INVESTMENT AID AND INCENTIVES IN SPAIN

With the aim of promoting investment, employment, competitiveness and economic growth, the Spanish State and all other public authorities have been developing a broad range of aid instruments and incentives specially targeted at boosting indefinite term employment, regional investment and research, development and technological innovation (R&D and TI).

Furthermore, since Spain is an EU Member State, potential investors are also able to access European aid programs, which provide further incentives for investing in Spain.

1. Introduction

With the aim of promoting investment, employment, competitiveness and economic growth, the Spanish State and all other public authorities have been developing and consolidating an extensive and complete system of aid instruments and incentives especially targeted at boosting indefinite-term employment, regional investment and at research, development and technological innovation (R&D&I).

Furthermore, since Spain is an EU Member State, potential investors are able to access European aid programs, which provide further incentives for investing in Spain.

These investment aid measures can be classified as follows:

  • State incentives for training and employment.
  • State incentives for specific industrial sectors.
  • Incentives for investments in certain regions.
  • State incentives for innovative SMEs.
  • Preferred financing from the Official Credit Institute (Instituto de Crédito Oficial or ICO).
  • Incentives for internationalization.
  • EU aid.

Most of the aid that can be obtained from the various agencies depends largely on the specific characteristics of each investment project (i.e. the better the prospects of the project, the more possibilities there are of obtaining financing and aid).

Furthermore, the ICEX-Invest in Spain website (www.investinspain.org) offers a search engine for public aid and subsidies granted in Spain. Using this tool, companies can gain easy access to updated information regarding the grants available for their investment projects. Also, this same tool now includes an automatic alert system for aid and subsidies tailor-made to each user.

Notwithstanding the tax incentives discussed in other chapters (the main tax incentives analyzed in Chapter 3 are investment tax credits (for further information go to Chapter 3, section 2), the main State incentives for investors are described on the following pages.

2. State incentives for training and employment

These incentives, which form part of the Government’s employment promotion policy, can signify important savings in labor costs and are divided into two types:

2.1. Training incentives

Royal Decree 395/2007, regulating the Vocational Training for Employment subsystem, has combined both the training aimed at employed workers (Ongoing Vocational Training) and the training aimed at unemployed workers (Occupational Training) under a single model.

In this context, the Vocational Training for Employment subsystem encompasses a set of instruments and actions aimed at encouraging and extending to companies and to employed and unemployed workers a type of training that meets their needs and contributes to the development of a knowledge-based economy.

The following are the initiatives making up this training subsystem:

  • Demand-based training: training initiatives fostered by companies and individual leaves of absence for training, financed in whole or in part with public funds, to meet the specific training needs raised by companies and their workers.
  • Supply-based training: comprising both training initiatives aimed preferentially at employed workers and training initiatives aimed primarily at unemployed workers with a view to offering them training which capacitates them for qualified work and access to jobs.
  • Training alternating with work: training initiatives under vocational training contracts and public training/work programs, enabling the worker to combine training with professional practice on the job.
  • Programs to support and accompany training: aimed at improving the efficiency of the Vocational Training for Employment subsystem.

The most notable initiatives, for the purposes of interest here, are demand-based training and programs to support and accompany training.

Thus, demand-based training is regulated by Order TAS/2307/2007, partially implementing Royal Decree 395/2007, regulating the vocational training subsystem for employment in connection with demand-based training.

The demand-based training system is implemented through the grant of an annual credit to companies-consisting of a percentage of reductions in their workers’ social security contributions —which must be earmarked for training activities for their workers.

The amount of the reductions is set annually in the General State Budgets, according to the size of the company and the scope of the training carried out in the preceding year.

Specifically, the aforesaid credit is subdivided into two types, according to the type of training program:

Table 1

 Features of the aidAmount (Additional Provision 91 LGPE 2016) *

Own training programs

Reductions in employer social security contributions so that the worker can take part in programs aimed at improving his qualifications.

The result of applying the following percentages, according to number of workers, to the amount paid in the preceding year as employer contributions to vocational training: 100% (between 6 and 9), 75% (between 10 and 49), 60% (between 50 and 249) and 50% (more than 250)

For companies with between 1 and 5 workers and for newly formed companies or companies opening new workplaces with new workers, reductions of €420 are established for the first case and of €65 for the second.

Individual leaves of absence for workers

Reductions in employer social security contributions for companies granting individual leaves of absence for training to their workers.

Equal to the salary costs of the leaves of absence granted, with certain limits established by Ministerial Order, according to size of company. As an example, for 2017 the limits will be between the amount equal to the costs of 200 hours, for companies with between 1 and 9 workers, and the amount equal to the costs of 800 hours, for companies with between 250 and 499 workers, increased by another 200 hours for each 500 workers more on the workforce.

During 2017, total credits granted under this section may not exceed 5% of the Public State Employment Service budget for the financing of reductions in employer social security contributions for vocational training for employment

(*) The amount of the 2017 reductions had not been stipulated by the date on which this Chapter was prepared, given that the 2017 General State Budgets Law had not yet been approved; accordingly, the amounts stipulated in the 2016 General State Budgets Law should be deemed to have been extended.
Pursuant to Additional Provision 91, funds from the amount relating to vocational training will be used to finance the vocational training for employment system regulated under Royal Decree-Law 4/2015, of March 22, 2015, on the urgent reform of the Vocational Training for Employment System. Nonetheless, the application of the vocational training for employment system provided for under said Royal Decree-Law is subject to subsequent implementation by regulation which has not yet taken place.
In this connection and pursuant to Transitional Provision 1 of Royal Decree-Law 4/2015, until the new categories of vocational training for employment initiatives provided for thereunder have been implemented by regulation, those in force under Royal Decree 395/2007 shall remain in force.
See the previous clarification regarding the transitional application of the training actions in force under Royal Decree 395/2007 for as long as the professional training for employment system regulated by Royal Decree-Law 4/2015, of March 22, 2015 has not been implemented by regulation.

On the other hand, the programs to support and accompany training are regulated in Order TIN/2805/2008, implementing Royal Decree 395/2007 on programs to support and accompany training, stipulating the terms regulating the grant of the public subsidies to be used to finance them.

These subsidies are aimed at contributing to the improvement of the vocational training for employment subsystem, boosting the quality of the training of employed and unemployed workers at industry or inter-industry level, as well as at disseminating and promoting the subsystem as a whole.

The procedure for granting these subsidies is initiated ex officio in a public call for applications issued by the Director-General of the National Employment Service or the respective Autonomous Community body with jurisdiction on the matter.

These subsidies are targeted at the financing of four types of program:

Table 2

PROGRAMPurposeBeneficiaries

Prospecting and analysis

To obtain a more detailed knowledge of the factors making up training demands, and analysis of specific training problems and needs in the various economic industries.

Companies with workplaces in national territory, which include among their corporate purposes the pursuit of activities relating to occupational training
for employment.

Preparation and experimentation

To furnish companies and agents active in the management of worker training with tools enabling them to improve their organization.

Evaluation

To evaluate training in the various economic industries and to develop evaluation methodologies with a view to improving training quality.

Promotion and dissemination

To create knowledge networks using virtual workplaces, documentary consultation bases, publications, etc. which favor the dissemination of initiatives and products of all the agents active in Vocational Training for Employment.

