consists of the following sections:
The Spanish Market
Spain's Economic Outlook
Marketing in Spain and the EC Single Market
Distribution and Sales Channels
Government's Role in Industry
Non-Tariff Trade Barriers
Advertising and Market Research
Currency, Banking, and Credit
Forms of Business Organization
Industrial Property Protection
Guidance for Business Visitors
A. Sources of Economic and Commercial Information
C. Trade Fair Schedule
Overseas Business Report
MARKETING IN SPAIN
Mary Beth Double
Spain Desk Officer Office of Western Europe International Trade
Administration Washington, D.C.,
with the assistance of:
Robert A. Kohn, Commercial Counselor, Ralph Griffin, Commercial Officer,
U.S. and Foreign Commercial Service Spain
TABLE OF CONTENTS
The Spanish Market
Spain's Economic Outlook
Marketing in Spain and the EC Single Market
U.S.-Spain Trade--Best Export Prospects
Distribution and Sales Channels
The Approach to Selling--Competitive Factors--Consumer Financing--
Regional Markets--Agents and Distributors--Wholesale and Retail
Channels--Franchises--Mail-Order Selling--Licensing Agreements,
Technology Transfer, and Payments
Government's Role in Industry
Value-Added Tax--Import Tariff System--Quotas and Licensing
Requirements--Import Licensing Procedures--Shipping Documents--
Advance Rulings on Classifications--Fines, Penalties--Antidumping,
Countervailing Duties--Special Customs Provisions--Homologation and
Standards Testing--Marking, Labeling, and Testing Requirements--
Quotations and Terms of Payment--Free Trade Zones and Special
Facilities--Transportation--Reexporting from Spain--Samples,
Carnets and Advertising Matter--Weights and Measures--
Non-Tariff Trade Barriers
Advertising and Market Research
Broadcast Media--Printed Media--Management Consulting Firms
Currency, Banking, and Credit
Currency--Banks and Financial Institutions--Sources of Consumer
Credit--Sources of Commercial Credit--Stock Exchanges
U.S. Investment Position--Types of Foreign Investment--Foreign
Investment Approvals--Repatriation of Earnings and Capital--
Investment Incentives--Transfer of Technology
Forms of Business Organization
Industrial Property Protection
Personal Income Taxes--Corporate Income Taxes--Net Worth Tax--
Other National Taxes--Regional Taxes--Municipal Taxes--Double
Guidance for Business Visitors
Entrance Requirements--Foreign Exchange--Working in Spain--
A. Sources of Economic and Commercial Information
C. Trade Fair Schedule
THE SPANISH MARKET
Spain is a major industrialized democracy, ranking as the tenth largest
economy in the world in 1990. Spain has a population of 39 million, with
14.6 million persons in the active work force. The gross domestic product
(GDP) per capita was $12,502 in 1990, a 28 percent jump over 1989's per
capita GDP. Agriculture accounts for 5 percent of GDP and employs 14
percent of the working population. Tourism is the major source of services
revenue, contributing $18.6 billion to the balance of payments in 1990.
With 197,000 square miles, Spain accounts for one-fifth of the land mass of
Western Europe. Its principal industries are textiles and apparel
(including footwear), food and beverages, metals and metal manufactures,
chemicals, shipbuilding, automobiles, and machine tools. Its natural
resources include coal, lignite, iron ore, uranium, mercury, pyrites,
fluorspar, gypsum, zinc, lead, tungsten, copper, kaolin, potash, and
hydroelectric power. Political and other background information on Spain is
available in the Background Note series of reports prepared by the U.S.
Department of State. They can be obtained at the U.S. Government Printing
SPAIN'S ECONOMIC OUTLOOK
Since joining the European Community (EC) in 1986, Spain has worked to make
its economy more open, efficient, and competitive. Most quantitative
restrictions have been removed, and foreign investment has been encouraged
in an effort to modernize Spain's industrial base in preparation for the
Single Market. Since 1986, the Spanish economy has enjoyed strong,
investment led growth. Real increases in GDP averaged 4.8 percent during
1986-89, making Spain's economy the fastest growing in the EC. The economy
grew 3.7 percent in 1990, and official estimates project GDP growth of 2.9
percent for 1991. The greatest growth in foreign direct investment has
been from other EC members. However, other important trade partners,
including Japan and the United States, have gained a strong foothold in
Spain. More detailed information on current economic developments in Spain
and an analysis of their implications for American business interests may be
obtained by ordering the most recent Foreign Economic Trends Report from GPO
or the nearest District Office of the Department of Commerce.
MARKETING IN SPAIN AND THE EC SINGLE MARKET
No European country has embraced the EC Single Market more enthusiastically
than Spain. Spain's implementation of the Treaty of Accession in January
1986 marked its entrance into the European Community. The 12 member states
include Belgium, Denmark, France, Germany, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom. The
Treaty of Accession granted Spain a 7-year transitional period, ending
December 31, 1992, during which it is obligated to adopt nearly 300 EC
Single Internal Market directives. Although 1992, the target date for
completion of the Single Market, is significant for all EC member states, it
holds special significance for Spain, which will host the Summer Olympics in
Barcelona and Expo '92 in Seville. The Expo will coincide with celebrations
for the 500th Anniversary of the Discovery of the New World. Madrid has
also been selected as the cultural capital of Europe for 1992, hosting
ballets, operas, and other such events throughout the year. U.S. companies
must now think of the European Community as a single market, rather than 12
separate and fragmented ones, especially as the EC works to create the
Single Internal Market by 1993. Although EC member countries will still
maintain their national identities, national borders will no longer be
synonymous with trade barriers. U.S. managers and executives will have to
rethink their strategies in marketing, finance, distribution, and
production. The 1992 program is designed to harmonize market conditions on
an EC wide basis, creating a more open, competitive market place. It will
remove internal barriers to the movement of goods, capital, labor, and
services, thus forming a single $5 trillion market of 345 million
consumers. Many inefficiencies, such as trucks waiting at border
checkpoints for documentation inspection or professionals being unable to
work in other member states, will be eliminated. The completion of the EC's
Single Internal Market program will create significant economic growth in
Europe and major opportunities for American exporters and investors. The
Single Market could add 1.8 million jobs and, over time, mean a $280 billion
increase in total demand for goods and services in the 12-nation block.
The major catalyst in the development of the EC Single Internal Market was
the passage of the Single European Act in 1985. This act went into effect
in 1987 and enables the EC Council of Ministers to adopt a Single Internal
Market directive or regulation on the strength of a qualified majority, or
54 of 76 votes. Council votes are assigned by a weighted average.
Previously, the Council of Ministers had to reach a unanimous agreement for
a directive to pass. A unanimous vote is required for fiscal matters,
decisions on the free movement of persons, and directives or regulations on
the rights and interests of employed persons. By January 1991, the EC
Commission had proposed all of the 282 directives and regulations for the
Single Market. The EC Council of Ministers has adopted 184 of those
proposals, or over 60 percent of the total directives to be acted upon.
Member states must implement and enforce a regulation immediately after the
Council of Ministers passes it. After a directive is adopted, the
Commission allows a period of 18 months to 2 years for member states to
implement the provision. The Single Internal Market program will force
European companies to become more competitive since they will no longer be
guaranteed business in a protected home market. At the same time, American
exporters will be able to manufacture to a single set of product standards
as the EC adopts uniform standards for the entire Community. Previously,
each country set its own standards.
The EC 1992 program also proposes to open contracts in certain public
procurement sectors to competition, particularly in the water, energy,
telecommunications sectors and transportation services. However, some
government procurement rules contain discriminatory policies in that they
unfairly favor contracts with high EC content. Therefore, American firms
with subsidiaries in the EC can take better advantage of the liberalization
of the public procurement sector than counterparts in the United States.
For the United States, the EC is the most important export market, and Spain
is the United States' seventh largest export market in the Community. The
United States held a trade surplus with the Community in 1990 with exports
of $98.1 billion, an increase of more than 13 percent over 1989. U.S.
exports to Spain during 1990 rose 9 percent over 1989 to $5.2 billion.
Strong U.S. export growth is expected to continue as solid European economic
expansion and the Single Internal Market stimulate increased trade
opportunities. The EC is now achieving real economic growth, led by
investment spending and a buoyant business confidence, as it restructures
itself into a single market. In the 12-nation Community, economic growth in
real terms was 2.7 percent in 1990, following record growth of 2.5 percent
in 1989. Growth is expected to continue at 2.5 percent through 1991.
Businesses are prospering in Europe in part because of increased investment
in Europe by EC, Japanese, and American companies preparing for the Single
Market. U.S. investment growth in the EC was 9.2 percent in 1988 and nearly
14.4 percent during 1989. Investment by U.S. firms has steadily increased
since 1984. Cumulative U.S. investment in the EC was $131 billion in 1988
and $150 billionin 1989. Foreign investment, including investment from the
United States is expected to continue increasing. Administrative costs for
U.S. exporters are already reduced due to adoption of a single
administrative document that eliminates the need for duplicate paperwork for
goods shipped to and within the EC. For the first time, all 12 EC countries
are using the same documentation and product classification system.
The EC is Spain's principal trading partner, taking some 67 percent of
Spanish exports and supplying about 57 percent of imports in 1989. The
United States follows the EC as a trading partner for Spain. This trade
pattern is expected to intensify as the Community progresses toward the
Single Market. Spain's trade policy is also influenced by its membership in
the Organization for Economic Cooperation and Development (OECD), the
General Agreement on Tariffs and Trade (GATT), and the International
Monetary Fund (IMF). It is a signatory to the Multilateral Trade
Negotiation (MTN) codes on customs valuation, technical barriers to trade,
dumping, and subsidies countervailing duties. Upon entry into the EC, Spain
acceded to the Government Procurement and Trade in Civil Aircraft Codes of
the GATT, as well as the Multi-Fibre Arrangement (MFA). However, as of
mid-1991 it had not implemented the Government Procurement Code.
The majority of Spain's trade is with Europe. In 1989, its principal
suppliers were West Germany, France, Italy, the United States, the United
Kingdom, and Japan. The leading destinations for Spanish exports were
France, West Germany, the United Kingdom, Italy, and the United States.
Although Spain has been historically tied to Latin America, the significance
of this trade relationship has diminished, as has trade with the Middle East
and Africa. Foreign trade is an increasingly significant factor in the
Spanish economy. In 1990, imports were $80.5 billion, and exports were $51
billion, about 15 percent of GDP. In dollar terms, export growth was 10
percent from 1988 to 1989, while imports grew by 18 percent over the same
period. The rate of growth of exports and imports is expected to slow over
the next several years.
Spain and the United States are major trading partners. In 1989, the United
States was Spain's fourth largest supplier behind West Germany, France, and
Italy. In recent years, growth of U.S. exports to Spain has been extremely
strong. Total U.S. exports to Spain have grown dramatically over the last
several years with a 34 percent increase during 1988, an additional 14
percent growth in 1989, and a 9 percent increase during 1990. In 1990, U.S.
exports to Spain reached $5.2 billion. The U.S. import market share was
approximately 9 percent in 1990. Overall, Spain ranked as the 15th largest
purchaser of U.S. exports in the world in 1990, while it was the 27th
largest supplier to the United States. The United States was the fifth
largest market for Spanish exports in 1989, following France, West Germany,
the United Kingdom, and Italy. Spanish exports have grown much more slowly
than U.S. exports, reaching $3.3 billion in 1990. The 1990 U.S. trade
surplus of $1.9 billion with Spain was one of the United States'
largest.U.S.-Spanish trade fluctuates with the dollar-peseta (Ptas.)
Generally, the United States holds a trade surplus with Spain. However,
from 1985 to 1987, Spain held a trade surplus with the United States due to
the peseta's depreciation and strong U.S. economic growth in which imports
had a major role. The United States regained its trade surplus in 1988
because of strong Spanish economic growth, as well as a comparatively weaker
dollar. The composition of U.S. exports to Spain has shifted away from
agricultural commodities toward manufactured goods. Agricultural exports
made up only 13 percent of total U.S. exports in 1990, down from a high of
45 percent in 1985. Leading U.S. manufactured exports are aircraft and
avionics, coal, computers and peripherals, medical equipment, laboratory and
scientific instrumentation, telecommunications equipment, and general
industrial equipment. Leading agricultural exports are soybeans, corn,
tobacco, and lumber. In 1990, the composition of Spain's worldwide exports
remained much the same. Major U.S. imports from Spain are refined petroleum
products, footwear, auto parts, processed food products, tires, aircraft
parts, wines, iron and steel, and ceramic tiles.
Best Export Prospects
Spain's demand for imported goods and services overall has grown rapidly
since Spain joined the EC. Preparations for the 1992 Summer Olympics in
Barcelona and Expo '92 in Seville have generated billions of dollars worth
of investment in road, rail, airport, and telecommunications
infrastructures. Demand for capital goods has risen in response to strong
domestic and foreign investment, allowing Spanish companies to expand and
modernize. In addition, its overall standard of living has improved
dramatically, resulting in greater consumer demand. The following product
sectors deserve special note:
Franchising.-- Although franchising is relatively new to the Spanish
marketing network, the Spanish are welcoming it as a proven business
system. Spaniards are particularly looking for "name" brands and have ample
capital available for such ventures. Estimated total sales in 1990 were
$300 million, and sales of U.S. firms accounted for two-thirds of the
total. Growth of franchise sales will exceed 40 percent annually in the
period 1991-93. The promising sub sectors are fast foods, business
services, and automotive.
Pollution Control Equipment.--As Spain moves to comply with rigorous EC
environmental regulations, demand for new equipment and systems is
skyrocketing. The pollution control market totalled $262 million in 1990
with imports from the United States totaling $42 million. U.S. exports will
grow 40 percent annually over the next several years. The most promising
sub sectors are filters, industrial incinerators, and electrostatic
precipitators. Auto emissions control will also provide excellent sales
Medical Equipment.--Improved living standards, increased health insurance
coverage, and heightened government spending for health services ensure
continued growth in the medical equipment sector. Expansion will be
strongest in private sector health care facilities. The market totaled $930
million in 1990, of which $195 million (21 percent) was from the United
States. U.S. exports should grow 35 percent annually for the next few
years. The most promising sub sectors are electro-medical devices,
electrocardiographs, and prosthetic equipment.
Laboratory and Scientific Equipment.--Spain has increased its funding of
both public and private research and development activities. The laboratory
and scientific industry continues to modernize, increasing quality and
efficiency. Total market size for laboratory and scientific equipment was
$650 million in 1990, with imports accounting for nearly 90 percent of the
sales. U.S. market share was 23 percent, and imports from the United States
are expected to grow 20 percent annually. The best prospects for export in
this sector are chromatographic equipment, spectrophotometric, and
Telecommunications Equipment.--In an effort to meet surging demand for basic
services, the Spanish national telephone company, Compania Telefonos
Nacional Espana - Telefonica (CTNE), has launched a massive investment
program to increase the number of communications lines and central units.
At the same time, the government is cautiously opening customer premise
equipment and value-added services to private sector suppliers. Three
private television stations were authorized in 1989. The cellular phone
market is also expanding rapidly. The Barcelona Summer Olympics and Expo'
92 will generate significant demand for telecommunications products and
services. In 1990, the market for telecommunications equipment was $4.1
billion and is projected to grow 30 percent each of the next several years.