Notwithstanding the foregoing, it is important to note that, by virtue of the provisions of Royal Decree Law 4/2015, of March 22, 2015, on the urgent reform of the vocational training for employment system in the area of labor and of Law 30/2015, of September 9, 2015, regulating the vocational training for employment system in the area of labor, modifications are made to the system in force in this connection under the following main objectives: (i) to guarantee that workers, employees and unemployed persons can exercise their right to training, (ii) to make an effective contribution through training to the competitiveness of enterprises, (iii) to strengthen the role played by collective bargaining in the matter and (iv) to offer efficiency and transparency in the management of public resources.

The newly introduced features include most notably the following:

  • Reorganization and regulation of training initiatives: the aforesaid regulations restructure and regulate in detail the categories of modules of vocational training for employment. In this connection, they stipulate the following four training modules: (i) programmed training by companies for their workers; (ii) training offered by the relevant authorities to active workers; (iii) training offered by the relevant authorities to unemployed workers; and (iv) other vocational training initiatives (which include, inter alia, individual leaves of absence for training and training that alternates with employment).
  • Economic modules for training: economic module means the cost per participant and hour of training eligible for public financing. The amount of these modules will comprise both direct and indirect costs of the training activity, and the costs relating to organization in programmed training can be financed up to 10% in companies of more than 9 employees, 15% in companies of between 6 and 9 employees and up to 20% in companies with 5 or fewer employees.
  • Programmed training by companies: with this new legislation, training initiatives seek to respond to the real, immediate and specific training needs of companies and their employees, and can be carried out by the company itself or entrusted to an external entity accredited and/or registered in the appropriate register.

For such purpose, companies may avail themselves of credit for the financing of training costs, which can take the form of reductions in employer social security contributions according to the annual projections in the General State Budgets Law. Companies will also participate in the financing of their employees’ training with their own resources, according to the following percentages: 5% (1 to 9 employees), 10% (10 to 49 employees), 20% (50 to 249 employees, or 40% (250 or more employees).

In any case, pursuant to Transitional Provision 1 of Royal Decree-Law 4/2015 and of Law 30/2015, referred to above, until the new categories of vocational training for employment initiatives provided for under such legislation are implemented by regulation, those in force under Royal Decree 395/2007, already described, will remain in force, except in connection with a few adjectival aspects (financing from grant, early payment, competition among training entities, etc.).

2.2. Employment incentives

The Spanish Central Government offers an extensive catalog of aid, consisting mainly of reductions in social security contributions, aimed at promoting new stable or indefinite jobs (especially for unemployed persons included in groups such as women in general, young people aged 16-30, the long-term unemployed, unemployed persons over the age of 45 and persons with disabilities).

Furthermore, on an exceptional basis, certain reductions in social security contributions are instrumented for temporary contracts executed with workers with disabilities or with socially-excluded individuals, provided that in both cases they are unemployed and registered as job seekers at the Employment Office, as well as with persons who provide evidence of having been victims of gender-based violence.

Where the indefinite-term or temporary contract is part-time, the incentive will be the result of applying to the incentives stipulated for each case, a percentage equal to the percentage of the working day stipulated in the contract, increased by 30%, the result of which may in no case exceed 100% of the stipulated incentive, except in connection with incentives for hiring persons with disabilities through special employment centers.

The catalog of aid, the basic parameters of which were just described above, is very extensive, as it varies according to the ample number of existing contracts and the specific features of each of them. Most of these incentives are set forth in Law 43/2006, on improved growth and employment, as well as in Law 3/2012, on urgent measures to reform the job market, which, among other objectives, are aimed at rationalizing the system of incentives for hiring under indefinite-term contracts, with a view to correcting some of the inefficiencies detected, in practice, in recent years.

More information on the aid and reductions envisaged for each type of contract may be found at the website of the State Public Employment Service (http://www.sepe.es)

In any case, the following is a summary of the main aids set forth in the aforesaid legislation, indicating the stipulated incentive percentages.

Table 3

A) Incentives for hiring under indefinite-term contracts to support entrepreneurs* (article 4 of Law 3/2012)

GroupsDescriptionAnnual amount (€)Duration

Unemployed persons registered as job seekers at the Unemployment Office

Young people aged 16 -30**

Men and Women

Women in occupations in which women are less represented

3 years

Year 1: 1,000
Year 2: 1,100
Year 3: 1,200

Year 1: 1,100
Year 2: 1,200
Year 3: 1,300

Persons over 45

Men and Women

Women in occupations in which women are less represented

1,300

1,500

(*) Only companies with fewer than 50 workers will be able to make use of the employment contract to support entrepreneurs regulated in this article.
In order to apply these initiatives, the employer must maintain the worker hired in his job for at least 3 years after the commencement date of the employment relationship. It must also maintain the level of employment attained by the company with the indefinite-term contract to support entrepreneurs for at least one year after execution of the contract. In the event of a breach of these obligations, the incentives must be returned.
Companies with fewer than 50 workers which hire unemployed persons who collect unemployment benefits using this contractual form may also take a tax credit for corporate income tax purposes equal to the lower of the following amounts: the value of the unemployment benefits still to be collected at the time of hiring or the amount of 12 months of the acknowledged unemployment benefit.
This tax credit will apply to contracts executed during the tax period until a workforce of 50 workers has been attained, provided that, during the 12 months preceding commencement of the employment relationship, the company’s total average workforce increases in connection with each worker by at least one unit with respect to that existing in the previous 12 months, and its application will be conditional on the worker hired having received unemployment benefits for at least 3 months prior to commencement of the employment relationship.
Indefinite-term employment contracts to support entrepreneurs may be executed until the unemployment rate in Spain has dropped below 15%.
(**) Companies hiring their first worker aged under 30 using this contractual form may take a €3,000 tax credit for corporate income tax purposes.

Table 4

B) Incentives for hiring under indefinite-term contracts

GroupsDescriptionAnnual Amount (€)Duration

Beneficiaries of the National Youth Guarantee System*

Young persons over the age of 16 and under the age of 25, or under the age of 30 in the case of disabled persons** (art. 107 of Law 18/2014, of October 25, 2014, approving urgent measures for growth, competitiveness and efficiency)

Full time

Part time

6 months

1,800

1,350 in the case of working time equal to 75% or 900 in the case of working time equal to 50%

Special situations

Socially-excluded workers (art. 2.5 Law 43/2006)

600

4 years

Socially-excluded workers who have finalized an employment contract with an employee insertion company during the preceding 12 months, and have
not worked for another employer thereafter and are hired by an employer that is not an insertion company or special employment center (art. 2.5 Law 43/2005)

Year 1: 1,650
Year 2: 600

Victims of domestic violence (art. 2.4 Law 43/2006)***

1,500

4 years

Victims of gender-based violence (art. 2.4 Law 43/2005)***

1,500

4 years

Victims of terrorism (art. 2.4 bis Law 43/2006)***

1,500

4 years

Victims of human trafficking (art. 2.4 ter of Law 43/2006)***

1,500

2 years

Persons with disabilities

In general (art. 2.2.1 Law 43/2006)

Men < 45 years

Women < 45 years

Men and women aged over 45

Throughout
the term of the
contract

4,500

5,350

5,700

In case of severe disability (art. 2.2.2 Law 43/2006)

5,100

5.950

6,300

Conversion to indefinite

Conversion of temporary contracts for job creation executed with persons with disabilities, or of training contracts executed with disabled workers into indefinite-term contracts (art. 2.2.1 Law 43/2006)

Men < 45 years

Women < 45 years

Men and women aged over 45

Throughout
the term of the contract

4,500

5,350

5,700

5,100

5,950

6,300

Conversions of work-experience, andover and replacement due to retirement
contracts into indefinite-term contracts (art. 7 Law 3/2012) ****

Men

Women

3 years

500

700

Conversion of vocational training and apprenticeship contracts, regardless of the
date of execution, into indefinite-term contracts (art. 3.2 Law 3/2012) *****

1,500

1,800

Conversion of contracts executed with socially-excluded workers into indefinite-term contracts (art. 2.6 Law 43/2006)

600

4 years

Conversion of contracts executed with socially-excluded workers who have finalized an employment contract with an employee insertion company during the preceding 12 months, and have not worked for another employer thereafter and are hired by an employer that is not an insertion company or special employment center into indefinite-term contracts (art. 2.6 Law 43/2006)

Year 1: 1,650
Year 2: 600

Conversion of contracts executed with victims of domestic violence into indefinite-term contracts (art. 2.6 Law 43/2006)

1,500

Conversion of contracts executed with victims of gender-based violence into indefinite-term contracts (art. 2.6 Law 43/2006)

1,500

Conversion of contracts executed with victims of terrorism into indefinite-term contracts (art. 2.6 Law 43/2006)

1,500

(*) This reduction will apply in all cases of workers hired between the time Royal Decree-Law 8/2014, of July 4, 2014 came into force, i.e., October 17, 2014, and June 30, 2016.
(**) Young persons over the age of 25 and under the age of 30 who meet the requirements imposed under Law 18/2014 for eligibility for an action under the National Youth Guarantee System will be eligible for this reduction until their unemployment rate drops to below 20% according to the Survey of Active Population for the last quarter of the year.
(***) Victims of gender-based and domestic violence, of terrorism and of human trafficking, do not have to meet the condition of being unemployed.
(****) Potential beneficiaries of these reductions are employers with fewer than 50 employees at the time of hiring, including independent professionals and worker-owned enterprises or cooperatives joined by employees as working or business partners, provided that the latter have chosen a social security scheme for employees. In the case of workers hired under work-experience contracts and made available to user companies, said companies will be entitled, on the same terms, to identical reductions where, without a break in continuity, they arrange an indefinite-term employment contract with those workers.
(*****) Starting on January 1, 2017, the social security contribution relief will consist of a reduction, where those hired are workers registered under the National Youth Guarantee System who meet the requirements imposed under article 105 of Law 18/2014, of October 15, 2014, approving urgent measures for growth, competitiveness and efficiency, said reduction being applied on the same terms as those of the reductions stipulated under article 3.5 of Law 3/2012.

Table 5

C) Incentives for hiring under temporary contracts

GROUPSDescriptionAnnual amount (€)Duration

Persons with disabilities hired under temporary contracts to foster employment (art. 2.2.4 Law 43/2006)

In general

Men < 45 years
3,500

Men > 45 years
4,100

Women < 45 years
4,100

Women > 45 years
4,700

Throughout
the term of the
contract

Severe disability

4,100

4,700

4,700

5,300

Socially-excluded persons (art. 2.5 Law 43/2006)

500

Victims of gender-based or domestic violence (art. 2.4 Law 43/2006)

600

Victims of terrorism (art. 2.4 bis Law 43/2006)

600

Victims of human trafficking (art. 2.4 ter Law 43/2006)

600

Table 6

D) Incentives for hiring under indefinite-term contracts, under temporary contracts or for conversion into indefinite-term contracts through special employment centers

GROUPSAnnual amountDuration

Unemployed persons with disabilities hired under temporary or indefinite-term contracts through special employment centers (art. 2.3 Law 43/2006)

100% of the employer’s social security contributions, including contributions for occupational accidents and sickness and joint collection contributions


Throughout the term of the contract.

Table 7

E) Incentives for training and apprenticeship contracts (article 3 of Law 3/2012)

GROUPSDescriptionAnnual amountDuration

Unemployed persons registered as job seekers with the Employment Office

For contracts executed after July 8, 2012

Reduction in employer’s contribution to social security for common contingencies, including those relating to occupational accidents and illnesses, unemployment, wage guarantee fund and vocational training, equal to 100% in the case of employers with fewer than 250 employees; and 75% in the case of employers with 250 or more employees (Article 3.1 Law 3/2012)

Throughout the term of the contract, including
renewals.

Regardless of the date on which they are executed

Reduction in employer’s social security contribution of EUR 1,500 per year (EUR 1,800 in the case of
women) where training and apprenticeship contracts which have terminated are converted into indefinite-term contracts (Article 3.2 Law 3/2012)

(*) The employer social security contribution relief stipulated for training and apprenticeship contracts will consist of a reduction, where those hired are workers registered under the National Youth Guarantee System who meet the requirements imposed under article 105 of Law 18/2014, of October 15, 2014, approving urgent measures for growth, competitiveness and efficiency, said reduction being applied on the same terms as those of the reductions stipulated under article 3 of Law 3/2012 (article 3.5 Law 3/2012).

The above does not preclude the reductions provided for in Order ESS/2518/2013 of December 26, 2013, regulating the training aspects of the contract for training and apprenticeship, whereby enterprises may finance the cost of training inherent in this type of contract through reductions in employer social security contributions. The maximum amount of these reductions will be the result of multiplying the economic module in question (face-to-face training: €8/hour; and distance training: €5/hour) by the number of hours equal to 25% of the working hours during the first year, and 15% of the working hours the second and third years.

It should be noted that the above-mentioned Law 18/2014 on urgent measures for growth, competitiveness and efficiency has entailed the modification of the above-mentioned Order ESS/2581/2013 on the training aspects of the contract for training and apprenticeship, increasing the maximum amounts of the reductions in employer social security contributions for cases where beneficiaries of the Youth Guarantee System are hired. In these cases, Order ESS/41/2015, of January 12, 2015, establishes that the above-mentioned multiple of 25%/15% will be increased to 50% of the working hours during the first year, and 25% of the working hours the second and third years.

Table 8

F) Incentives for the contracts provided for in Law 11/2013, of July 26, 2013, on measures to support entrepreneurs and to boost growth and create jobs*

TYPEDescription/GroupsAnnual amountDuration

Training relationship (art. 9)

Indefinite or temporary part-time hiring of young unemployed persons under the age of 30 registered with the employment office, beneficiaries of the National Youth Guarantee System, without employment experience and originating from other sectors of activity, combining employment and training*** or having pursued such training in the 6 months preceding the execution of the contract.

100% reduction to employer social security contributions for common contingencies in the case of companies with fewer than 250 employees; and 75% in the case of companies with 250 employees or more.

Maximum 12-month term, renewable for another 12 months provided that the worker continues to combine training and employment or has pursued the training in the 6 months prior to the deadline for the 12 months preceding.