U.S. imports, while small at $80 million, are projected to grow even
faster. Leading prospects in this sector are mobile communications, digital
switching, automated call distributors, multiplexers, and outside plant
Computers and Peripherals.--Imports will continue to dominate the
fast-growing computer and peripherals market for the next several years.
Strong demand from the public and financial sectors will contribute to
continued growth. In 1990, the market totaled $2.4 billion and is expected
to grow 8 percent over the next several years. U.S. computers and
peripherals dominate the market, and the United States is Spain's leading
supplier of related equipment. U.S. shipments totaled $382 million in 1989
and $420 million in 1990, an increase of 10 percent. However, these figures
understate U.S. market presence since many U.S. computer manufacturers
supply the Spanish market from sources within the EC. The most promising
exports in this sector will be laser printers, optical readers scanners,
modems, and laptop computers.
Building Materials and Supplies.--Growth in the Spanish construction
industry is the strongest in the EC. Demand for building materials grew 10
percent in 1990 to $40 billion, and that rate is expected to continue for
the next several years. Total imports of building materials in 1990 were
valued at $4.7 billion. The United States accounted for $240 million
(19.6%) of imports during 1990. U.S. exporters of building materials will
enjoy a 25 percent growth rate through 1992. The United States is most
competitive in lumber andwood with 80 percent of U.S. exports in this
sector), particle board, innovative finished building materials, hardware,
specialized metal framing, and special glass.
Construction Equipment.--The Spanish construction sector claims $30 billion
in revenues yearly. Government plans for major infrastructure projects
will support this growth over the next several years as Spain prepares for
the Olympics and Expo '92 and the EC Single Market. The market for
construction equipment totaled $3 billion in 1990, with imports accounting
for $900 million of the total. U.S. imports during 1990 were $85 million
and are expected to grow faster than the average at 20 percent yearly.
Leading construction equipment exports will include track laying tractors,
shovel loaders, off highway dump trucks, and motor graders and levelers.
Sporting Goods and Recreation Equipment.--Higher real incomes, strong demand
in the tourist sector, and reduced tariffs have fueled demand for sporting
goods and recreation equipment. More than two-thirds of U.S. exports in
this sector are boats, particularly power boats, but demand is also strong
for U.S. sportswear, sports footwear, and equipment for exercise, golf, and
tennis. In 1990, U.S. exports, excluding boats, totaled $18 million, less
than 1 percent of Spain's $414 million sporting goods market. U.S. exports
of boats in 1990 were $48 million. However, with an improved standard of
living, increased demand, focus on the 1992 Olympics, as well as U.S.
producers' excellent reputation for quality, American exporters should look
forward to a 20 percent increase in exports over the next 3 years.
Travel and Tourism Services.--Spaniards are traveling to the United States
in record numbers. Per capita expenditure and length of stay have been
above average due to the relative strength of the peseta against the dollar
and the appeal of U.S. destinations. Total Spanish travel and tourism
service sales in 1990 were $40 billion, and they are expected to grow 6
percent annually over the medium term. U.S.-owned firms accounted for $1
billion of the total. Travel to U.S. destinations should continue to rise.
Other Services Industries.--Insurance, computer services, and other service
industries are poised for takeoff in Spain. With the exception of fast food
franchises which are already firmly entrenched in the Spanish market, U.S.
providers of these services will find a virtually fresh market. If their
services are well tailored to the market, they should enjoy rapid
acceptance. A listing of Spanish trade associations may be obtained from
the Spain Desk Officer at the U.S. Department of Commerce.
DISTRIBUTION AND SALES CHANNELS
The Approach to Selling
The Spanish market is a series of regional markets joined to two major
hubs--Madrid and Barcelona. The vast majority of agents, distributors,
foreign subsidiaries, and government-controlled entities that make up the
economic power block of the country operate in these two hubs. Dealers,
branch offices, or government offices located outside of these two hubs will
almost invariably obtain their supplies from their Madrid and Barcelona
contacts rather than engage in direct importation. The key to a foreign
firm's sales success in Spain is to appoint a competent agent or distributor
or to establish an effective subsidiary in either Madrid or Barcelona.
However, investment incentives which reward investors for establishing
manufacturing operations in the poorer regions of the country have resulted
in some dispersal of U.S. investment in recent years.
The major competitors of U.S. exporters and investors in Spain are Western
European firms, but Japanese companies are swiftly becoming formidable
competitors in Spain. Cost, financing terms, and after-sales servicing play
important roles in marketability in Spain. Since Spain acceded to the EC,
member states' exports to Spain have benefited from lower tariffs than U.S.
exports. The dutiable rate for almost all EC goods entering Spain will be
zero on January 1, 1993, while U.S. goods will be subject to the EC's Common
External Tariff (CXT). American products retain cost competitiveness, in
comparison to other exporters to the EC, because of lower production costs
achieved through economies of scale. European exporters provide generous
financing and engage in extensive cooperative advertising. Their
governments also support exporters efforts by assisting with trade promotion
events. Although U.S. products are well respected for their high level of
technology and overall quality, U.S. firms often fall short of their
competitors in terms of flexibility on financing, adaptation of product
design to local market needs, assistance with marketing, and after-sales
service. Spanish business procedures follow those of the rest of Western
Europe, where price remains paramount. However, credit terms, after-sales
service, and marketing assistance are key factors in any successful
Use of credit to purchase consumer goods is now widely accepted in Spain,
particularly in the cities, and banks compete aggressively to offer
coverage. All major U.S. credit cards, including Visa, Master Card,
American Express, and Diners Club, are used, as well as various European
credit cards. Department stores and some upscale retailers sometimes offer
their own credit, particularly for purchases of large ticket items.
Consumer credit is commonly used for the purchase of cars and homes.
Housing developers, automobile dealers, and some manufacturers offer
consumer financing directly.
The Madrid hub principally serves the central, southern, and western parts
of Spain, while Barcelona serves the north and east. Some overlapping
occurs in Zaragoza, Bilbao, Valencia, and the Canary Islands. Barcelona
usually encompasses the Balearic Islands and the enclave cities of Ceuta and
Melilla in North Africa.
Regional characteristics influence buying patterns. A competent agent or
distributor takes this into account when marketing his products. The Basque
Country, on Spain's north coast, and Catalonia, which includes Barcelona,
have long traditions as autonomous regions with their own official languages
and customs. There are 15 other autonomous communities (roughly analogous
to U.S. states) with varying but lesser degrees of self-identification and
Madrid is Spain's center for banking, administration, and transportation,
and it serves as the headquarters of many large international companies.
Barcelona is the capital of Catalonia which boasts a strong industrial
tradition. The primary industries have historically been textiles, paints,
chemicals, printing, plastics, fertilizers, electrical engineering, and
machinery manufacture. Barcelona and Bilbao, the seat of the Basque
Country's industry, are Spain's leading ports. As an important container
port, the Bilbao region has extensive shipyards, steelworks, iron-ore mines,
chemical and cement works, pulp and paper mills, and an oil refinery. In
the south, Valencia is the center of the Spanish furniture and ceramics
industries, as well as a major center for citrus fruits and vegetables.
Seville, the center of Andalucia with its river port, is a major source of
olive oil, cork, wines, and other agricultural products. The free port city
of Vigo, in the far northwest, is Spain's most important fishing and
Agents and Distributors
Most U.S. exporters sell their products in Spain through distributors.
Agents and distributors are generally exclusive, covering the entire
country. Although a majority of Spanish distributors have their head
offices in Madrid or Barcelona, many are located in Bilbao, Valencia, and
other Spanish industrial cities where a particular industry may be
concentrated. Distributors normally have sub-offices, enabling them to
cover other parts of the country. In general, a distributorship is governed
by the conditions agreed upon between the parties. Spain applies the
"freedom of contract" theory, by which the contracting parties may establish
any stipulation, condition, or undertaking provided that it does not violate
Spanish law, morals, or public policy.
The principal-agent relationship is governed by Spanish Civil and Commercial
Codes and Spanish labor laws. On May 4, 1982, the Spanish Government
amended Royal Decree 203381, regulating the "special labor relationship"
between a principal and its agent. An amendment (R.D. 11951982) was
published in the Boletin Oficial del Estado (Official State Bulletin,
published daily as in the U.S. Federal Register) on June 14, 1982. This
decree requires a principal and agent to execute a written contract in which
they stipulate the agreed terms, including provisions for cancellation of
the agreement. A copy of the contract should be filed with the sales
representative's local Office of Employment. A fixed-term, written contract
should not raise any relevant issue with respect to its termination. By
contrast, termination of an indefinite duration agreement may raise a number
of legal issues. Successive renewals of a fixed-term contract may be
interpreted by the courts as an indefinite-duration contract. The decree
provides that, in the case of a definite term appointment, the term will be
automatically renewed upon expiration for an identical term, unless either
party objects to the renewal in writing at least 1 month before the end of
the initial term. The amendment limits all definite term appointments to 1
year, which can be automatically renewed only once. However, upon the
expiration of the renewal term, the appointment will be automatically
converted into an indefinite-term appointment, unless either party objects
to the conversion in writing at least 1 month before the end of the renewal
Unwritten agreements for all legal purposes are enforceable contracts, but
require burden of proof. Under Spanish law, no one is bound in perpetuity.
Should a party grant indefinite, exclusive rights, it is not bound forever
by the initial commitment to the point that it cannot revoke the original,
exclusive mandate. Nevertheless, an ongoing, indefinite relationship cannot
be terminated without a reasonable cause. If it is terminated, damage
compensation may apply, particularly if the termination is viewed by the
court as being without reasonable notice or abusive. Historically, the
Spanish courts have been extremely conservative in awards. U.S. firms
seeking foreign distributors may contact the nearest U.S. Department of
Commerce district office for an Agent Distributor Service ($125 per country)
or for assistance in requesting "Gold Key" service. The Gold Key service
provides tailored service to a visiting U.S. businessman, and assists in
reaching potential agents andor distributors. Participation in trade events
often leads to contracting with an agent or distributor.
Wholesale and Retail Channels
Two distinct types of wholesalers exist in Spain. "Mayoristas" are large
national or regional wholesalers that sell to other smaller wholesalers
("minoristas") and retailers. Minoristas are small retail wholesalers
generally found in outlying provinces or in large urban areas where odd or
small orders make up the majority of their business. Discount warehouses
for such commodities as processed foods and beverages by the case, consumer
electronics, household furniture and furnishings, and textile goods are
common in urban areas.In addition to the recent proliferation of large,
discount retailers such as Pryca, Makro, Continente, and Baricentro,
Alcampo, and Jumbo Comercial, there are two of department store chains with
national coverage: El Corte Ingles and Galerias Preciados. In the urban
centers, boutique- store malls are becoming more common. Supermarkets are
rapidly replacing family-owned retail food stores throughout the country,
largely because working couples seek convenience. A listing of major
Spanish retailers is available from the Spain Desk Officer at the U.S.
Department of Commerce.
Franchising is now firmly entrenched in the fast food and catering areas.
Fast food franchises have particular appeal for the younger generation.
American franchises enjoy prominence in this market where 50 percent of all
franchises are foreign based. Franchised computer stores and photo
developers have enjoyed considerable success, opening new locations
rapidly. New areas for franchising, such as discount print shops and
drugstores, have not yet developed. There is no Spanish regulation for
franchising. EC guidelines and the International Franchising Code of Ethics
Mail order selling, as well as direct door-to-door sales, has not
experienced the type of growth that market potential would indicate. This
slow growth is primarily due to an outdated law which severely limits the
range and scope of such activities. Also, consumers are skeptical of the
quality of the merchandise offered in these manners and are wary of the
potential for non delivery of goods which are paid for in advance. An
association has been formed to help bolster the image of direct marketing
firms, to address complaints by consumers, and to aid in revising the law.
It is closely modeled after a similar U.S. association with which it has
Licensing Agreements, Technology Transfer, and Payments
In 1988, Spain liberalized regulations for technology transfer to conform
with EC practices. Licensing agreements, governed by R.D. 175087, are
reviewed by the Director General of Foreign Transactions (DGTE) in the
Ministry of Economy and Commerce. If objections are raised by the DGTE,
agreements can be modified and re-submitted. Registration of licensing
agreements are usually valid for 5 years and are renewable. Payments for
licensing fees, technical assistance, consultants' fees, trademarks,
patents, technology transfer, and other non patented know-how are
transferable abroad when the contracts were previously registered with the
Payments are subject to Spanish withholding tax. Payment delays may occur.
The length of delay varies depending on the firm handling the transfer, but
experienced firms count on approximately 3-4 weeks delay in processing. The
only significant documented anomaly in transfer payments has been the
Spanish Government's occasional denial of transfer of technology payments
within the multinational firm when payment quotes substantially exceed those
in normal market conditions. Payments based on sales or production levels
are considered royalties. Taxes may not exceed 10 percent of gross
royalties net of labor and materials costs. The DGTE closely questions, and
could deny payments, when they are not "arms-length" transactions or exceed
5 percent of sales of production levels. When the specific technical work
to be supplied by the sister or parent firm can be documented, remittances
generally are authorized.
GOVERNMENT'S ROLE IN INDUSTRY
The Spanish Government participates actively in many industrial sectors. It
owns and operates the postal and telecommunications systems, most radio and
television networks, the railroad, the national airline, and the
distribution of tobacco and oil products. The principal vehicle for
government participation in industrial development is the semi-autonomous
government company, Instituto Nacional de Industria-National
Intitute of Industry (INI). Founded in 1941, INI has widespread holdings in
shipbuilding, steelmaking, coal mining, defense, electronics, power
generation, chemicals, petroleum, cellulose, and the two national airlines
(Iberia and Aviaco). In services, INI is involved in tourism, regional
development, informatics, financial services, and foreign trade. INI
controls over 200 firms, with 125,000 employees. The Spanish Government
also owns one-third of Telefonica, the national telephone company, which is
heavily invested in telecommunications equipment production. Its monopoly
over Spanish national and international telecommunication networks,
including satellite earth stations, was reduced by a December 1987
telecommunications law (Ley de Ordenacion de las Telecommunicaciones
(LOT)). The LOT allows for competition in terminal services, but the
monopoly in basic services, such as telephone and telegraph, is reserved for
the state-controlled company.
The government has designated key sectors for development (rationalization)
and has created zones for preferential treatment, according to EC
guidelines. The government supports rapid liberalization in the service
sectors of the economy, particularly financial services. Currently, Spain
is developing key sectors such as electronics, informatics, and robotics, as
well as modernizing certain declining basic industries, including steel,
shipbuilding, and textiles. Both the Spanish central and regional
(autonomous) governments offer a range of investment incentives on a
regional level through an EC-funded program for declining industrial zones.