Microenterprises and self-
employed workers ****

Hiring on a permanent, full- or part-time basis, of young unemployed persons under the age of 30 and registered at the employment office.

100% reduction to employer social security contributions for common contingencies.*****

During the first year of the contract.

New young entrepreneurial
projects (art. 11)

First hiring on a permanent basis (full or part time) on the part of independent contractors under the age of 30 and without salaried workers, of unemployed persons aged 45 or more registered uninterruptedly at the unemployment office, for 12 months in the 18 months preceding the hiring or who are beneficiaries of the occupational retraining program for persons who have used up their unemployment protection

100% reduction to employer social security contributions.

Durante un máximo de 12 meses siguientes a la contratación.

First young persons’
employment (art. 12)

Conversion of temporary contracts (up to a maximum of 6 months) of young unemployed persons under the age of 30 without employment experience or less than 3 months of experience into indefinite-term contracts.

Reduction in employer social security contributions of €500 a year and €700 a year in the case of women.

Durante 3 años.

Work experience for first
employment (art. 13)

Work experience contracts for young persons under the age of 30, even where 5 or more years have elapsed since completion of their studies.

Reducción de las cuotas empresariales a la Seguridad Social por contingencias comunes del 50%, o del 75% si a la hora de contratar estuviese realizando prácticas no laborales en la empresa, con una bonificación adicional del 50% o 25%, respectivamente, para personas beneficiarias del Sistema Nacional de Garantía Juvenil.

Durante toda la vigencia del contrato.
En el caso de personas beneficiarias del Sistema Nacional de Garantía Juvenil, la bonificación adicional se aplicará hasta el 30 de junio de 2016.

(*) The hiring incentives provided for under articles 9, 10, 11, 12 and 13 of Law 11/2013 will also apply where the contract is executed with youth under the age of 35 who have been recognized a degree of disability equal to or greater than 33%, provided that they also meet the other requirements imposed under the aforesaid articles (Additional Provision Nine Law 11/2013).
(**) In accordance with the First Transitional Provision of the above mentioned Law 11/2013, the incentives set out in articles 9 to 13 will remain in force until the unemployment rate falls below the 15% mark.
(***) Officially certified training or training promoted by the Public Employment or Training Services in languages or IT and communication of a minimum annual duration of 90 hours.
(****) Excluding indefinite contracts in support of entrepreneurs, indefinite contracts of groups in special situations or with a disability and permanent contracts for intermittent work.
(*****) In order to qualify for this measure, companies must meet the following requirements: a) have, when the contract is executed, a workforce equal to or of less than nine workers; b) not have had any previous employment relationship with the worker; c) not have adopted, during the six months preceding execution of the contract, unjustified contract termination measures; and d) not have previously executed another contract pursuant to article 10.1 of Law 11/2013.

G) Incentives for indefinite-term employment and for independent professionals under Law 1/2015

Article 8 of Law 25/2015, of July 28, 2015, on the second chance mechanism, the reduction of the financial burden and other social security measures, consolidated the incentive for indefinite-term employment and for independent professionals introduced by Royal Decree-Law 1/2015, of February 27, 2015, on the second chance mechanism, the reduction of the financial burden and other social security measures, consisting of the possibility of reducing the employer social security contribution, in any of its forms, in cases of indefinite-term hiring. In order to be eligible for this incentive, companies must be up to date with their tax and social security obligations; they must not have terminated employment contracts in the preceding six months; and they must execute indefinite-term contracts, over a period of at least 36 months, which entail an increase in the level of employment.

The amount of the incentive can be up to €500, over 24 months, in cases of full-time hiring, and is reduced proportionally, according to the percentage of reduction in working time under each contract.

After the 24 months have elapsed, and during the following 12 months, companies with fewer than 10 employees at the time they execute the contract qualifying for this contribution relief, will be entitled to maintain the incentive, although only up to the first €250 of the contribution base, or the relevant amount reduced proportionally, in cases of part-time hiring.

It is also important to note that in the case of employees registered under the National Youth Guarantee System, this contribution relief will consist of a reduction, provided that the requirements stipulated under article 105 of Law 18/2014 are met (mainly, to be registered and included on the single demand list and, in any case, have evidenced not having worked or received education or training previously, during a specific period of time).

Nonetheless, this incentive will not apply to certain employment relationships, such as special employment relationships (senior management, disabled persons, etc.) or to those that affect the spouse, ascendants, descendants and other persons related by consanguinity or affinity, or to the hiring of employees who had been hired by other group companies, among other cases.

Lastly, the application of this incentive will be incompatible with the application of any other social security contribution relief for the same contract, other than the relief for hiring beneficiaries of the National Youth Guarantee System or the economic aid to beneficiaries of the Employment Activation Program under indefinite-term contracts.

2.3. Local employment initiatives (no time limit)

In addition to the incentives to foster employment and for labor adjustments, aid and subsidies may also be granted for investment projects aimed at generating economic activity and stable employment in local and regional areas of Spain, subject to classification by the State Employment Public Service as investment and employment (I+E) projects or entities.

The specifications for the grant of this aid are established in the Order of the Ministry of Employment and Social Security of July 15, 1999, which has remained in force in the context of the new Spanish Employment Strategy 2014-2016 approved by Royal Decree 751/2014, of September 5, 2014.

In connection with the foregoing, it is important to note that at the Industry-wide Conference on Employment and Labor Affairs of the most recent Conference of Autonomous Community Presidents held in Madrid on January 17, 2017, an agreement was reached to renew the Spanish Employment Strategy for 2017-2020 (still awaiting final approval), stipulating the following priorities:

  1. To continue actively advancing in the modernization of the Public Employment Services and in the improvement of the coordination instruments on which the National Employment System is based, increasing the efficiency of Active Employment Policies.
  2. To continue advancing in the improvement of the Vocational Training for Employment system, especially in matters of Dual Training.
  3. To give priority to directing the services and programs related to active employment policies toward enhancing the employability, principally of young people and long-term unemployed persons.

According to specific information furnished by the government, the final approval of this Strategy apparently will not introduce substantial changes to the aforesaid Order of July 15, 1999, which will continue to represent the basic framework of reference in these matters.

A priori, the incentives provided for under said Order for investment projects aimed at generating economic activities and stable employment (able to be classed by the State Public Employment Service as “I+E” projects or enterprises) are therefore expected to remain in force under the aforesaid Spanish Employment Activation Strategy 2017-2020.

In this connection, for a project to be classed as “I+E”, it must meet the following requirements:

  • A local corporation must support the business project by contributing economic and/or material resources, such as infrastructures or services assisting it in the start-up and management of the business.
  • Projects must provide for the hiring of workers or the recruitment of new partners in the case of projects involving cooperatives or labor companies.
  • Projects must provide for the incorporation of a new company with a maximum number of 25 employees at the time of incorporation.
  • Projects must relate to a newly formed enterprise.
  • Projects must provide for the production of products and/or services which relate to emerging economic activities or, in the case of traditional activities in the area, which cover needs not covered by the existing structure.
  • Projects must meet technical, economic and financial viability requirements.