These incentives are outlined in the "Investments" section of this
Government Procurement.--Although Spain automatically acceded to the GATT
Government Procurement Code when it joined the EC in 1986, it has not yet
implemented the code. EC directives on the Procurement Code, particularly
EC Directive 88295 of March 1988, provide the framework for Spanish
legislation on government procurement. These directives outline procedures
for awarding contracts for construction and supply of public works, as well
as procurement for entities operating in the fields of telecommunications,
water, transport, and services. A proposed directive will open up
procurement of services such as insurance, architecture, and waste
disposal. Although a law on consolidating and rationalizing public-sector
purchases was passed in 1985, there is still no central purchasing agency
within the Spanish Government or its controlled industries. Each
government ministry, agency, or government-owned company procures supplies
and services independently. Regional and local government agencies follow
the same general procedures regarding foreign purchases as the central
Various types of tenders are used in government procurement:
a) the auction (subasta), in which the contract is awarded to the lowest
b) the selective tender (concurso-subasta), in which the contract is awarded
to the lowest of pre qualified bidders;
c) the tender (concurso), in which the contract is awarded on the basis of
most advantageous overall proposal in which price may not be the determining
d) the private tender, in which the contract is awarded to whatever firm the
International tenders are announced at least 40 days prior to the submission
date and domestic tenders 20 days before the submission date. Validating
documentation may be requested at submission. All requirements are
published in the Official State Bulletin. For major procurements,
especially military systems, the Spanish Government generally asks vendors
to offer substantial offsets. An offsets package may combine transfer of
technology, investment, or additional Spanish export transactions. Typical
offset commitments for military sales reportedly range from 100 to 130
percent of the purchase price.
U.S. firms seeking contracts from Spanish Government-controlled entities
must have an established agent, distributor, or subsidiary in Spain before
bidding on contracts. Under Spanish law, foreign companies seeking
contracts with the Spanish Government enjoy the same opportunities as do
Spanish firms. The foreign enterprise must, however, be a legal entity (for
example, corporation or partnership) in accordance with its own national
laws. The foreign firm must also be prepared to accept jurisdiction of the
Spanish courts in legal issues that may arise in implementing the contract.
Supply and service contracts are approved by the ministry having
jurisdiction. Approval of the Ministry of Economy and Finance is required
for contracts resulting in payments in foreign currencies.
Since Spain became a member of the European Community on January 1, 1986,
the principal element of trade policy has been the acceptance of EC trade
practices. Spain adopted the Common Customs Tariff Nomenclature (the
Harmonized System), a value-added tax (VAT or IVA), and EC product
standards. It also agreed to eliminate quotas on most products and reduce
tariffs. In the case of trade in certain products in which Spain feared
market disruption, longer transition periods were negotiated before trade
would be completely freed.
Value-Added Tax (VAT)
The VAT became effective in 1986, applying a standard rate of 12 percent to
most sales of goods and services. A reduced rate of 6 percent is applied to
sales and imports of human or animal foodstuffs, water, books, newspapers,
magazines, pharmaceutical products, personal dwellings, and school
supplies. The reduced rate covers such services as transportation of
persons, hotels (three star and below), restaurants (two fork and below),
theaters, cinemas, and some sport services. A 33 percent VAT tax is applied
mostly to sales and imports of luxury items, including private use vehicles,
pleasure boats more than 9 meters long, private use aircraft, and certain
types of jewelry and furs.
Import Tariff System
Spain's Treaty of Accession calls for the reduction of tariffs in eight
stages over a period of 7 years. Spanish tariffs for EC countries will fall
to zero by January 1, 1993, while those for third-country goods, including
the United States and Japan, will receive the EC's Common External Tariff.
However, if the Spanish Government deems that certain capital goods
necessary for the development of the economy are not readily available, the
goods may possibly be imported at lower tariff rates or even tariff free.
Since 1988, Spain has used the Harmonized System of tariff nomenclature for
applying duties. The Spanish tariff schedule is divided into four columns:
normal dutiable rate, GATT (most favored nation) rate, EC rate, and European
Free Trade Association (EFTA) rate. U.S. goods are taxed under Spain's
normal dutiable rate, unless there is an applicable GATT rate which is lower.
Table 3 shows the pace of the adjustments required for EC and non-EC goods
leading up to 1993. Spain has adhered to the GATT since 1963. It
subscribes to the 1979 Multilateral Trade Negotiations (MTN) codes on
technical barriers to trade, subsidies, and customs valuation. As a party
to the EC agreement with EFTA, Spain has also reduced import duties from
between 25 to 60 percent on products from EFTA members (Norway, Finland,
Iceland, and San Marino), Switzerland, Austria, Sweden. Spain has a wide
range of commercial treaties with Eastern Europe and the Soviet Union.
These set categories of goods to be traded over a specific number of years.
For information on Spanish duties, contact the Office of European Community
Affairs, International Trade Administration, U.S. Department of Commerce,
Washington, D.C. 20230, direct telephone: (202) 377-2905; FAX: (202)
377-2155. Please include a complete description of the product and
appropriate tariff classification numbers, if known.
Quotas and Licensing Requirements. Spain was obligated under its EC
accession agreement to transform its structure of formal and informal import
restrictions for industrial products into a formal system of import licenses
and quotas. Many U.S. exports were restricted, and the United States
objected that the new import regime for non-EC products was illegal under
the GATT. In September 1988, the United States and Spain signed an
agreement that eliminated quotas on most U.S.-origin products. While Spain
does not enforce any quotas on U.S.-origin manufactured products, it still
requires two special import documents, which are described below. Neither
of these documents constitutes a trade barrier for U.S.-origin goods.
Import Authorization. (Autorizacion Administrativa de Importacion (AAI),
also referred to as an import license) is generally used to control imports
which are subject to quotas. While this document may still be required for
U.S.-origin goods, authorization is guaranteed since no quotas against
U.S.-origin goods are enforced. The form is generally approved within 24
hours. In essence, for U.S.-origin goods, the document is used for
statistical purposes only or for national security reasons.
Import Notification. (Notificacion Administrativa de Importacion (NAI)) may
be required for statistics uses. It is not required for shipments valued at
less than Ptas. 500,000 and financed for less than 1 year. It is much like
the bill of lading (also known as import declaration).
Import Licensing Procedures Importers apply for import licenses at the
Spanish General Register of the Spain's Department of Commerce or any of its
regional offices. The license application must be accompanied by a pro
forma invoice in sextuplicate, which includes the f.o.b. price, the freight
and insurance, the c.i.f. price, net and gross weight, and the HS tariff
nomenclature number to comply with exchange control regulations. If
necessary, the importer is allowed to prepare the pro forma invoice in
Spain, based upon information supplied by the seller. The license, once
granted, is normally valid for 6 months but may be extended if adequate
justification is provided. Goods that are shipped to a Spanish customs area
without proper import licenses or declarations are usually subject to
considerable delay and may run up substantial demurrage charges.
Consequently, U.S. exporters should ensure, prior to making shipment, that
the necessary licenses have been obtained by the importing party.
There are three general types of import licenses.
Statistical Import Declaration. (Declaracion Estatistica de Pagos de
Importacion (DEPI)) which is for merchandise valued under Ptas. 500,000.
Generally, products valued under Ptas. 500,000 do not require an import
license; but occasionally, a product worth more than Ptas. 500,000 may be
classified in such a way as to require a DEPI.Prior Notice of Import.
(Notification Previa de Importation) which is for merchandise that
circulates in the EC customs union area but which is controlled for
statistical purposes only. The importer must obtain the document and
present it to the General Register.
Government Import Authorization, import license. (Autorizacion
Administrativa), which must also be presented to the General Register.
Depending on the product, the Spanish Government may refuse import.
Exporters are required to present one commercial invoice, one bill of
lading, and triplicate copies of a certificate of origin for all shipments.
Special certificates may be required for items under quota, traded by the
state, or posing particular public health or safety problems.
Commercial Invoices.--These must be prepared accurately, and the description
of the merchandise must be complete. English is acceptable. Importers
require six copies of pro forma invoices to support license applications.
Bills of lading must indicate weight in kilograms, but pounds are acceptable.
Certificates of Origin.--These documents or signed original invoices are
required for all goods with the following exceptions: commercial shipments
with a value of less than Ptas. 50,000 f.o.b., crude petroleum, and
radioactive isotopes imported by the Nuclear Energy Board. All parcel post
packages require a certificate of origin, although such a certificate is not
usually required for packages valued at less that $10. If the goods are
being shipped from within the EC, a special certificate of origin is
required. Certificates of origin are available from an authorized U.S.
chamber of commerce. Official certificates of origin are sold by the
Spanish Embassy and Consulates, while commercial printers sell generic
forms. As a substitute for the certificate of origin, the exporter may
present a copy of the official invoice with the seal of a Spanish Consulate
or the original invoice with original signature, describing the goods and
U.S. states in which the product is manufactured.
Legalization of Documents.--If the importer or a bank has requested consular
certification (usually for certificates of origin or original invoices), the
Spanish Embassy or Consulate will provide this service for a modest fee. If
legalization has been requested, all three copies of the certificate of
origin are presented to the Consulate after certification, with a copy of
the commercial invoice for checking purposes. The Consulate will retain two
copies of the certificate and return the original. The certificate is valid
for 6 months from date of issue. Validity may be extended by the
Directorate General of Customs on a case-by-case basis. For goods exported
to Spain through a third country, in which title has been taken, a
certificate of origin may be issued in the third country by a Spanish
chamber of commerce, Commercial Office, or Consular Officer. In addition,
the Director General of Customs may empower a foreign authority to issue
certificates of origin when none of the above-mentioned offices exist.
Sanitary Certificates.--U.S. Animal and Plant Health Inspections
certificates are required from the U.S. Animal and Plant Health Inspection
Service (APHIS) are required for importation of living plant material
(including plants, plant products, and seeds) into Spain. Health inspection
requirements also govern the importation of animals and parts of animals
(including meat products, skins, hides, and similar products), marine
mammals, fish, crustaceans, or mollusks and parts. Spanish regulations are
subject to provisions of the Spanish Ministry of Agriculture. Inspections
usually are carried out in local offices of APHIS, which are located in
major U.S. ports and airports. Export agents or brokers may present
products for inspection. Inspection of air shipments may be handled by the
airlines. The Foreign Agriculture Service (FAS) at the U.S. Department of
Agriculture can assist with information on documents required for the
importation of agricultural products (including food items), plants, and
animals.Due to the complexity of sanitary and health regulations, U.S.
exporters should also obtain information directly from the importer prior to
shipment. Information can also be obtained from Spain's Ministry of
Pharmaceutical Certificates.--These are required by Spanish customs for
drugs and certain sanitary items. A standard analysis bulletin issued by
the manufacturer, listing product composition is acceptable for customs
purposes. Average clearance time for all goods through major customs areas
in Spain is 1 day for air-mailed goods and 3 days for goods shipped by sea.
Special clearances are in effect for perishable goods, live animals, and
some medical goods. Frozen storage is available in major customs areas to
protect perishable products.
Advance Rulings on Classifications Advance rulings on tariff
classifications may be obtained by presenting an application and sample
directly to the Tariff Study Service, Directorate General of Tariff and
Import Policy. In the case of machines, apparatus, and other articles for
which it is not possible to present samples, a set of drawings, models, or
photographs accompanied by a detailed description of the quantity and kind
of component parts and the purpose for which the machine or apparatus is
intended may be substituted for the sample.
Fines and Penalties Fines and penalties may be imposed for failure to
present customs declaration within the prescribed time and for any errors in
documentation. Variations due to damage or spoilage are not penalized.
Deficiencies or excesses of less than4 percent are not penalized.
Antidumping and Countervailing Duties As a signatory to the Antidumping and
Countervailing Duty Codes of the GATT, Spain penalizes products imported at
less than their normal value which cause injury to domestic industry. The
antidumping duty will be the difference between the dumped price and
comparable domestic price of the exported product. When a subsidy complaint
has been filed by a national production sector representative, the Spanish
Directorate General for Tariff and Import Policy investigates the case; and
if cause is found for the complaint, then it must present the case to the EC
Antidumping Committee. This is the only organization that can levy a
countervailing duty equal to the estimated or actual subsidy. The length of
the countervailing duty imposition may vary from case to case and the range
extends from 5 to 33 percent
Special Customs Provisions Goods are cleared by Customs agents or brokers
who handle the necessary formalities on behalf of the importing firm or
individual. A bill of lading, an original invoice with a copy, a
certificate of origin, and an import declaration are required for most
clearances through Customs for products which will remain in Spain. If the
bill of lading is not available, the customs agent will be required to
secure a bank guarantee for the full value of the goods to effect release.
If the goods arrive before the import declaration is prepared, a 72-hour
grace period is allowed for presentation of the declaration prior to
imposition of a 5 percent fine on the value of duties. Import declarations
are made at the Secretariat of Commerce or its branch delegations in major
port cities throughout the country. Declarations must use the exact
terminology of the tariff classification under which the goods are being
imported. A 3-month grace period is allowed for U.S.-origin goods arriving
without proper documentation, subject to a written guarantee by the customs
agent. From Europe, the grace period is 2 months.
Goods in transit need only be listed on the vessel or aircraft manifest and
do not have to be unloaded. Transit goods may also be unloaded for shipment
to a Customs-approved warehouse prior to reshipment from Spain or to another
customs house in Spain for declaration or further reshipment.
Once goods have been declared for consumption and nationalized in Spain, an
export declaration is required to reexport the goods.
Homologation and Standards Testing Although most of the local homologation
requirements and testing standards are gradually disappearing as Spanish
legislation conforms to EC directives, certain homologation and other
special requirements remain for some products. Generally, a product that
meets the standards and certification requirements of any other EC country
can be imported and sold in Spain without further testing. Spanish
homologation requirements remain in force for computer keyboards and
screens, dot matrix printers, teleprinters, and electric typewriters.
Justification for this continued requirement is based on the need to ensure
availability of the accented Spanish "n." Applications for homologation are
processed by the Directorate General of Electronics and New Technologies of
the Ministry of Industry and Energy, usually a lengthy process.
Spain has also established technical specifications, testing, and
certification procedures for telephones, faxes, modems, private branch
exchanges, and data transmission devices. Type approval is obtained via
"Certificates of Acceptance," which must be obtained from the Directorate
General of Telecommunications of the Ministry of Infrastructure. These
national standards will be phased out as EC norms take effect. The Spanish
Standards Certification Association--Asociacion Espanola de Normalizacion y
Certificacion is responsible for developing voluntary standards and
certification programs. It represents Spain in international standards
bodies. The Spanish Government publishes a listing of approved laboratories
for testing and certification each year. U.S. companies new to the Spanish
market may want to consider contracting the services of a local company
which specialize in product standards and certifications requirements.
EC Low Voltage Certificate.-- (7323EC or R.D. 7/1988). This is required
for electrical products which operate in a voltage range of 50 to 1,000
volts alternating current or 75 to 1,500 volts direct current. There are
three accepted forms of proofs of conformity: a mark issued by an authorized
EC agency; a certificate issued by an approved EC authority; or a
declaration issued by the manufacturer. In the latter, the manufacturer
self-certifies that the product, manufactured with good engineering
practices, will not endanger the safety of persons, domestic animals, or
property when properly installed and maintained and used in applications for
which it was made.
Spain now allows the entry of used equipment, material, and goods. However,
they are subject to the same standards concerning safety as apply to any new
import. Additionally, there may exist regulations specific to the
particular type of equipment, such as computers and peripherals, that is
being imported. Therefore, U.S. exporters should ensure that goods likely
to be examined for quality considerations be forwarded as samples to the
importer for submission to the Spanish Customs Inspection Service (SOIVRE)
for a binding determination. U.S. exporters are encouraged to mark their
goods and their shipping containers with "United States of America" in a
suitable size to publicize American-made goods. Improperly marked goods or
those carrying fraudulent claims will be denied entry by Spanish Customs.
Marking, Labeling, and Testing Requirements In view of the complexity and
rapid change in marking, labeling, and testing requirements in Spain, U.S.
exporters should request pertinent instructions from their importers prior
to shipment. In general, special requirements exist for foodstuffs,
beverages, textiles, drugs and pharmaceuticals, fertilizers, precious
metals, tires, and firearms.
Following are specific categories for which marking, labeling, and/or
testing requirements are required.
Foodstuffs.--The Directorate General of Health sets human consumption
standards for the preparation, residual content, and storage media for
virtually all classes of foodstuffs. The labels on the container must
include the product designation, list of ingredients, weight or volume,
dates (manufacturing, packing, minimum shelf life, and expiration dates),
directions for food preservation (if applicable), identification of the firm
involved (manufacturer, packer, or importer), and country of origin. If the
original label is not in Spanish, a similar one must be prepared in Spanish,
firmly affixed to the container. Milk products, margarine, chocolate, and
soaps have other, more technical labeling requirements. Wines and other
alcoholic beverages must meet Spanish standards.
Textiles.--Customs and point-of-sale regulations require that all textile
goods and ready-made clothing have a Spanish label. Standard Spanish
textile nomenclature and content requirements must be stated on the label.
Requirements relating to textile content, labeling, and packaging are
specific and extensive. They are regulated by R.D. 928/1987, dated June 5,
1987. Manufacturers' trademarks, duly registered, are permitted on textile
products. Import licenses for used clothing are frequently denied.
Drugs, Pharmaceuticals, and Cosmetics.--These goods are subject to technical
inspection and registry by the Directorate General of Health prior to
entry. There are also detailed marking and labeling requirements, somewhat
similar to those for foodstuffs, but which also include detailed chemical
Fertilizers and Fungicides.--Imported fertilizers must be registered with
the local Agriculture Department Office. Inspection and analysis will be
performed prior to customs clearance. All printed advertising and publicity
materials must be approved by the Department of Agriculture, and labels must
be in Spanish and include detailed precautions.
Firearms.--All firearms must be cleared by the Spanish Government Proving
Grounds and bear the stamp of that organization.
Metals.--The Spanish Guaranty Bureau provides assay services and affixes its
hallmark for all imported precious metals.
Motor Vehicles.--Each vehicle will be inspected for engraved serial numbers
on both the engine and chassis. If one of these are not available, Spanish
customs levies a special charge for stamping the same number.
Tires and Tubes.--All tires and inner tubes must be marked with a serial
Quotations and Terms of Payment
Spanish importers prefer quotations on a c.i.f. Spanish-port basis, as this
is the dutiable value for Spanish customs purposes. However, they will,
accept f.o.b. foreign port quotations if they have well-established shipping
connections. Terms of payment should always be stipulated in the import
license. U.S. firms generally prefer payment in U.S. dollars by irrevocable
letter of credit upon presentation of documents, particularly during the
first year of operation with a Spanish importer. In descending order of
preference, other terms of payment currently in use are: 1) 90 to 180-day
irrevocable letter of credit; 2) sight (bank) draft; 3) 90-day draft; 4)
check or bank transfer after presentation of documents, and, 5) check or
bank transfer following sale for consignment goods.
U.S. firms rarely offer open account terms, requiring many years of
experience with the Spanish customer. American firms should bear in mind
that their Western European competitors tend to be more liberal, both in
extension of credit and in terms offered. U.S. firms should carefully weigh
the advantages of competing on financial terms, particularly where European
competition in a given product or service is known to be strong. The U.S.
Department of Commerce district offices can provide background checks on
Spanish firms through the World Traders Data Report (WTDR) service. Although
payment for imports of U.S.-origin goods is typically made in U.S. dollars,
it can be made in any convertible currency upon agreement of the parties.
In its continuing effort to liberalize trade, the government has allowed
importers and distributors to hold foreign exchange accounts for their
international operations since early 1989.
Duties are paid in pesetas at the time the goods are imported. The duty is
calculated at the daily exchange rate for the currency of the country of
origin. Spanish customs authorities, however, usually allow approximately
25 days after arrival of the goods to pay the duty.
Free Trade Zones and Special Facilities
Free Trade Zones.--These exist in Barcelona, Cadiz, and Vigo.
Manufacturing, processing, sorting, packaging, exhibiting, sampling, and
other commercial operations may be undertaken free of any Spanish duties or
taxes. Special permission is needed for hazardous operations, however, and
all applications are processed through the Ministry of Economy and Finance
to the zone authority. Duties and taxes are payable only on those items
imported for use in Spain.
Free Ports.--On the Canary Islands in the cities of Las Palmas and Santa
Cruz de Tenerife, and in the North African enclave cities of Ceuta and
Melilla, free trade is licensed by the Director of Customs who collects only
excise taxes for some cargo movements. All commercial activities of a
value-added nature may be undertaken, and maximum storage time is 4 years.
Free Deposits.--These permit operations similar to those in free ports.
They are essentially smaller areas in most Spanish ports, such as in
Algeciras, Alicante, Bilbao, Cartagena, Gijon, La Coruna, Pasajes, and
Santander. The maximum storage period is 4 years; facilities are supervised
by Spanish Customs.
Commercial Deposits.--More limited manipulation of goods is permitted in
these areas than in the other facilities such as exist in Huelva, Las
Palmas, Malaga, and Valencia. Sales may be made from these deposits after
Reexporting From Spain
The Spanish reexport system is regulated by the Order of 24 July 1987 from
the Ministry of Economy and Finance, conforming to EC regulations. All
inquiries on reexports should be addressed to the Customs Director of the
port in question or to the Director General of Customs Policy in Madrid. In
general, reexports of U.S. goods from Spain follow the same procedures as
exporting Spanish products, including submission of a Customs Export
Declaration. Goods reexported to other EC member states are subject to
For a limited number of goods, a Prior Notice of Export must be presented to
the General Register of the Spanish Department of Commerce or one of its
regional offices. (A General Register is found at the entrance of all
Spanish government ministries. It consists of the presentation of documents
where they are stamped with the date and time.) Government authorization is
required for reexport of arms and munitions, pornography, and religious
articles. The exporter must obtain a Government Global Export Authorization
or Government Per Operation Authorization depending on whether one or
various consignments of authorized goods are needed. These documents must
be presented to the General Register at the Ministry of Defense (for arms
and munitions), Ministry of Industry of Commerce (for pornography), or the
Ministry of Culture (for religious articles).
Goods that will be reexported outside the EC and that are not covered by
specific EC regulations can be exported simply by presenting a Customs
Export Declaration at the customs exit point. For a limited number of
goods, a Prior Notice of Export must also be presented at the customs exit
point. Spain has adopted a national reexport licensing system for sensitive
dual-use high-technology items. U.S. exporters of high-technology goods
subject to U.S. export control procedures should ensure that their Spanish
clients and subsidiaries are aware of these same procedures before
reexporting the goods or software. The importer should ask for a Technology
Certificate from the U.S. exporter and have it signed by the appropriate
Spanish ministry and send it back to the exporter to be presented to Customs.
There are four types of reexports.
Temporary Imports.--These are goods imported for a limited period of time
under an ATA carnet that are not transformed or incorporated into other
goods. They do not require prior import approval from the Ministry of
Commerce. A bank guarantee in the form of a bond equivalent to duties owed
must be provided to Customs. The bond will be returned by customs upon
reexportation of the temporarily imported goods.
Temporary Admission.--These are goods admitted on a temporary basis for
incorporation into an exported product. Importation requires prior approval
by the Ministry of Commerce. The same procedure as for temporary imports
must be followed for reexport.
Replacement Goods.--Companies with continuing need of primary materials,
commodities, or intermediates may, in the second year of operation, request
prior approval by the Ministry of Commerce for replacement goods and must
deposit a bond with Customs on the compensatory tax only. They will not be
liable for the duty for similar goods transformed the previous year and
reexported. Replacements for defective goods destroyed under Customs
supervision are also admitted duty-free, but free admission requires
extensive supporting documentation.
Drawback.--Duties are paid simultaneously with presentation of a list of the
products to be reexported. Later, a rebate is made upon customs clearance
out of Spain. This procedure also requires prior approval by the Ministry
Samples, Carnets, and Advertising Matter Businesses are advised to use the
carnet procedure to temporarily bring goods into Spain for demonstration
purposes without paying duties or posting bond. The carnet must be
presented to the customs authorities whenever entering or leaving the
country. Consumable items and give-away samples are not included under
carnet procedures. ATA carnets are predominantly used for commercial
samples, tools of trade, advertising material or cinematographic, audio
visual, medical, scientific, or other professional equipment that will be
imported for a period of less than 1 year. The advantage of the ATA carnet
is that it allows exporters to avoid normal customs clearance formalities.
The carnet also provides a financial guarantee to foreign customs officials
that, if the goods are not reexported, the duty will be paid. A bond
equivalent to the duty is charged.
The ATA carnet is used internationally and should be distinguished from the
EC carnet, sometimes referred to as the ESC carnet. Introduced in July
1985, the Community carnet is used for the temporary movement of certain
types of goods between EC countries, usually equipment and working
materials. Unlike the ATA carnet, it does not require posting a bond.
Carnet applications are available from all district offices of the U.S.
Department of Commerce, most U.S. chambers of commerce, and authorized
export insurance companies. They are also issued by the U.S. Council of the
International Chamber of Commerce in New York. The Community carnets are
available at EC customs offices only.
Advertising material, catalogs, price lists, and similar printed items are
admitted duty free. However, to avoid any problems such items should always
be labeled, "no value." Otherwise, a customs duty is likely to be levied on
the sample. As a signatory to the International Convention to Facilitate
the Importation of Commercial Samples and Advertising Matter, Spain admits
samples of negligible value duty free. Those items of commercial value and
not covered under carnet procedures may be imported for up to 1 year by
business people upon payment of bond. Upon presentation of the customs
receipt and reexport, the deposit is refunded. Qualifying business people
bearing commercial samples should come equipped with a letter from his or
her principals attesting to this status, identifying the samples, and
certifying that the samples are not for sale. The letter should have a visa
from the nearest Spanish Consulate.
Weights and Measures
The metric system is used in Spain and should be used in every quotation
where measurement of weight, volume, distance, or temperature is involved.
Household voltage is normally 220 volts, 50 cycles, single phase, with
European tubular prongs on plugs. There are older sections of some cities
which still use nominal 125 volt, 50 cycles current, but these are on the
wane. Industrial current is either 220 or 380 volts, 50 cycles, three
phase. Commercial travelers with electrical equipment should come equipped
with adapter plugs andor transformers.
NON-TARIFF TRADE BARRIERS
Following are brief descriptions of various types of non-tariff barriers.
Import Authorizations.--Some nations trading with Spain have notified the
GATT that import declarations for liberalized goods are often subject to
administrative delay, as are items under the quota system. Due to an
agreement between the United States and Spain in September 1988, import
authorizations for U.S.-origin products are generally approved within 24
hours and, therefore, no longer constitute a barrier to trade. However,
U.S. exporters transshipping goods manufactured outside of the United States
will face this barrier.
Standards and Certification Requirements.--Although entry requirements have
been significantly liberalized since 1986, safety and technical standards
and approval procedures may still act as a trade barrier. Spain has until
1993 to bring its standards into conformity with EC standards, and the
process of type approval can be lengthy and complex. This process is often
referred to as "homologation."
Sanitary and Phytosanitary Barriers.--Spain prohibits imports of U.S.
produce (notably fresh apples, kiwi, cherries, avocados, and grapefruit),
citing plant protection requirements. While other EC countries permit
imports from the United States of these fruits, Spain has not indicated any
willingness to change its regulations to bring them in line with EC-wide
policy until Spain is fully integrated into the EC in 1993.
Intellectual Property Rights (IPR).--IPR protection has been weak
historically. However, Spain adopted new patent, copyright, and trademark
laws following its EC accession which raised its IPR protection to EC levels
and included copyright protection for computer software. The United States
is monitoring Spain's enforcement of these new laws. (Spain is a party to
the Paris, Berne, and Universal Copyright conventions and the Madrid Accord
Motion Picture Dubbing License Requirements.--Spain requires issuance of a
license for dubbing each non-Spanish film distributed domestically. Dubbing
is deemed essential since dubbed movies are commercially more successful
than subtitled original language films in the Spanish market. To obtain a
dubbing license, distributors must contract to distribute a Spanish film.
Government Procurement.--Spain has not yet completed the process of
implementing the GATT Government Procurement Code. Meanwhile, the Spanish
Council of Ministers (the Cabinet) must approve all government procurement
awards above $50 million, thereby opening contract award evaluation to
noncommercial, non technical, and political considerations. In practice,
informal preference is given to Spanish and EC suppliers.
Offset and Local Content Requirements.--Although offset and local content
requirements have been standard in defense procurement contracts, they are
becoming more common in civilian government contracts. In recent years,
large commercial contracts have contained offset provisions up to 60 percent.
Restrictive Shipping Practices.--Until 1993, certain product imports
(especially cotton and tobacco) must be carried by a Spanish flag vessel.
However, the Spanish Government occasionally grants waivers.
Spain's international transportation links are well developed, as might be
expected of a nation that receives over 50 million visitors a year.
Thirty-five major airlines schedule flights to Madrid, Barcelona, and other
principal cities. Chareter flights are also numerous, especially during the
tourist season. Major shipping lines call at Cadiz, Barcelona, Bilbao,
Tarragona, and others with container, roll-on roll-off, and break bulk
service. Ocean transit time from the U.S. Eastern seaboard averages from 10
days to 2 weeks.Super highways connect Spain's major cities. The rest of
the highway system in Spain is good, but somewhat congested (150,000
kilometers of regular roads and 13 million motor vehicles as of 1990). Most
business people use Iberia, the national airline, for domestic business
travel. The national railroad, RENFE, also provides service to most cities,
offering good service for freight. However, trucking has gained a greater
market share in recent years. With an extensive coastline, coastal steamers
and ferries for both passengers and freight are readily available. The
Balearic Islands, Canary Islands, and the African enclaves of Ceuta and
Melilla are linked by regular steamers from the major coastal cities. The
major ports are Tarragona, Barcelona, Bilbao, and Cartagena.
Demand for energy in Spain has grown nearly 5 percent in 1986-88, faster
than the EC average. Oil products remain the largest contributor to the
energy sector, but demand for oil products has slowed. The emergence of a
single European market is fostering competition and environmental
consciousness in Spain. As a result, the Energy Research Plan seeks to
expand national production and development of renewable energy sources.
Spanish Government energy policy focuses on reducing dependence on imported
oil, increased use of natural gas, and continued restructuring of the coal
and electricity sectors. Electricity demand registered an average annual
increase of 3.4 percent between 1984 and 1988. A new national energy plan
is expected for the 1990s.