Incentives available for projects deemed eligible are as follows:

  • A financial subsidy aimed at the reduction by up to three percentage points of interest rates on loans granted to the company in connection with its incorporation and establishment. The maximum amount of this subsidy will be €5,108 per indefinite-term job created.
  • A subsidy for the support of management activities (e.g. subsidies for the external contracting of market or technical research, reports, and/or training programs). This subsidy will only be available during the first year after the incorporation of the company and will cover 75% of the cost of the qualifying services up to a maximum of €12,020.
  • A subsidy for technical assistance for the hiring of highly-qualified technical experts, covering 50% of total labor costs (including employer social security contributions for a maximum period of one year). This is a one-time subsidy with a ceiling of €18,030.
  • A subsidy for each indefinite-term employment contract, amounting to €4,808 for each new worker hired under an indefinite-term full-time contract (or the related proportion of such overall amount in the case of indefinite-term part-time contracts).
  • A subsidy for cooperatives and labor companies amounting to €4,808 per unemployed working partner recruited on an indefinite-term basis. This subsidy is not compatible with those described in the two preceding points.

All the aforementioned subsidies may be increased by 10% where the main activity is related to certain areas, such as the protection and maintenance of natural areas, new information and communication technologies, waste management, mass transportation, the development of local culture and the care of children, the handicapped and the aged.

Applications for these incentives must be submitted to the respective Provincial Directorate of the Employment Public Service or the appropriate Autonomous Community body, which are the bodies in charge of the management of this aid, selecting projects and granting the related aid.

This aid and these subsidies are compatible with others granted by other government agencies or public or private entities, although the total amount of the subsidy, whether taken alone or together with aid or subsidies granted by other public authorities, private or public entities, may not exceed 80% of the cost of the subsidized activity.

3. State incentives for specific industries

The Central Government provides financial aid and tax benefits for activities pursued in certain industries which are considered to be priority industries (e.g., mining, technological development, research and development, etc.) in view of their growth potential and their impact on the nation’s overall economy. Additionally, Autonomous Community governments provide similar incentives for most of these industries.

Financial aid includes both nonrefundable subsidies and interest relief on loans obtained by beneficiaries, or combinations of the two.

The main official programs supporting the industrial development projects to support innovation currently in force are:

3.1. Research, development and technological innovation

3.1.1. 2013-2020 Spanish Strategy for Science and Technology and for Innovation

Encouraging innovation, technological improvement and research and development projects continues to be one of the priority objectives of the Spanish public authorities, since this is a determining factor of the increase in a country’s competitiveness and economic and social development.

Science, Technology and Innovation Law 14/2011, of June 1, 2011, establishes the legal framework for the fostering of scientific and technical research, experimental development and innovation in Spain, founded on a scheme based on the approval of the related Spanish Strategies for Science, Technology and for Innovation, which serve as multi-year reference documents for reaching the statutory objectives and as a basis for the preparation of a State Plan through which to instrument in detail the initiatives required to perform such objectives.

In line with the foregoing, at the beginning of 2013 the Council of Ministers approved, in a combined document, “the Spanish Strategy for Science and Technology and for Innovation” for the 2013-2020 period, whose essential purpose is to promote the scientific, technological and business leadership of the country as a whole and to increase the innovation capacities of the Spanish company and the Spanish economy, defining in this connection the following general objectives:

  • recognizing and promoting R&D&I talent and its employability, with a view to improving the System’s R&D&I training capacities, boosting labor market integration and employability of the trained human resources, both in the public and in the business sectors, and facilitating their mobility among public institutions and between such institutions and the private sector for the pursuit of R&D&I activities;
  • fostering excellence in scientific and technical research; promoting the creation of knowledge, increasing the scientific leadership of the country and its institutions and fostering the creation of new opportunities which lead to the future development of highly competitive technological and business capacities;
  • boosting business leadership in R&D&I, increasing the competitiveness of the productive fabric by increasing R&D&I activities in all areas and, in particular, in those industries deemed to be strategic for growth and job creation in the economies of Spain and its Autonomous Communities;
  • fostering R&D&I activities aimed at meeting the global challenges currently facing Spanish society.

In order to attain the foregoing objectives, and having regard to the characteristics of the environment in which the agents of the Spanish System for Science, Technology and Innovation are to pursue their activities, six priority areas of transversal action were identified: (i) defining a favorable environment which enables the pursuit of R&D&I activities; (ii) specializing and aggregating the creation of knowledge and talent; (iii) stimulating knowledge transfer in open and flexible environments which favor interaction and encourage its conversion into innovative applications, whether commercial or non-commercial; (iv) supporting internationalization and promoting the international leadership of the System; (v) fostering the intelligent specialization of territories with a view to promoting a highly competitive regional framework; and (vi) disseminating a scientific, innovative and enterprising culture throughout society as a whole, with a view to achieving a higher degree of social and institutional acceptance of the entrepreneur.

The structure of the Spanish Strategy for Science and Technology and for Innovation aimed at aligning Spanish policies with the R&D&I objectives pursued by the European Union, defined in the new framework program for the financing of “Horizonte 2020” R&D&I activities, with a view to intensifying the participation of the agents of the Spanish System for Science, Technology and Innovation in the development of the European Research Space, facilitating access to sources of financing at Community level.

In short, the 2013-2020 Spanish Strategy for Science and Technology and for Innovation, as an instrument used to foster the country’s economic growth and competitiveness, defines the conceptual framework used to instrument R&D&I policies in Spain, whose specific initiatives are implemented and instrumented in the related State Plans.

3.1.2. 2013-2016 State Plan for Scientific and Technical Research and for Innovation

Simultaneous to the approval of the aforesaid Strategy, the Council of Ministers approved the 2013-2016 State Plan for Scientific and Technical Research and for Innovation, which, in line with the objectives and priorities defined in the Spanish Strategy for Science and Technology, defines the instruments to be used to finance R&D&I activities on the part of the national government, comprising the entire process, from the creation of ideas through the incorporation of those ideas into the market in the form of new products and processes used to improve the quality of life and the wellbeing of all citizens and to contribute to economic development.

This State Plan has the nature of a Strategic Plan pursuant to Subsidies Law 38/2003, of November 17, 2003, and the funds allocated thereunder are granted in competitive tender procedures, in which the selection of the proposals is based on scientific/technical methods and technological, business and commercial viability, supported by internationally validated principles, as well as by standardized and transparent assessment processes based on inter-party assessment committees.

In summary, the objectives of the 2013-2016 State Plan for Scientific and Technical Research and for Innovation have as a common denominator that of bolstering the competitiveness of the business fabric of Spain, founded on a sound scientific and technological base and on promoting innovation in all its dimensions, including most notably the following objectives: (i) promoting the training and employment of human resources in R&D&I activities in both the public and the private sectors; (ii) increasing the quality of scientific and technical research so that it attains its maximum level of excellence and impact; (iii) strengthening the international capacities and leadership of scientific and technical research institutions, centers and implementation units; (iv) facilitating access to scientific and technological infrastructures and to scientific equipment (in particular to major domestic and international special scientific and technical facilities); (v) boosting business leadership in R&D&I by enhancing the capabilities of companies in this regard and incorporating SMEs into the innovation process; (vi) favoring the creation and growth of technology-based enterprises and promoting efficient investor networks that provide access to new forms of financing for R&D&I activities; (vii) increasing cooperation between the public sector and the business sector in connection with R&D&I; (viii) stimulating R&D&I aimed at meeting society’s challenges; (ix) promoting the internationalization of the R&D&I activities of the agents of the Spanish Science, Technology and Innovation System; (x) expanding scientific, technological and innovative culture, as well as the dissemination of the results of scientific-technical research and innovation projects; (xi) going more deeply into R&D&I policies based on demand.