The majority state-owned company, Telefonica, controls telephone and related
services. Service is generally good, but international service is expensive
by U.S. standards. Lines are normally available for data transmission, as
is cellular mobile telephone service in Madrid and Barcelona. Use of telex
and facsimile (FAX) transmissions is widespread. Explosive growth in
demand, however, has caused delays in installing new phone lines. As in
other European PTTs, the postal system is state-owned and handles mail,
telegraphic service, savings, money transfers, and other services. Service
is reasonable, but delays have spawned the emergence of messenger services
for intra and inter-city and international courier delivery.
Color television is broadcast on VHF and UHF by the state-owned Television
Espanola (TVE) and by several regional television stations. Three privately
owned television stations were also licensed in 1989 and have begun
operation. Television advertising is aggressively sought. In 1990, almost
all of the 15 million television sets in use were color. The average daily
audience for all stations is estimated at 24.5 million.
There are 15 million radio listeners for 195 AM, 399 FM, and 2 LM (land
mobile) stations. The government owns or controls 79 AM, 138 FM, and the 2
LM stations. Regional autonomous governments and municipalities are rapidly
adding new stations, but unauthorized, "pirate" stations operate
The press has a daily readership of approximately 7 million for the 11 major
newspapers handling national and international news and the 109 regional and
local ones. There are four major press agencies headquartered in Madrid.
EFE is the government operated press agency. The two major newspapers are
El Pais and La Vanguardia, with paid circulations of about 370,000 and
200,000, respectively. The daily business newspapers include Cinco Dias,
Expansion, and Gaceta de los Negocios.Of the 40 noteworthy magazines, 2 have
a circulation of over 500,000. They are Hola, which concentrates on social
life, and Pronto, which is sensationalist. The business community is served
by Mercado, Actualidad Economica, and Dinero, all of which have circulations
of about 30,000.
Movies are very popular, and there are over 6,000 theaters and 1,300 cinema
clubs. Advertising is prevalent in theaters. In recent years, sales of
video movies and tapes have increased sharply. Sales and rentals are
available in all cities. Spain uses the European PAL television system, and
both VHS and BETA videotape recorders are manufactured locally and imported,
although BETA is rapidly losing popularity to VHS.
ADVERTISING AND MARKET RESEARCH
Television is fast becoming the preeminent advertising medium, replacing
newspapers in peseta volume of ads shown. With 300 television sets per
1,000 inhabitants, television reaches 96 percent of Spanish households.
Spanish TV commercial spots average 30 seconds. However, the standard is 20
seconds, and 10 seconds is the minimum. Rates are reasonable. Radio
advertisements last 10 to 30 seconds and are generally used by local
merchants in urban areas.
Full color advertisements are offered in all the leading dailies and
magazines, and rates are considered low by U.S. standards. Newspapers
publish regular supplements on topics such as high technology,
communications, education, and science, and these are often the media of
choice for advertisements by leading multinationals in these fields. The
technical press also has reasonable rates, but circulation is considerably
smaller than in comparable magazines in the United States.
Billboards are commonplace both in urban and rural areas. Rates are
Ads may be placed directly in the media or through an ad agency.
Commissions average 15 percent, and many agencies have creative staffs to
develop ads likely to appeal to the Spanish population, including regional
tastes. In general, U.S. multinational ads are successful, once adapted to
Spanish tastes. There are no standard rates for ad placement or creative
development, and competition is strong for multinational and foreign
clientele. Ad agencies are located mainly in Madrid and Barcelona.
Management Consulting Firms
National and multinational market research agencies offer their services
mainly in Madrid and Barcelona, with expertise in key sectors such as
footwear, textiles, processed foods, metallurgy, shipbuilding, and
electronics. Rates charged by Spanish firms are lower than competing
foreign firms, but the quality of translations is often uneven.
CURRENCY, BANKING, AND CREDIT
Spain's monetary unit is the peseta (Pta.). Bank notes are issued in
denominations of 10,000; 5,000; 2,000; 1,000; 500; 200, and 100 pesetas.
Although the 500, 200, and 100 notes are out of print, they still
circulate. Coins are issued in 500, 200, 100, 50, 25, 10, 5, 2, and 1
pesetas. Spain's foreign exchange control regime has been liberalized
considerably and is changing as Spain conforms to EC regulations. Complete
freedom of capital movement will be implemented by January 1, 1993. At that
time, only information and data reporting will be required.
Foreign exchange policy is managed by the Directorate General for Foreign
Transactions. Spanish importers are allowed to maintain dollar accounts for
international trade transactions. Persons wishing to repatriate earnings
from Spain should consult their bank for details. Payments may be freely
effected once all taxes have been paid.As with other currencies, the
dollar-peseta exchange rate fluctuates. While the entrance of the peseta in
late June 1989 into Exchange Rate Mechanism (ERM) of the European Monetary
System (EMS) stabilizes exchange rates within the EC, the peseta still
floats freely against the dollar.
Banks and Financial Institutions
Financial markets in Spain are not as well developed as in the United
States, since the financial system is heavily concentrated in commercial
banks. Liberalization spurred by the EC Single Market is most evident in
the financial sector, and financial innovation has been more rapid in Spain
than in other EC countries. Recent developments include a Euro-peseta
market, an interest-rate swap market, a futures market in Barcelona, and a
commercial paper market. The Spanish financial system is supervised by the
Bank of Spain (Banco de Espana) and consists of the Institute of Official
Credit, commercial and industrial banks, private banks, savings and loan
associations, other financial intermediaries, and the stock market. It
controls money supply, regulates credit institutions, establishes reserves,
sets interest rates, and controls foreign payments.
Institute of Official Credit (Instituto de Credito Oficial)
Controlled by the Ministry of Economy and Finance, this institution
supervises medium and long-term loan policies for preferential projects in
the private sector via credit banks, for industry, construction,
agriculture, mortgages, fishing, export, and local commerce. It also issues
long-term, low-interest credits for infrastructure projects.
Industrial Banks.--These are investment banks, owned by commercial banks,
which are chartered to create new agricultural and industrial companies via
medium and long-term financing.
Commercial Banks.--These are the main suppliers of short and medium-term
credit to the private sector. Six banks account for more than two-thirds of
the banking system's assets. In order for Spanish banks to compete more
effectively in the EC single market, the government has encouraged mergers
of Spanish banks. In March 1991, the Corporacion Bancaria de Espana (CBE)
was created by merging seven Spanish financial institutions, including Banco
Exterior de Espana and the Institute of Official Credit. Its assets are
more than Ptas. 8.3 trillion.
Multinational Banks.--There are more than 40 multinational banks established
in Spain. With portfolios largely based on wholesale and capital markets,
these banks account for roughly 1 percent of consumer deposits, 15 percent
of total credit in pesetas, and 22 percent of total credit in foreign
currencies. By the end of 1992: 1) banks will no longer be limited to three
branches; 2) withdrawal of deposits will be liberalized; and, 3) foreign
entities will be permitted to purchase Spanish banks.
Savings and Loans.--There are 78 savings and loan institutions, whose assets
have been steadily accounting for about one-third of the banking system.When
doing business in Spain, it is recommended to retain both a multinational
bank and a local bank. Payroll services, discounting trade acceptances and
certain other financing are all cheaper with local banks. Foreign banks
offer foreign exchange services at competitive fees, spot and forward
markets, as well as newer innovative products that are developing in the
market. Financing trade with the United States is effected through the main
Currently, there are nine American banking and finance companies operating
in Spain. Bank of America and Citibank Espana are the only American
entities which carry out all banking operations in Spain as full Spanish
subsidiaries. Bankers Trust, Chase Manhattan N.A., Citibank N.A.,
Manufacturers Hanover Trust, and Morgan Guaranty Trust limit their
operations to wholesale banking business. American Express and Bank of New
York only have representative offices in Spain.
Sources of Consumer Credit
Credit Cards.--Credit and bank cards are issued by banks, department stores,
and other business entities. Major American credit cards are well
established through local banks.
Installment Credit.--Installment credit is offered at virtually all stores
where high cost consumer durable goods are sold. Payments tend to be
slightly shorter, and interest rates are generally 3 to 5 percent higher
than those for similar purchases in the United States.
Sources of Commercial Credit
Companies requiring loans of more than five times their equity may require
authorization from the Bank of Spain. The Spanish Government offers
below-market credit and tax incentives for qualifying firms. In addition,
firms willing to locate in the designated declining industrial zones may
benefit from additional credit (See Investment Section). Credits are also
provided for worker training. In addition to general, short-term loans
(polizas de credito), there are five financing facilities available to
Discounted Trade Acceptances.--(discuento de letras). These are the most
common form of financing for medium-sized firms. Banks usually grant these
lines for up to 1 year but prefer short-term paper of 30, 45, or 90 days.
Companies interested in raising their discount ceiling sometimes open term
or savings accounts equal to 5-20 percent of their drawings.
Floating Rate Advances.--These advances are granted for up to 1 year and are
based on the Madrid Inter-Bank Offered Rate (MIBOR) plus a spread.
Fixed Rate Overdrafts (cuentas de credito).--These act as another important
financing instrument available at a charge which is levied quarterly.
Preference between the overdraft or MIBOR loan instruments depends on
interest rates, which in turn, reflect both liquidity in the economy and the
Bank of Spain's policies.
Financial Leasing.--This facility is very popular and accounts for about 85
percent of capital good investments in Spain. Leasing is most popular among
small and medium-sized companies. Fiscal leasing obliges the lessee to make
monthly payments for the life of the contract. Lease contracts typically
run 3 to 5 years for capital equipment and 10 years for real estate.
Factoring.--This is much less common than the three previous financing
methods, but it is widely available to exporters. When factoring, a company
sells its receivables to a bank and receives a discount less a fee. The
bank will handle credit, collection, and bookkeeping so that the company can
maintain a continuous cash flow.
The Madrid, Barcelona, Bilbao, and Valencia stock exchanges are well
developed, rivaling other European exchanges. They are completely
computerized and interconnected. A continuous trading market, the
tightening of disclosure controls, and the elimination of the civil
servant's monopoly on trading rights have been implemented. New issues are
authorized by the Directorate General of Financial Policy. The
liberalization process, including the law on venture capital of 1986, has
increased trading activity and created an expanding secondary market.
Since the early 1960s, attracting significant, new foreign investment has
been a basic tenet of the Spanish Government's economic policy. New foreign
investment laws have increasingly opened the economy to market forces,
allowing the industrial base to become more modern and efficient.
Practically every segment of industry has foreign participation. Foreign
investment is particularly important in automobiles, finance, food
processing, computers, chemicals, pharmaceuticals, and tourism. Since Spain
joined the EC, a substantial amount of foreign investment has gone into
acquisitions of existing firms, but new investment and reinvestment by
foreign subsidiaries are also booming.
U.S. Investment Position
At year-end 1990, the United States was the seventh leading investor, with a
total book value of $7.48 billion invested in over 400 majority-owned
subsidiaries and branches. In comparison, Spanish investments in the United
States totaled $796 million at year-end 1990. Principal U.S. investments
are in the automotive, chemical, pharmaceutical, electronic, metal
transformation, and food processing industries. Other leading foreign
invest totaled $796 million at year-end 1990. Principal U.S. investments
are in the automotive, chemical, pharmaceutical, electronic, metal
transformation, and food processing industries. Other leading foreign
investors in Spain are Germany, the United Kingdom, and France.
Types of Foreign Investment
Foreign investment legislation distinguishes between four forms of foreign
investment: direct, portfolio, real estate, and other, including joint
venture. The administrative handling of the various forms of investment has
been greatly simplified, permitting most foreign investment to enter freely
without prior bureaucratic review or subject only to prior notification in
order to permit administrative verification of compliance with regulations.
Foreign investment is participation in a Spanish firm giving the investor
influence over management, or effective control of the company. A foreign
branch is also considered a direct investment.
Direct investment includes direct ownership through the founding, expansion,
or purchase of a foreign company's branches or operations, loans to Spanish
companies, reinvestment of foreign investor profits through capital
increases, and transfer of corporate assets from parent company to its
subsidiary. For regulatory purposes, a foreign investor interest of 20
percent or more confers sufficient influence over a company for it to be
considered a direct foreign investment.
Foreign firms submit investment applications prior to investing; these are
usually approved. Sometimes negotiation and ad hoc legislation are
required. Investment authorization may be granted based on certain
performance requirements, such as exports, use of local research and
development, and domestic inputs.
Joint Ventures.--Joint ventures are increasingly common, and there are
hundreds in Spain, including many with INI firms. They are normally
approved, and must be registered with the Ministry of Industry and Energy. There are numerous joint ventures by U.S. firms in Spain, and equity
positions vary up to 100 percent. Joint venture agreements would follow the
same screening as for other foreign investments.
Real Estate Investments.--Foreigners may purchase real estate in Spain.
Deeds are registered in the Property Register and are subject to regulation
of the 1986 Foreign Investment Code. Registry fees range from 0.02 to 0.5
percent for investments exceeding 50 million pesetas. The Ministry of
Agriculture and the regional autonomous governments maintain registries for
foreign ownership of farm land. The Ministry of Defense requires that
acquisitions by foreigners on the Balearic Islands, in the enclave cities of
Ceuta and Melilla in North Africa, and in the region of Galicia be approved
in advance by local military commanders who require a detailed site plan.
Corporate purchases of land must be registered with the DGTE. Urban
property with more than three apartments must be registered. Renting
commercial space, especially in the principal urban centers, can be as
expensive as in the largest U.S. cities.
Foreign Investment Approvals
Foreign investment authority lies with the Council of Ministers (the
Cabinet) and the Ministry of Economy and Finance. The office of the
Director General of Foreign Transactions (DGTE) in the Ministry of Economy
and Finance administers the foreign investment regime. In addition, the law
provides for an inter-ministerial body, the Junta de Inversiones Exteriores
(Foreign Investment Board) which may be called upon to provde advice on
foreign investment cases. Spanish law permits foreign investment of up to
100 percent of equity, except in a limited number of sectors. Majority
foreign investments are prohibited in the following sectors: military
equipment, radio and TV broadcasting, all of which require government
authorization for minority participation. Mining is limited to minority
ownership, as are shipping, air transport public service companies,
petroleum exploration, and gambling.All foreign firms are granted national
Proposed foreign investments are submitted to the DGTE which must act within
30 working days. Approval is automatic after 30 days unless the Government
objects. Companies benefiting from preferential financing must first obtain
DGTE authorization. Direct investments of up to 50 percent in share capital
of a company do not require prior authorization or vetting by the DGTE.
However, these must still be registered through an "a posteriori"
declaration to the Registry of Foreign Investment. Although foreign
investment up to 100 percent of ownership is permitted, the Government may
disapprove applications when the size, nature, or financial characteristics
of the investment are deemed prejudicial to national economic objectives.
Specific authorization is required for investments in restricted sectors,
foreign governments, foreign owned corporations, and those sectors regulated
by separate legislation.