The Council of Ministers, in a resolution dated December 30, 2016, approved the extension of the State Plan for Scientific and Technical Research and for Innovation 2013-2016, which will remain in force until the approval of the future State Plan for 2017-2020, on which the Secretariat of State for R&D&I of the Ministry of Economy, Industry and Competitiveness is currently working.

The initiatives of the national government set forth in the Plan are organized into the following scheme:

Table 9
STATE PROGRAMS

Promotion of talent and its employabilityFostering of excellence in scientific and technical researchBusiness leadership in R&D&I R&D&I aimed at the challenges of society

State Subprograms

Strategic Actions

  • Training.

  • Incorporation.

  • Mobility.

  • Creation of knowledge.

  • Development of emerging technologies.

  • Institutional strengthening.

  • Scientific and technical infrastructures and equipment.

  • Business R&D&I.

  • Essential facilitating technologies.

  • Cooperative R&D&I targeted at the demands of the productive fabric.

  • Health, demographic change and welfare.

  • Food safety and quality; Productive and sustainable agriculture, sustainability of natural resources, marine and maritime research

  • Safe, efficient and clean energy.

  • Intelligent, sustainable and integrated transportation.

  • Action on climatic change and efficiency in the use of resources and raw materials.

  • Social changes and innovations.

  • Digital economy and society.

  • Security, protection and defense.

  • Strategic action for health.

  • Strategic action for economy and digital society.

In the area of administrative management, the Plan attributes the management of the financing instruments provided for in the State Programs, as far as initiatives of the Secretariat of State for Research, Development and Innovation are concerned, to the two R&D and IT financing agencies created under Science, Technology and Innovation Law 14/2011: the Center for Industrial Technological Development (Centro para el Desarrollo Tecnológico Industrial or CDTI) and the State Agency for Research (Agencia Estatal para la Investigación) soon to be created.

The Plan also covers the approval of Annual Action Programs as instruments of ongoing review for the monitoring and management of the State Plan during its term, from the allocation of available financial resources through programmed initiatives. Such programs are to include a list of the initiatives that are meant to be promoted during this annuity, including submission deadlines and time limits on the resolution of proposals, as well as the agencies in charge of managing them.

Lastly, in order to guarantee the success of programmed public initiatives, the Plan provides for the design of indicators of results and of follow-up for the assessment of the degree of compliance with the objectives stipulated for each State Program, as well as the impact of such program on the objectives stipulated in the Spanish Strategy for Science and Technology itself.

Notwithstanding the provisions of each call for applications for the respective programs and subprograms, in general, the aid included in the State Plan has the following characteristics:

Table 10

BeneficiariesTypes of aidForms of participation
  • Individuals.

  • Public research agencies, pursuant to Science, Technology and Innovation Law 14/2011.

  • Public and private universities with proven R&D capacity, pursuant to Organic Law 6/2001 on Universities.

  • Other public R&D centers.

  • Public and private health entities and institutions related to or assisted by the National Health System.

  • Certified Health Research Institutes.

  • Public and private non-profit entities (foundations and associations) engaging in R&D activities.

  • Enterprises (including SMEs).

  • State technological centers.

  • State technological and innovation support centers.

  • Business groupings or associations (joint ventures, economic interest groupings, industry-wide business associations).

  • Innovative business groupings and technological platforms.

  • Organizations supporting technological transfer and
    technological and scientific dissemination and disclosure.

According to the State Program:

  • Subsidies.

  • Loans.

  • Venture capital instruments.

  • Other instruments (tax guarantees and incentives, etc.).

  • R&D&I programs and projects: individual or group aid, including public-private cooperation, used to foster the creation of knowledge, its application, and innovation in all its dimensions.

  • Contracting and aid targeted at R&D&I human resources: aid for the training and incorporation of doctors, researchers, technologists, technicians and R&D&I managers in all stages of their professional careers.

  • Aid for scientific and technical infrastructures and for the acquisition of equipment: aid for the acquisition and maintenance of the scientific and technical equipment required for the pursuit of R&D&I activities.

  • Supplementary actions: aid for the performance of a wide spectrum of especially significant actions associated with R&D&I programs and projects, human resources or infrastructures for the development and pursuit of activities not covered in the preceding forms of participation.

  • Revitalization actions: aid for the execution of strategic and priority actions which,
    due to their nature, do not fit the characteristics of the activities covered in the preceding forms of participation (participation in community programs or bilateral or multilateral cooperation with non-EU countries; improvement of scientific communication and innovation, etc.).

  • Joint programming initiatives: aid used to bolster scientific and technical research and innovation in transnational cooperation with a view to facing major scientific challenges on a joint basis.

For more information please see the following website of the Ministry of Economy, Industry and Competitiveness (http://www.idi.mineco.gob.es/)

3.1.3. Strategic Action on Digital Economy and Society

This strategic action, forming part of the State Plan for Scientific and Technical Research and Innovation 2013-2016, comprises a set of measures aimed at the progressive adoption of digital technologies and the development of the Information Society with a view to the transformation of the economy and society towards a digital environment that cuts across all sectors of business activity.

Included within this strategic action are the measures set out in the Digital Agenda for Spain approved in 2013 and structured into six headings: (i) boosting the roll-out of networks and services to guarantee digital connectivity; (ii) developing the digital economy for the growth, competitiveness and internationalization of Spanish enterprises; (iii) improving e-Government and adopting digital solutions for the efficient provision of public services; (iv) strengthening trust in the digital sphere, (v) promoting the R&D&I system in information and communication technology (ICT), and (vi) encouraging the inclusion and digital literacy and training of new ICT professionals.

The action is set to be implemented through various instruments such as competitive calls for applications for domestic and international aid, agreements with third parties, loans, venture capital, innovative public procurement, awareness initiatives, direct implementation programs and other European financing instruments.

At present, the rules governing the grant of aid in the area of information and communication technology (ICT) and the Information Society, within the context of the strategic action on the economy and society, are contained in Order IET/786/2013, of May 7, 2013, recently amended by Order IET/457/2015, of March 11, 2015. The main features of this system of aid are as follows:

  • It can take the form of subsidies, loans or a combination of both, with maximum financing, in the case of loans, of up to 100% of the eligible cost of the projects or initiatives, with a variable interest rate to be specified in each call for applications and with a maximum repayment period of 5 years, including a grace period of 2 years.
  • The beneficiaries will be enterprises (distinguishing between SMEs, individual micro-enterprises, public corporate enterprises and state-owned business entities), research bodies and business groupings or associations (EIGs, joint ventures, industry business associations and innovation clusters).
  • The following will be eligible for aid: industrial research projects (planned research or critical studies aimed at acquiring new knowledge and techniques useful for creating new products, processes or services) and experimental development projects (acquisition, combination and use of pre-existing knowledge and techniques, of a scientific, technological or business nature, for the development of plans, structures or designs of new, modified or improved products, processes or services).
  • The costs eligible for subsidies are, among others, personnel costs, instrument and material costs, contractual research costs, technical knowledge and patents acquired or obtained under a license and additional overhead costs directly deriving from the project.