Repatriation of Earnings Capital
Foreign investors who are in full compliance with Spanish foreign investment
legislation have the right to transfer profits outside Spain without
restriction. Proceeds from the liquidation of investments, including the
capital initially contributed and profits obtained from the sale, may be
transferred freely. The government may only deny the right to transfer
funds abroad if, after administrative verification, it is found that the
profits and capital gains were obtained in violation of foreign investment
There are investment incentives available at EC, national, regional and
local levels, even in combination. These range from grants, tax benefits,
access to local financing, and duty-free imports, to facilitation of
property purchases and necessary permits. Spain has garnered a
disproportionately large share of EC investment incentive funds because of
its economic development lag and high unemployment. Incentives granted by
national, regional, or municipal governments and the EC are offered to
Spanish and foreign companies alike without discrimination, but usually
require performance guarantees. Therefore, the foreign investor should
contact offices at each level. Spain's 17 autonomous communities (regions,
roughly equivalent to U.S. states) have their own investment promotion
departments and administer their own incentive programs in conjunction with
the central government. Information on investment incentives can be
obtained at any Spanish Commercial Office. A listing of regional
development agencies may be obtained from the Spain Desk Officer at the U.S.
Department of Commerce.Incentives are available for specific localities,
employment promotion, and development of certain industries. The government
also administers programs to promote small and medium-sized business, the
Spanish fashion industry, and exports, as well as to improve industrial
design and product quality. National investment incentives are coordinated
by the Ministry of Economy and Finance's Directorate General of Regional
Under Spain's regional development plan, three types of areas are to be
Economic Promotion Zones (ZPE, formerly known as Zones for Urgent
Reindustrialization (ZUR)).--These are areas with the lowest levels of
economic activities and income. These zones are further divided into
priority zones based on population, accessibility, and availability of
Zones of Industrial Decline (ZID).--These are industrialized geographical
areas affected by industrial decline. ZID's may be located far from urban
areas where skilled labor and technicians may be scarce.
Special Zones (ZE).--These are regions where special circumstances prevail.
For investments in steel, shipbuilding, electronics, chemicals,
pharmaceuticals, and textiles, specific national incentives and
administrative requirements are complex and require approval by other
Spanish Government ministries. Incentives include reduced or zero import
duties on imported capital equipment not manufactured in Spain, accelerated
depreciation, free land, reduced taxes, preferential loans, subsidies, and
credits for worker training. Payments for transfer of technology,
management contracts, and parent overhead charges distributed to
subsidiaries normally are authorized upon presentation of adequate
documentation, although certain quantitative or qualitative limitations may
apply. Repatriation of profits and proceeds from liquidated investments may
be undertaken freely.
Transfer of Technology Royalties
Spain's legislation conforms to EC directives. According to R.D. 2343 1973,
all technology transfer agreements must be recorded in the Transfer of
Technology Contracts Register maintained by the Directorate General of
Industrial and Technological Innovation at the Ministry of Industry and
Energy. However, R.D. 1750 of December 18, 1987 eliminated the government's
authority over such contracts, ensuring that the registry is maintained
solely for statistical purposes. R.D. 1750 also liberalizes procedures for
payments under such contracts. Accordingly, payments under franchise
agreements or agreements for the use of trademarks, patents, utility models,
and software for industrial or business use must be reported in advance to
the DGTE, largely for statistical purposes. The DGTE will inform the
Directorate General of Industrial and Technological Innovation, and payments
may be affected if an objection is raised within 30 workdays. Approval can
only be denied when the costs clearly exceed the real value of the
technology transferred or technical assistance rendered. Payments for
royalties and similar fees to nonresident firms are subject to a withholding
tax. DGTE approval is required for transfer abroad of more than 10 million
pesetas in earnings derived from licensing or technical assistance
FORMS OF BUSINESS ORGANIZATION
In the future, foreign firms already established in Spain will have the
option to incorporate under EC directives or Spanish law. The EC Commission
is expected to adopt an EC incorporation statute, available to companies
with capital of over 100,000 European Currency Units (ECUs). With EC
incorporation, a company will be able to offset losses by branches against
parent company profits in another EC member state.
The different forms of business organization in Spain are:
Sociedad Anonima (S.A.).--This is the most common type of business
organization in Spain, comparable to a U.S. corporation. A July 1989 law
changed the Corporations Act to conform to EC directives. To form an S.A.,
at least three investors must subscribe to the entire capital; once
accomplished, the number of shareholders can decline to one. The minimum of
paid in capital is Ptas. 10 million and is divided into shares where
shareholder liability is limited to the pledged amount if not fully paid
in. The S.A. structure is obligatory for any limited liability company with
capital of more than Ptas. 50 million. Banks, insurance companies, and
leasing firms must incorporate as S.A.s. A prospectus is issued for
subscription of capital when public offerings are made. A transfer tax of 1
percent of capital is paid at registration, and brokerage or notarial fees
are .05 percent.
Sociedad de Responsabilidad Limitada (S.R.L.).--Partnerships and family
businesses with less than Ptas. 500,000 minimum capital, must become limited
partnerships. The maximum capital limit is Ptas. 50 million, fully paid in
at registration, with shares equally divided between no less than two and no
more than 50 shareholders.
Sociedad Regular Commandita (S.R.C.).--In this general partnership, all
partners manage the firm, but each one is not obliged to contribute capital
or assume full liability. Profits are usually distributed according to paid
in capital, but all partners are fully responsible for the firm's actions
and debts up to their collective and personal property. Consequently, this
form of incorporation is not recommended for U.S. firms.
Sociedad Comandita (S.C.).--This is a limited private partnership that
requires that share capital consist of investments by partners with no
minimum capital. These partnerships must have at least one general and one
limited partner. The general partner contributes management and capital,
the limited partner only capital. The general partner is liable for all
debts of the partnership, but the limited one is liable only to the amount
invested. The partnership is registered in the Mercantile Register under
the name of one of the general partners. It can be either a simple or
limited partnership or one that issues shares.
Asociacion de Empresas (A.E.).--The most common type of joint venture is a
corporation formed by individuals or a group of investor companies for
certain objectives such as export sales, research and development, bids on
government tenders, and turnkey projects. No member of a joint venture may
hold more than one-third interest except under special conditions, and all
members are unlimited in liability for its debts. Special tax advantages
are available to the members upon application to the Official Credit
Institute and approval by the Ministry of Economy and Finance. The joint
venture contract must be registered in the Mercantile Registry, and foreign
members must register with the DGTE.
Temporary joint ventures (of no more than 10 years duration), without a
separate legal identity, gain certain tax advantages. Firms interested in
establishing such a joint venture must apprise tax authorities how income
and expenditures will be shared.
Sucursal.--Branches are a separate establishment of the parent company,
usually in the same line of business. The parent must appropriate capital
for which it is liable, and such capital can only be repatriated when the
branch is dissolved. Branches are commonly used for commercial operations
as manufacturing operations are not usually granted by the Ministry of
Economy and Finance.
INDUSTRIAL PROPERTY PROTECTION
The Spanish Patents Act of March 20, 1986 brought Spain into conformity with
the European Patent Convention and the anticipated EC Patent Convention as a
requirement for its entry into the EC. Key provisions in the law are the
patentability of food products, the ability to patent inventions by an
employee, greater protection for patent holders, and lower requirements on
exploiting patents. Spain was granted a transitional period to adopt
protection in the chemical and biotechnology technology technology areas.
Therefore, protection will not be available until October 7, 1992 for
chemical and pharmaceutical products or for the products of microbiological
processes. The burden of proof in alleged process patent infringements is
shifted to the alleged offender. The law also mandates usage, mandatory
licensing, and limitation on imports of products patented in Spain by the
invention, additions to existing patent holder.
Spain recognizes patents of patents, on utility models, and introductory
patents (patents of importation). Patents for pharmaceutical, chemical, and
phyto-pharmaceutical products may now be filed; however they will not become
effective until October 7, 1992. The introductory patent was abolished in
1986. Hence, no imported products can currently be granted such a patent.
However, the law is not retroactive. Therefore, many products imported
before 1986 are still under the previous legal regime. The exclusive
exploitation period for introductory patents, which are only valid for
manufacturing, is 10 years, but this does not afford protection against
imported products. A 20-year period for working patents is available, and
the patent must be worked within three years of patenting. Third parties
may be licensed to use the patent, but they must pay to use the patent.
There is a 2-month average wait for provisional registration and more time
for patents with opposition. Utility designs incorporate technological
innovations and are patentable in exclusivity for 20 years.
These are known by their form or external characteristics and are eligible
for exclusive exploitation for renewable periods of 10 years. Although
third parties may oppose registration on basis of similarity to already
registered models, registration is not forfeited because of non-use.
Both the Trademark Law of November 1988 and the Intellectual Property Law
175087 of November 1987 address protection for brand names and trademarks.
Trademarks must be registered to be protected. The right of exclusive use,
following acceptance of the brand or mark in the Industrial Property
Register enjoys full protection. Trademark protection lasts for 20 years
and may be renewed. The courts may declare the expiration of a trademark
that has not been used for 5 years. The first applicant is entitled to
registration and exclusive use. As signatories to the "Paris Union"
International Convention on Industrial Property, the United States and Spain
grant national treatment to each others' intellectual property.
The Intellectual Property Law of November 1987 offers copyright protection
for all original literary, artistic, or scientific creations, including
computer software. Spain and the United States are members of the Universal
Copyright Convention. To be accorded protection, U.S. authors must include
the copyright symbol, title, name of author, and first date of publication.
The copyright is valid for the life of the author and for 80 more years for
heirs. Computer software is eligible for 50 years of protection.
Nonresident U.S. citizens in Spain may contact the U.S. Department of
Commerce Spain Desk Officer, the American Embassy in Madrid, or the American
Consulate General in Barcelona for a list of attorneys to file intellectual
property rights applications. A list of patent attorneys is also available
from the Industrial Registry Section of the Ministry of Industry and Energy.
Foreigners and foreign-owned firms are subject to the same tax laws as apply
to Spaniards and Spanish businesses. There is no discrimination in the tax
codes against foreigners or foreign-owned firms.Taxation makes up about 26
percent of total government revenue and is relatively low by European
standards. In addition to customs duties and the value-added tax (VAT),
Spain imposes personal, corporate, capital gains, net worth, gift, and
inheritance taxes. The central, regional, and local govern/ments each levy
At present, direct national taxes include the following principal elements:
Personal Income Taxes
There is a graduated tax on personal income, with the highest bracket
currently set at 56 percent (Personal Income Law 44 of September 8, 1978,
Law 20 of July 28, Law 33 of December 23, 1989, Budget 1987, and subsequent
annual Budget Laws). Personal taxes are levied on the worldwide net income
and capital gains of a resident individual or family unit, including salary,
bonuses, fringe benefits, pension payments, and travel expenses beyond
certain limits. Nonresidents are taxed only on the Spanish portion of
income and expenses. The sliding tax rate starts at 25 percent for a
taxable base of more than Ptas. 600,000, and up to Ptas. 1 million averages
34.5 percent at Ptas. 7 million, and caps at 56 percent for Ptas. 8,000,000
and above. Tax rates vary each budget year.
Allowable deductions include, but are not limited to standard deductions for
self, spouse, children, and dependent relatives; some medical care and
necessary expenses; interest paid on principal and secondary residences and
home improvement loans; and some business and insurance expenses.
Deductions are also allowed for regional and municipal taxes, social
security and official pension fund payments, and allowable expenses on
income producing assets.
Corporate Income Taxes
A direct corporate tax (Corporation Income Tax Law 61/1978, Law 33 1987, and
subsequent annual budget laws) is levied on the income of companies and
other legal entities. Spain's present standard corporate income tax rate is
35 percent of the taxable base, with provisions for tax and investment
credits. The 35 percent rate applies to all revenues and equity increases
for resident firms, regardless of the source of increase. Nonresident firms
are subject only to tax on income or increases in equity generated in Spain,
such as profits, royalties, license fees, fees for services, and franchising
fees. For dividends, 25 percent is withheld pending final tax determination
at the end of the fiscal year, defined as any 12-month period chosen by the
Allowable deductible expenses include necessary and documented expenses
within the tax year incurred on an arms-length basis, bad debts,
depreciation, and capital losses. In most cases, maximum allowable
depreciation rates are less than in the United States. For example,
industrial buildings are depreciable up to 3 percent annually and office
buildings up to 2 percent. However, Spain announced in 1990 that
depreciation schedules for investments made in 1985 and 1986 will be
liberalized substantially, in effect allowing firms to determine their own
depreciation period. Capital gains from the sale of assets will not be
taxed if reinvested within 4 years in similar assets. Foreign exchange
gains and losses appear as taxable income and allowable expenses,
respectively. Tax credits are granted on a case-by-case basis, both for
fixed productive assets and for hiring personnel; credits can range up to 20
percent of the investment. In 1988, this amounted to a Ptas. 500,000 credit
for each job created. The types of credits are fixed annually in the budget
and can be revised for preferential sectors. Taxes on nonresident firms are
similar in incidence, but there is a different system of collection.
Nonresident firms are only taxed on their earnings in Spain. Taxes on
nonresident earnings are imposed when transfers are made to the nonresident
firm. Nonresident taxable incomes include income derived in Spain,
dividends, interest payments, services and general expenses of affiliates
and branches, services with direct deduction of certain expenses, earnings
on cinematographic productions, income derived from re-insurance operations;
and increases in equity.
Net Worth Tax
The worldwide net worth of a resident taxpayer (a person who remains over
183 days in Spain) is calculated by subtracting all debts from all assets
and allowing deductions of Ptas. 9 million for an individual, Ptas. 9
million for a married couple, and Ptas. 1,500,000 for each child. The tax
rate varies from 0.2 percent for net worth valued at Ptas. 25 million or
less, 0.65 percent for net worth of Ptas. 100 to 250 million, and 2 percent
net worth valued at over Ptas. 250 million. The total of net worth and
personal income tax cannot exceed 70 percent of total taxable income in a
Other National Taxes
Spain added the Value-Added Tax, VAT, (Law 301985, R.D. 2028/1985, Decree of
December 26/1986, and Law 37/1988) in conformance with EC rules following
its accession to the EC on January 1, 1986. This sales tax is the major
indirect tax and is applicable at all stages of production and
distribution. The normal rate is 12 percent, but the luxury tax rate is 33
percent applied to such goods as recreational vehicles, jewelry, and furs
and a reduced rate of 6 percent applied to certain products such as food,
medicine, books, and municipal transport. A general transfer tax on
transfers of property and legal documents (Law 32/1982, R.D. 3050/1980, R.D.
3494/1981 and Law 37/1988) is levied for the following items: formation of
companies or increases in capital, liquidations and capital reductions, sale
of real interest in the company estate, mortgages, and loans. Transfers of
shares are exempt.
Excise Taxes (Law 45/1985, R.D. 2442/1985, and Law 37/1988).--These are
levied on specific products such as alcoholic beverages, hydrocarbons, and
Import duties (R.D. 511/1977, Royal Legislative Decree 1299/1986).
These are being eliminated for EC imports over a 7-year transition period
ending January 1, 1993. At the same time, Spanish duties on imports from
third countries, including the United States, are being adjusted to the EC
Common External Tariff. (Refer to "Trade Regulations" Section for further
Inheritance taxes are levied on inherited property vary according to the
degree of relationship to the deceased and value of the property. Gift
taxes are levied similarly.
Optional taxes on the erection and installation of new structures,
construction work, and increases in urban land values.