3.1.4. Center for Industrial Technological Development (CDTI)

The CDTI (state-owned business entity under the auspices of the Ministry of Economy, Industry and Competitiveness) promotes the technological innovation and development of enterprises, its main objective being to contribute to the improvement of the technological level of enterprises through the pursuit of the following activities:

  • Technical/economic evaluation and financing of R&D&I projects developed by enterprises.
  • Management and promotion of Spanish participation in international technological cooperation programs.
  • Promotion of the international transfer of business technology and support services for technological innovation.
  • Support for the creation and consolidation of technologically based enterprises.

Notwithstanding the more detailed presentation found on the CDTI website (www.cdti.es), the lines available to the CDTI for the financing of R&D&I projects include most notably the following:

  1. R&D Projects:

    This line has the purpose of financing applied business projects for the creation and significant improvement of a productive process, product or services, including both industrial research activities and experimental development.

    Three categories of projects are eligible for financing under this line:

    • Individual R&D projects for the financing of production processes, products or services submitted by a single enterprise, with a term of 1 to 3 years and a minimum eligible budget of €175,000.

    • National Cooperation R&D Projects for projects submitted by business groupings (EIGs or consortiums) with a term of 1 to 3 years and a total minimum eligible budget of €500,000 (and a minimum budget per enterprise of €175,000, the share of any one enterprise in no case exceeding 65% of the project’s total budget).

    • International Technological Cooperation Projects for the financing of the participation of Spanish enterprises with a joint collaboration agreement with foreign enterprises participating in international technological cooperation programs managed by the CDTI (multilateral, bilateral programs, international programs with certification and unilateral monitoring by this body) or with an increase in the technological capacity of Spanish enterprises to enhance their possible participation in large international scientific-technological facilities. In these cases, the term of the project may be from 1 to 3 years and the minimum eligible budget of the Spanish enterprise will be €175,000.

    • R&D&I projects under a specific call, for R&D&I projects submitted in the context of a specific call for applications published by the CDTI and which will have the aid established in its own call.

    The instruments for financing the projects included in this line consist of partially repayable aid (only a part of the aid granted must be repaid to the CDTI), for up to a maximum of 75% of the total budget of the approved project, or 85% on an exceptional basis.

    In these projects, the costs eligible for subsidies will be, among others, personnel costs, instrument and material costs, contractual research costs, technical knowledge and patents or certain costs deriving from consulting and equivalent services aimed exclusively at research activities, in addition to supplementary general expenses incurred directly on the research project.

    Regarding the advances of the aid that can be obtained, the CDTI offers two different forms: (i) a 25% advance of the aid granted, up to a limit of €200,000, without requiring guarantees additional to the financial terms agreed by the Board of the CDTI when it approved the project; and (ii) an advance of 50% or 75% of the aid granted, provided that the applicant furnishes guarantees in order to secure the 25% or 50% excess over the advance without additional guarantees granted by the Center (the guarantees furnished may be from financial institutions, mutual guarantee societies or public entities able to issue guarantees pursuant to the regulations governing them, with sufficient solvency in the opinion of the CDTI).

  2. Direct Innovation Line

    This financing instrument, directly managed by the CDTI and co-financed with Structural Funds through the Research, Development and Innovation Operating Program, under the de minimis rules, is aimed at enterprises (regardless of their size), which carry out technological innovation projects whose objectives cover one or more of the following cases: (i) active incorporation and adaptation of technologies entailing an innovation at the enterprise, as well as processes aimed at improving technologies and adapting them to new markets; (ii) the application of the industrial design and engineering of the product and process for technological improvement (projects that not only entail technological modernization for the enterprise, but also a technological leap in the industry in which the enterprise operates); or (iii) application of a new or significantly improved production or supply method (including significant changes in the area of techniques, equipment and/or software).

    Projects cannot last more than 18 months and the minimum eligible budget will be €175,000. The amount of the financing will be 75% of the eligible budget (CDTI funds), which can be increased to 85% if co-financed by ERDF funds.

    Investments eligible for financing will include the acquisition of new fixed assets, personnel, material and consumables, external collaborations, overhead costs and audit costs.

    It will be possible to opt for an advance of 25% of the aid granted (up to €300,000) without additional guarantees, or up to 50% or 75% by providing guarantees from financial institutions or mutual guarantee societies with sufficient solvency in the opinion of the CDTI.

  3. Global Innovation Line

    This line is targeted at financing projects aimed at investing in innovation and incorporating innovative technology for the growth and internationalization of enterprises that pursue their activities in Spain, both at facilities located in Spain and abroad, with a view to meeting the requirements of new markets, improving the competitive position of the enterprise and generating added value.

    Projects that are eligible for this program must strengthen the value-added activities that are carried on in Spain and, although they may entail the internationalization of the enterprise’s activities, they cannot lead to the activity being relocated.

    This aid is available to SMEs and midcap companies. The maximum duration of the projects may not exceed 2 years and the minimum eligible budget will be €667,000, up to a maximum of €10,000,000, including as eligible items the acquisition of new fixed assets related to the innovation intended to be implemented, the engagement of external services and outsourcing and audit expenses.

    The amount of the financing may be up to 75% of the total eligible budget, and guarantees must be requested from financial institutions with sufficient solvency in the opinion of the CDTI) for 50% of the loan, which may reach 100% depending on the economic-financial analysis performed by the Center. The interest rate will be calculated loan to loan, taking into account the characteristics of the transaction and of the beneficiary, with a repayment term of 7 years. Advances of 25%, 50% or 75% of the loan may be obtained up to a maximum of €4 million, without guarantees beyond those already required.

  4. Direct Expansion Line

    This instrument uses subsidized loans to finance the purchase of new fixed assets for the following investment lines:

    • Initial investment, as an investment in tangible and intangible assets related to the creation of a new establishment, the expansion of capacity at an existing establishment, the diversification of an establishment’s production with products not previously produced by it, or a fundamental transformation of an existing establishment’s global production process.

    • Initial investment in favor of a new economic activity, as an investment in tangible and intangible assets related to the creation of a new establishment or the diversification of an establishment’s activity, provided that the new activity is not an activity identical or similar to that previously pursued at the establishment.

    Potential beneficiaries targeted by the aid are businesses legally incorporated in Spain, which meet the following requirements: (i) to carry out the investment project in the assisted regions of Andalucía, Asturias, Castilla-La Mancha, Extremadura and Galicia; (ii) to have been beneficiaries previously of any public aid for the development of an R&D&I project; and (iii) for the beneficiaries to contribute 25% of the budget in the form of equity or external financing exempt from any public aid.

    SMEs can be beneficiaries of aid for the initial investment or for the initial investment in favor of a new economic activity. Large enterprises can only be beneficiaries of aid for the initial investment in favor of new economic activity (unless they carry out the project in Extremadura, in which case they can also benefit from the aid for the initial investment).

    The following cannot be beneficiaries of this aid:

    • Businesses which have terminated an identical or similar activity in the European Economic Area within two years prior to their application for regional aid for investment or which, when they apply for the aid, have specific plans to terminate said activity within not more than two years after the initial investment, for which the aid is requested, has been completed in the area in question.