Fifteen of Spain's 17 autonomous regions do not have authority to levy
taxes. These regions depend financially on an allocation of the central
government's tax revenue. Regional governments obtain a share of the real
property tax, inheritance tax, economic activity tax, which replaced the
former urban and real property taxes.
According to a law enacted in December 1988, Spanish municipalities can levy
two kinds of taxes: the former urban and rural property taxes), as well as a
share of taxes on fiscal licences for professional activities and artists
and fiscal licences for commercial and industrial activities. Information
on regional variations in tax rates can be obtained directly from regional
authorities. For historical reasons, only the Basque Country and Navarre
have unique, independent tax regimes. Compulsory taxes on real property,
business activity, establishment of new businesses, and motor vehicles.
Double Taxation Agreements
Spain has double taxation treaties with EC countries as well as Austria,
Finland, Japan, Portugal, South Africa, and Switzerland to eliminate double
taxation. An agreement between the United States and Spain was ratified in
late 1990 and was implemented on January 1, 1991. The treaty follows the
lines of the OECD Draft Convention on Double Taxation. In summary, the tax
withholding rate on dividends is a maximum of 15 percent, but it drops to a
maximum of 10 percent if the beneficiary resident of one state holds at
least a 25 percent interest in the company from the other state paying the
dividend. The withholding rate on interest is a maximum 10 percent.
However, there is no withholding at source for interest on long-term loans
granted by financial institutions. The maximum tax withholding rates for
royalties are 5, 8, or 10 percent, depending on the kind of royalty
payment. The treaty provides for the taxation of capital gains by the
source country when the beneficiary resident of the other state holds 25
percent or more whose sale gives rise to the capital gain. Specific
questions regarding tax rates should be directed to an accounting firm
specializing in international taxation. Questions regarding international
tax policy should be directed to the Office of International Tax Treaties at
the U.S. Department of Treasury.
In 1990, the Spanish work force totaled 14.6 million persons, with the
following distribution: services, 46 percent; industry and construction, 37
percent; and agriculture, 5 percent.
Employment.--Temporary hires are permitted for up to 3 years. After 3
years, a company must either offer a worker a permanent contract or lay him
off. The majority of all new employment contracts in 1988-90 were
temporary. The Ministry of Labor, in consultation with trade unions and
industry trade associations, sets minimum standards per sector for wages,
hours, working conditions, social security, vacations, and incentives.
Compensation.--The minimum daily wage was Ptas. 1,556, about $13.00 in 1989.
Terminations.--Workers covered by permanent contracts have strong job
security. An indemnity must be paid to any dismissed worker. The law
permits companies to dismiss workers only for cause or having suffered at
least 3 years of corporate losses, and then only after negotiations between
the unions, Ministry of Labor, and employer. Causes include absenteeism,
deliberate work slowdowns, insubordination, breach of trust, alcoholism, or
Social Security.--Payments are paid largely by the employer and cover
medical care, retirement, family allowances, health and unemployment
benefits, training, and the bankruptcy fund. Social security contributions
amount to 30.2 percent of each employee's base wage up to a fixed limit (24
percent for social security health and pension benefits, 5.2 percent for
unemployment insurance, and the remainder for job training and wage
guarantees). The employee pays an additional 6 percent.
Other Costs.--Additional costs to employers include a minimum of two bonuses
per year, usually a month's salary, payable in July and December, and a 1
month paid vacation annually, as a minimum. In recent years, relations
between government and organized labor have become strained because of
disagreements over economic policy. The unions, impatient for a greater
share of Spain's economic prosperity, have called for increased social
spending and are adamantly opposed to increased liberalization of labor
market regulations on job security.
GUIDANCE FOR BUSINESS VISITORS
According to the Treaty of Friendship and General Relations of 1902,
Americans have the right to enter, travel, and reside anywhere in the
country and to enjoy the same protection and rights as Spaniards, provided
they respect Spanish law. Americans may freely exercise their business or
profession and are taxed the same as Spaniards. Americans have the right to
possess real estate in Spain, subject to the law of October 23, 1935, and
other legislation placing restrictions on the acquisition and ownership of
real estate by foreigners in certain designated "strategic zones."
Americans may dispose of personal property. Their heirs, and donors --
whether resident or nonresident -- may take possession or dispose of
personal property, either directly or through an attorney, once applicable
Spanish taxes have been paid. American citizens enjoy the same rights and
the same advantages that are granted to Spanish citizens, have free access
to Spanish courts, and may be represented by legal counsel.
No visa is required for U.S. passport holders for a stay of up to 6 months.
To remain longer, a special visa issued by a Spanish Consulate is required.
Detailed information about this visa can be obtained from the nearest
Spanish Consulate. These are located in Boston, Chicago, Houston, Los
Angeles, Miami, New Orleans, New York, San Francisco, and Washington, DC.
There are no mandatory inoculations.
Travelers are permitted to bring in, duty free, clothing and personal
effects contained in their luggage and intended for their personal use.
Americans visiting Spain are considered tourists for the first 6 consecutive
months, after which they are considered residents. Approval is required for
an extension of tourist status. To remain in Spain, foreigners must obtain
residence permits from the police authorities in the district in which they
will reside. All permanent foreign residents become liable to Spanish
income tax laws.
Foreign currency must be declared upon entry into Spain, and no more than
the amount declared may be taken out upon departure. Nonresident aliens may
leave without authorization with a maximum of Ptas. 100,000 and the
equivalent of Ptas. 500,000 in foreign currency. All foreign exchange
restrictions will be removed by January 1, 1993.
Working in Spain
The employment and work regulations pertaining to foreign workers (aliens)
in Spain are governed by Decree 1870 of July 27, 1968. In order to work in
Spain, either as an employee or self-employed person, an alien must obtain a
visa and a work permit in advance. Work permits are not issued to aliens if
qualified Spanish workers are available. Foreign workers are paid the same
wages as Spaniards. Whenever layoffs occur, companies must first discharge
foreign workers. Whenever a foreign worker with specialized qualifications
is hired, a Spanish worker may need to be hired also. The restriction
against hiring foreigners may be waived for the spouses of Spanish citizens
in special cases.
As a general rule, U.S. firms in Spain predominantly employ Spanish
nationals because of readily available labor. They typically employ very
few Americans in Spain, usually limited to senior executives with long
experience with their companies. Applications for work permits must be
submitted to the Ministry of Labor through the Provincial Labor Office
(Delegacion Provincial de Trabajo). Applications are publicized. If no
Spaniard applies within 15 days, it is assumed there are no available
national applicants. Upon approval, the work permit is issued following
payment of a small fee.University degrees are evaluated for foreigners
wishing to practice a profession.
U.S. degrees and transcripts of school records must be legalized
("apostilla") by the Secretary of State of the state in which the school is
located. This requires that diplomas be authenticated by the university,
notarized, and translated. The apostilla and official translation are then
submitted to the Ministry of Education.
Foreign engineers and architects wishing to practice in Spain must be
members of one of the Spanish Colleges of Engineers. Only persons having
completed training in Spain or whose degree has been validated by the
Spanish Government are eligible to become members. Otherwise, they can only
practice in an unofficial status, and all work must be approved by an
authorized engineer. Additional information concerning work permits is
available from the Spanish Ministry of Labor.
Conducting Business in Spain
Business Hours.--Spanish hours tend to run 2 hours later than in the rest of
Europe. Although the Spanish Government works from 8 a.m. to 5 p.m.,
business is usually transacted between 10 a.m. and 2 p.m. and from 4 to 8
p.m. Summer hours beginning on July 1 usually run from 8 a.m. to 3 p.m.
There are regional, sectoral, and seasonal variations. Do not expect to
schedule meetings on weekends or during the peak vacation period in July and
August. It is also best to avoid business travel near Christmas and Easter
and during July and August, the primary vacation periods for Spaniards. The
best months for business travel are October through June.
Meals and Client Entertainment.--It is customary to conduct a great deal of
business at meals in public restaurants or private clubs. Lunch hours are
usually from 2 to 5 p.m., and dinner from 10 p.m. to 12 a.m. Luncheons are
usually organized without spouses, and dinners with them. The approach
should be formal. The Latin American "abrazo" is not used in Spain; a
handshake suffices. If invited for a meal in a private home, it is
customary to bring or send a small gift, such as flowers or a book. It is
not considered polite to discuss business until after the main course is
served. Restaurant meals can be quite expensive. In Spain, business
persons never split the bill or "go dutch."
Business Negotiation.--This is accomplished after initial positions have
been established, usually when coffee is served following the meal.
Credit Checks.--As in other countries, it pays to run a credit check on a
potential client. This background check can be done with the World Traders
Data Report (WTDR) through U.S. and Foreign Commercial Service (US&FCS)
District Offices or commercial credit sources.
Language.--Sales literature should be in Spanish. In addition, in the
Basque and Catalan regions, it may prove advantageous to have product
literature in the Catalan or Basque languages as well. Business cards
printed in both English and Spanish are helpful, but not essential.
Although a minority of Spanish business persons have a passable knowledge of
English or French, use of Spanish is very much appreciated and can lead to
much greater receptivity.
Interpreters.--They are available in all major cities at a customary hourly
rate. Contact the US&FCS offices in Spain, the American Chamber of Commerce
in Spain, or the Spain-U.S.A. Chamber of Commerce in New York for names of
interpreters. An interpreter is included in the Gold Key Service provided
by US&FCS Spain.
Communications.--Domestic and international telephone service is reliable
but much more expensive than in the United States. The use of the facsimile
machine (fax) is expanding rapidly. Telex service is good but more
expensive. Airmail letters take a week to reach the United States and
surface parcel post takes 8 to 10 weeks. Parcels mailed to Spain are
subject to customs inspection and delays. Local mail within Spain can be
Time.--Spain is 1 hour ahead of Greenwich Mean Time (GMT), thus 6 hours
ahead of U.S. Eastern Standard Time, except for several weeks in the spring
and autumn when the United States has not yet changed its time to/from
Daylight Saving Time.
Holidays.--A number of national holidays are observed throughout Spain, but
observances vary by region. Several regional holidays are also celebrated
throughout the year. Holidays falling on Saturdays or Sundays are not
observed on any other day. National holidays observed in Spain are:
January 1-New Year's Day
May 1-Labor Day
June 24-King Juan Carlos' Saints Days
July 25-St. Joseph de Compostela
October 12-Dia de la Hispanidad
November 1-All Saints Day
December 6-Constitution Day
Demographics. The data below are indicative of Spanish living standards:
Table 1. SPAIN-Standard of Living, 1988-90
Per capita GNP (1990 est.): $12,502
Average annual per capita disposable income (1990 est.): $11,202
Automobiles per 1,000 inhabitants (1988): 263
Telephones per 1,000 inhabitants (1988): 381
Television sets per 1,000 inhabitants (1989): 322
Secondary school enrollment per 1,000 inhabitants (1990/91): 61.7
Doctors per 1,000 inhabitants (1991 est.): 3.8
Infant mortality per 1,000 inhabitants (1990): 6.0
Table 2. Spanish Tariff Adjustments
Non-EC EC EC Rate of EC Accumulated
Goods Goods Decline % Reduction (%)
March 1, 1986 18.4 13.8 10 10
January 1, 1987 17.4 12.4 12.5 22.5
January 1, 1988 16.5 10.7 15 37.5
January 1, 1989 14.8 8.6 15 52.5
January 1, 1990 13.3 6.6 12.5 65
January 1, 1991 12.1 4.8 12.5 77.5
January 1, 1992 10.9 3.1 12.5 90
January 1, 1993 8.7 0 10 100
Import duties are levied on an ad valorem basis and tend to run between 10
and 35 percent, except for duties on raw materials which are lower. The
c.i.f. (cost, insurance, freight) value of the merchandise is the open
market price reached between the buyer and seller (free of discounts), plus
transportation, insurance, and other expenses connected with the sale and
delivery to a Spanish customs port. The metric system of weights and
measures is used for customs purposes. Some goods are taxed according to
metric measurements for net or gross weight, length, or volume.
Table 3. Average Exchange Rate
Table 4. Limitations on Foreign Investments
Sector Foreign Equity Participation
National defense Limited to 25% (+)(*)
Public services Not allowed
Air transportation Limited to 25% (++)(*)
Maritime transportation Limited to 40%
Mining Limited to 49%
Insurance Based on reciprocity
Banking Interests above 5 percent must notify the
Ministry of Economy and Finance. Prior approval
is required for interest above 15 percent.
Casinos Prior authorization from Council of Ministers
Telecommunications Foreign equity in Telefonica (the state
telephone company) is limited to 25 percent.
Terminal services are open, basic services are
Securities Firms Authorization from Ministry of Economy and
Radio and TV Broadcasting Prior authorization from Council of Ministers
Motion Picture Production Not allowed
Petroleum refining, and
exploitation Situation is unclear. Entire hydrocarbon
exploration sector is reorganizing.
(*) As outlined by 1986 Foreign Investment Law, these sectors require
(+) Granted only on a discretionary basis in special cases such as the
fabrication of arms and ammunition. Minerals of strategic interest and
telecommunication services may be considered due to their direct relation to
(++) Granted on a limited, discretionary basis; never in excess of 25
ANNEX A: SOURCES OF ECONOMIC AND COMMERCIAL INFORMATION
Ministerio de Economia y Hacienda
(Ministry of Economy and Finance)
Ministerio de Economia y Hacienda
(Directorate General of Customs and Special Taxes)
Direccion General de Aduanas e Impuestos Especiales
Ministerio de Economia y Hacienda
Guzman del Bueno, 137
(Tariff and Customs Valuation Service)
Servicio de Arancel y Valoraciones
Sub direccion General de Tributos Sobre Comercio Exterior
Ministerio de Economica y Hacienda
Guzman del Bueno, 137
(Directorate General for Foreign Transactions)
Direccion General de Transacciones Exteriores (DGTE)
Ministerio de Economia y Hacienda
Paseo de la Castellana, 162
(Directorate General for Financial Policy)
Direccion General del Tesoro y Politica Financiera
Ministerio de Economica y Hacienda
Paseo del Prado, 6
Subdirector General de Proyectos de Inversion
Direccion General de Incentivos Economicos Regionales
Ministerio de Economia y Hacienda
Paseo de la Castellana, 147
(Directorate General for Regional Economic Incentives)
Direccion General de Incentivos Economicos Regionales
Ministerio de Economia y Hacienda
Paseo de la Castellana, 147
Ministerio de Industria, Comercio y Turismo
(Ministry of Industry, Commerce, and Tourism)
Ministerio de Industria, Comercio y Turismo
Paseo de la Castellana, 160
(Department of Commerce)
Secretaria de Estado de Comercio
Ministerio de Industria, Comercio y Turismo
Paseo de la Castellana, 160
(Industrial Property Register-patents and trademark registration)
Registro de la Propiedad Industrial
Ministerio de Industria, Comercio y Turismo
Other Spanish Government Agencies
(Directorate General for Pharmacueticals and Sanitary Products)
Direccion General de Farmacia y Productos Sanitarios
Ministerio de Sanidad y Consumo
Paseo del Prado, 18-20
(Ministry of Agriculture, Fisheries, and Food)
Ministerio de Agricultura, Pesca y Alimentacion
Paseo Infanta Isabel, 1
Ministerio de (Ministry of Education and Science)
Sub direccion General de Titulos, Convalidaciones, y Homologaciones
Secretaria General Tecnica
Ministerio de Educacion y Ciencia
Other Important Spanish Institutions
(National Standards Institute)
(Asociacion Nacional de Normalizacion y Racionalizacion)
Fernandez de la Hoz, 52
(Customs Inspection Service)
(Servicio de Vigilancia Aduanera)
Manuel Silvela, 4
(National Employment Institute)
Instituto Nacional de Empleo
Condesa de Venadito, 9
(For information about real estate investments)
Consejo Superior de Camaras Oficiales de la Propiedad Urbana
Calle Claudio Coello, 73
(Each major city has its own Camara de la Propiedad)
(Official Credit Institute)
Instituto de Credito Oficial
Plaza de Santa Barbara, 2
Ministerio de Justicia
Principe de Vergara, 72
Spanish Government Offices in the United States
Spanish Commercial Offices:
500 N. Michigan Ave., Suite 1500
Chicago, IL 60611
Phone: (312) 644-1154
Fax: (312) 527-55316
2655 Le Jeune Rd., 1114
Coral Gables, FL 33134
Phone: (305) 446-4387
Fax: (305) 446-2602
350 S. Figueroa St., Suite 498
Los Angeles, CA 90071-1360
Phone: (213) 628-1406
Fax: (213) 628-1504
405 Lexington Ave., 44th floor
New York, N.Y. 10017-0331
Phone: (212) 661-4959
Fax: (212) 972-2494
Telex: 510-6014778 OFCOME NY UQ
2558 Massachusetts Ave., N.W.
Washington, D.C. 20008
Phone: (202) 265-8600
Fax: (202) 265-9478
Mercantil Plaza, piso 11
P.G. Box 3179
Hato Rey, Puerto Rico 00919
Phone: (809) 758-6345
Fax: (809) 758-6948
Spanish National Tourist Office
665 Fifth Avenue
New York, NY 10022
Phone: (212) 759-8822
Fax: (212) 980-1053
Spain-U.S.A. Chamber of Commerce Offices in the United States
350 Fifth Ave., Suite 3514
New York, N.Y. 10118
Phone: (212) 967-2170
Fax: (212) 564-1415
2655 Le Jeune Rd., Suite 1008
Coral Gables, FL 33134
Phone: (305) 446-1992
Fax: (305) 529-2854
Telex: 413177 LPI-MIA
125 Summer St., 17th Floor
Boston, MA 02110
Phone: (617) 439-8777
Fax: (617) 439-8734
U.S. & Foreign Commercial Service Offices in Spain
U.S. & Foreign Commercial Service
American Embassy U.S. mail address:
Serrano, 75 American Embassy-FCS
28006 Madrid PSC #61, Box 0021
APO AE 09642
Phone: 011-(341) 577-4000 Fax: 011-(341) 575-8655
U.S. & Foreign Commercial Service
American Consulate General U.S. mail address:
Via Layetana, 33 Commercial Section
08003 Barcelona A. C. G.
Phone: 011-(343) 319-9550 Barcelona PSC 64
APO AE 09646
Fax: 011-(343) 319-5621
American Chambers of Commerce in Spain
American Chamber of Commerce in Spain
Avenida Diagonal, 477
Phone: 011-(343) 405-1266
Fax: 011-(343) 405-3124
American Chamber of Commerce in Spain
Padre Damian, 23
Phone: 011-(341) 458-6559
Fax: 011-(341) 458-6520
Other Important U.S. Government Contacts
Spain Desk Officer
U.S. Department of Commerce
Washington, DC 20230
Phone: (202) 377-4508
Fax: (202) 377-2897
Office of European Community Affairs
U.S. Department of Commerce
Washington, DC 20230
Phone: (202) 377-5276
(202) 377-2905--for duty rates
Fax: (202) 377-2155
Foreign Agricultural Service
U.S. Department of Agriculture
Washington, D.C. 20250
Phone: (202) 447-7103
Animal and Plant Health Inspection Service (APHIS)
6505 Belcrest Rd.
Hyattsville, Maryland 20782
Phone: (301) 436-8590 (Animals)
(301) 436-8537 (Plants)
Office of Tax Treaties
U.S. Department of Treasury
Internal Revenue Service
Washington, DC 20024
Phone: (202) 287-4752
ANNEX B. PUBLICATIONS
U.S. Department of Commerce Publications - Available from the Commercial
Information Management Systems (CIMS) at the nearest District Office of
the U.S. Department of Commerce, or through any library or organization
having access to the National Trade Data Bank (NTDB).
*Business America (bi-weekly)
*Basic Guide to Exporting
*The World is Your Market
*Foreign Business Practices
*EC 1992: Growth Markets
*Overseas Business Report, Marketing in Spain
*Foreign Economic Trends Report, Spain
U.S. Government Publications.--The U.S. Department of Commerce has
published numerous market research papers on Spain. These include air
pollution control equipment, apparel & textiles, auto parts & services,
avionics & ground support equipment, biotechnology, building materials,
coal, computers & peripherals, educational & training equipment,
electronic components, food processing & packaging equipment, franchising,
health care services, home textiles, hotel & restaurant equipment,
industrial controls, industrial organic chemicals, insurance, medical
equipment, metalworking equipment, oil & gas field machinery, security &
safety equipment, service sector, software, and sporting equipment.
The market research papers can be obtained from the Commercial Information
Management Systems (CIMS) at the International Trade Administration's
district offices located throughout the United States, or through any
library having the National Trade Data Bank. The fees start at $10 for
market research files or market research by industry/country.
A list of attorneys in Spain may be obtained from the Spain Desk Officer,
Office of Western Europe, Room 3042, U.S. Department of Commerce,
Washington, D.C. 20230.
More detailed information on current economic developments in Spain and an
analysis of their implications for American business interests may be
obtained by ordering the most recent Foreign Economic Trends report from
the nearest district office of the U.S. Department of Commerce.
Political and other background information on Spain is available in the
Background Notes series of reports prepared by the U.S. Department of
State. These may be ordered from the GPO Book Store, U.S. Department of
State, Washington, D.C. 20520.
Annual subscriptions for these reports may be purchased by writing to the
Superintendent of Documents, U.S. Government Printing Office, Washington,
Other U.S. Government Publications can be obtained from Superintendent of
Documents, U.S. Government Printing Office, Washington, D.C. 20402.
Foreign publications can be obtained from European Publications, Inc.,
11-03 46th Avenue, Long Island City, N.Y. 11101
Other Recommended Publications the following publications may also be
useful sources of information:
*"American Firms in Spain" and
*"Employment in Foreign Countries"
Published by World Trade Academy Press,
50 East 42nd Street, Suite #509
New York, N.Y. 10017.
*"American Firms, Subsidiaries, and Affiliates in Spain"
Published by Commercial Section, A.C.G.,
Barcelona PSC 64,
APO AE 09646
*Area Handbook for Spain
Published by the U.S. Government Printing Office,
Washington, D.C. 20402.
*Commercial, Business, and Trade Laws of the World
Published by Oceana Publications, Inc.,
Dobbs Ferry, N.Y. 10522.
*Economic Outlook (semi-annual)
*Annual Report on Spain
Published by OECD, Publications and Information Center,
2001 L St., N.W., Suite #700, Washington, D.C. 20036.
*American Chamber of Commerce in Spain - Report
Newsletter of the American Chamber of Commerce in Madrid,
Avenida Diagonal, 477-8, 08036 Barcelona, Spain.
Published quarterly by US&FCS,
Consulado General de los EE.UU.,
Via Laietana, 33, 08003 Barcelona.
Published by Banco Central,
Alcala, 49-28014 Madrid, Spain.
*The Business Link
Published by Spain - USA Chamber of Commerce
350 Fifth Avenue, Suite #3514
New York, NY 10118.
*Europe: Magazine of the European Community
Published by European Community Information Office,
2100 M Street, N.W., Suite 700
Washington, D.C. 20037.
*ICE - Informacion Commercial Espanola
Published by CEDISA
28004 Madrid, Spain.
*SENS - Spanish Economic News Service
Published by Gestinova
Paseo de la Castellana, 81
28046 Madrid, Spain.
ANNEX C. TRADE FAIR SCHEDULE
Spain hosts a number of national and international trade fairs. The U.S.
Department of Commerce participates in Spanish fairs and or sponsors
promotional events; e.g., trade missions, seminar missions, and industrial
catalog shows. Information concerning these events may be obtained from
the nearest U.S. Department of Commerce District Office or the Office of
Western Europe, International Trade Administration, U.S. Department of
Commerce, Washington, D.C. 20230.
The trade fair schedule for Spain is shown below by city and month:
Jan. INTERNATIONAL CARAVANNING SHOW (Annual)
SALON GAUDI--Men's Fashion Show (Biannual)
Feb. GRAPHISPACK--International Graphic Arts Show
(Quadrennial, next in 1993)
SALON GAUDI--Women's Fashion Show (Biannual)
Mar. ALIMENTARIA--Food Products (in odd years)
CONSTRUMAT--International Construction Show (in odd years)
Apr. COSMO--Aircraft and Avionics (in odd years)
EXPOMOVIL--International Automobile Show (in even years)
May RODATUR--International Tourism Show (Annual)
Jun. EXPOTRONICA--International Electronic Components and
Equipment Fair (in even years)
LIBER--Book Show (Annual)
Jul. SALON GAUDI--Men's Fashion Fair (Biannual)
Sep. EXPOHOGAR--Housewares (Annual)
SALON GAUDI--Women's Fashion Fair (Biannual)
SONIMAG--International Image, Sound, and
Oct. HOSTELCO--International Restaurant, Hotel, and Community
Equipment (in odd years)
TECNOCLINIC--International Hospital Techniques and Equipment
(in odd years)
TECNO-ALIMENTARIA--Machinery and Equipment for the Food Industry
(in odd years)
Nov. EXPOMATEX--International Textile Machinery Fair (1991)
EXPOQUIMIA--Chemicals (Triennial, next in 1993)
Dec. INTERNATIONAL NAUTICAL SHOW (Annual)
Feria de Barcelona
Avda. Reina Ma. Cristina, s/n
Mar. ELA-ELEKTRO--International Technical and Electronic Machinery,
Automation, and Lighting Fair (in odd years)
EXMA--International and National Maintenance
(in odd years)
Apr. AMBIENTE--Heating, Air Conditioning, and Plumbing (in odd years)
Sep. EXMA--Material Handling Equipment (in odd years)
FERROFORMA--Hardware, D.I.Y., Kitchenware, and
Products (in even years)
TRANSMET--International Casting, Forging,
and Surface Treatment (in odd years)
SUBCONTRATATION--Subcontracting Fair (in odd
Oct. BIEMH-HERRAMIENTA--Machine Tools Fair (in even years)
Nov. FORESTA--Forestry Equipment (in odd years)
PROMA--International Protection of the Environment Fair
(in odd years)
SINAVAL AND EUROFISHING--Marine, Sea Port, and Fishing
Industries (in even years)
Feria Internacional de Bilbao
Telex: 32617 FIMB E
Mar. FICC--International Footwear Industry Fair (Biannual)
May MODATECC--International Technology and Footwear Fashion Fair
Sep. FICC--International Footwear and Related Industries Fair
Nov. MODATEC--International Technology and Footwear Fashion Fair
PROMA--International Protection of the Environment Fair
(in odd years)
Institucion Ferial Alicantina
Avda. Chapi, 30
03600 Elda (Alicante)
Telex: 68232 CEPEX E
Jan. FITUR--International Tourism Fair (Annual)
IBERJOYA--Jewelry Show (Annual)
REGALO FAMA--Gift Show (Biannual)
Feb. ARCO--International Contemporary Art Fair (Annual)
IMAGENMODA--International Women's Fashion Show (Biannual)
Mar. SICUR--International Safety Devices Show (in even years)
Apr. BRICOLAGE--Do-It-Your-Self Show (Annual)
IBERPIEL--Furs and Leather Show (Biannual)
INTERDIDAC--Teaching Aids (in odd years)
May EXPO-OPTICA--International Optics, Optometry, and Prothesic
Audiometric Show (Annual)
Jun. FINART--International Artesan Products Fair (Annual)
LIBER--International Book Show (in odd years)
TEM--Municipal Equipment (in even years)
Sep. IMAGENMODA--International Women's Fashion Show (Biannual)
REGALO FAMA--Gift Show (Biannual)
Oct. TECNOVA--Innovation and Technology (in odd years)
Nov. IBERPIEL--Furs and Leather Show (Biannual)
SIMO--International Monographic Office
Equipment and Informatics Show (Annual)
Spain-U.S. Chamber of Commerce in Florida
Gables International Plaza
2655 Le Jeune Road, Suite 1008
Coral Gables, FL 33134
Phone: (305) 446-4495
Fax: (305) 529-2854
Telex: 413177 LPI-MIA
Recinto Ferial de la Casa de Campo
Avda. de Portugal, s/n
Jan. TEXTILHOGAR--International Fair of Home Textiles and Decoration
FIMI--International Children's and Young
People's Fashion Fair (Biannual)
Feb. FEJU--International Toy Fair (Annual)
DIPA--International Teaching Aids, Educational Techniques, and
Stationery Fair (Annual)
EXPOCARNE--International Meat Industries Fair (in odd years)
Mar. CEVISAMA--International Ceramics, Glass, Facings and Fixtures
Apr. MAICOP--International Bakery and Ice Cream Fair (biennial)
May FIAM--International Art in Metal, Lamps, and Jewelry Fair
CEVIDER--International Ceramics, Glass, and Decorative Elements
INTERNATIONAL MUSIC SALON (Annual)
EXPOFARMACIA--International Congress and
Pharmaceutical Specialties (Annual)
MUNDO BELLEZA-DROGUEYPO--Cosmetics and Home Clean Products
Recreational Equipment (Annual)
Jul. FIMI--International Children's and Young People's Fashion Fair
Sep. FIM--International Furniture Fair (Annual)
Oct. EXPOCARNE--Meat Processing Equipment Fair (Biennial)
IBERFLORA--International Ornamental Horticulture Show (Annual)
EUROAGRO--International Agricultural Production Trade Fair (Annual)
Nov. INDUFERIAS--International Exhibition for Amusement and
Feria Muestrario Internacional
Avda. de las Ferias, s/n
Telex: 62435 FERIA E
Apr. INTERNATIONAL BICYCLE, MOTORCYCLE, PARTS, AND ACCESSORIES FAIR
May EXPAL--Aluminum Monographic Show (Biennial)
Inst. Ferial de Castilla y Leon
Jan. ENOMAQ--International Wine Cellar Machinery and Equipment Salon
(in even years)
Feb. SMAGUA--International Monographic Water Show (in odd years)
SMOPYC--International Construction Machinery
Show (in even years)
Mar. FIMA--International Farm Machinery Fair (Annual)
Nov. ROBOTICA--Robotics Equipment (in odd years)
MUNDITELE--TV Productions (Annual)
Feria de Muestras de Zaragoza
This file extracted from Dept. of Commerce National Trade Data Bank (NTDB)
CD-ROM SuDoc No. C 1.88:993/12. Processed 12/01/1994 by software developed
by RCM (UM-St. Louis Libraries) / OBR_0019