    • Businesses which are subject to an outstanding recovery order following a previous decision of the European Commission, declaring the aid illegal and incompatible with the common market, or businesses in crisis (i.e., businesses which have petitioned for a declaration of voluntary insolvency or have been adjudged insolvent).

    • Businesses which are not up to date on their compliance with the tax and/or social security obligations imposed on them by the legislation in force.

    Financing cannot be obtained for projects pertaining to economic activities in the steel, coal, naval construction, synthetic fibers, transport and connected infrastructures, production and distribution of energy and energy infrastructures, fishing and aquaculture and primary agricultural production industries, pursuant to the applicable Community legislation. Equally ineligible are projects to finance activities related to exportation, pursuant to Community legislation, nor can aid be granted if it is conditional on the use of national products rather than imports.

    The minimum eligible budget is €200,000 and the maximum, €10,000,000. The maximum duration of the project is 24 months. In terms of form and amount, the financing consists of repayable aid with a coverage of up to 75% of the total loan approved by the CDTI. The interest rate is fixed, set at 1-year Euribor + 0.5%, to be established when the aid is approved. Ordinary interest will accrue semi-annually from the time the aid is drawn down. This aid is to be repaid semi-annually for 7 years, the first repayment falling due one year after completion of the project.

    With respect to eligible investments and expenses, the financing can be obtained for the acquisition of new fixed assets, both tangible (plant, machinery and equipment) and intangible (patents, licenses, technical know-how or other intellectual property rights). The following investments cannot be financed: (i) items contained in an investment project already completed prior to its presentation; (ii) lands, buildings and constructions; (iii) depreciation of equipment; (iv) lease of tangible assets; (v) second-hand assets; and (vi) VAT.

    Once the investments are completed, they must be maintained in the beneficiary area for at least three years, in the case of SMEs, and five years, in the case of large enterprises. This will not preclude the replacement of installations or equipment which have been rendered obsolete or have broken down within said period, provided that the economic activity is maintained in the area in question during the stipulated minimum period.

  5. INNODEMANDA Program

    INNODEMANDA Program is a financing instrument to support the technological offer in innovative public procurement processes convened by Public Administrations. This program finances an enterprise’s innovation costs required in a particular public procurement process, in such a way that the contracting body has more competitive offers, fostering a greater use of innovative products and services by the Administration.

    The operation of this program requires a synchronization between the scheduled time of a particular procurement and the time of application, analysis and resolution of the R&D by the CDTI required for participation in the that tender.

    To this end, it is necessary the formalization of a Adhesion Protocol between the CDTI and the contracting bodies, specifying, among others, the most significant milestones established in the invitation to tender, as well as the implementation deadlines, conditions and legislation applicable to the financing offered by the CDTI for R&D activities.

  6. NEOTEC Initiative

    The aid under the NEOTEC Initiative finances the start-up of new business projects that require the use of technologies or knowledge developed from a research activity, in which the business strategy is based on the technological development.

    Technology and innovation must be competitive factors that help to set the enterprise apart and serve as a basis for its long-term business strategy and plan, with the maintenance of its own R&D lines.

    The aid can be used for business projects in any technological and/or industrial area. The 2016 call for aid applications did not admit business projects whose business model was primarily based on services to third parties, without their own technological development.

    The aid will take the form of subsidies, and beneficiaries must be innovative small companies, incorporated not more than four years prior to the date on which the aid application is filed and in accordance with the requirements imposed in each call for aid applications.

    The maximum budget of the 2016 call for aid applications was €20 million. A new call for applications for this line of aid is expected to be launched in 2017.

    In addition, in an attempt to enable technological enterprises to avail themselves of the possibility of financing through venture capital instruments, the “NEOTEC Venture Capital Program” was designed as a joint initiative of the CDTI and the European Investment Fund (EIF), aimed at revitalizing the national venture capital market, either by contributing capital to funds being incorporated or by executing joint investment agreements with funds already operating.

    In order to guarantee maximum flexibility and optimum access, the NEOTEC Venture Capital Program is structured as two actions which function through the following vehicles:

    • The “NEOTEC Capital Riesgo” venture capital company, which acts as a fund of funds, investing in venture capital investment vehicles managed by qualified teams based in Spain.

    • The “Coinversión NEOTEC” venture capital company, which invests jointly with pre-selected venture capital investment vehicles (acting as a Joint Investment Fund) in Spanish technological SMEs.

    However, the CDTI is currently reviewing the conditions and the functioning of the NEOTEC Initiative, so there is a possibility that this line of aid may undergo changes.

  7. CIEN Strategic Projects

    The Strategic Program of Consorcios de Investigación Empresarial Nacional (CIEN) (National Business Research Consortiums) finances major industrial research and experimental development projects, carried out by business groupings on the basis of effective cooperation and targeted at the performance of planned research in tomorrow’s strategic areas with potential international projection.

    It also pursues the promotion of public-private cooperation in the area of R&D and, accordingly, requires the appropriate outsourcing of activities to research bodies.

    The eligible industrial research and experimental development activities are those defined in European legislation on state aid.

    Each call for aid applications will detail the characteristics (composition of the consortium, eligible expenses, etc.) and the type of funding of the consortiums.

  8. Multi-regional Operational Program for Intelligent Growth

    The CDTI, as an ERDF funds manager since the 2007-2013 period, designed a regional instrument aimed at boosting the generation of innovative capacities in less developed areas through the funding of experimental development projects carried out by business consortiums: ERDF INNTERCONECTA.

    With this instrument, the CDTI aimed to boost cooperation, at regional level, on projects targeted at the regions’ needs and at generating innovative capacities that foster greater territorial cohesion.

    In the 2014-2020 period, calls for aid applications will be co-funded through the Multi-regional Operational Program for Intelligent Growth. The basic requirements for a transaction to be selected are: (i) it must comply with national and Community legislation on European Structural and Investment Funds and on State Aid; (ii) it must be in line with the objectives of the related Operational Program; (iii) it must be in line with the strategy of the National R&D&I Plan; (iv) it must support tech-based enterprises, whether large or SME, as well as recently formed tech-based enterprises, preference being given to the participation of public research centers and technological or innovation support centers in the projects; (v) it must support R&D activities; and (vi) it must help to generate a competitive advantage for the enterprises in their respective fields of action and, at the same time, serve to increase the level of technical knowledge in the industry in which they operate.

  9. EIB Financing

    The European Investment Bank (EIB) granted Spain a loan to serve as support for investment projects carried out by small and medium-size enterprises (SMEs) and mid- and small-cap companies (companies with less than 3,000 workers).

    The EIB financing is to be used for loans granted by the CDTI to R&D projects with a minimum term of 2 years. Projects of small size and investments with a projected maximum cost of €25 million can be financed, although the EIB’s contribution cannot exceed €12.5 million.

    Potentially eligible are loans requested by companies established in an EU Member State and which are (i) independent SMEs with less than 250 workers prior to the investment; or (ii) independent mid-cap companies with less than 3,000 workers prior to the investment.

    Nearly all economic industries are eligible, save for certain exceptions (weaponry, arms and ammunition production; military or police installations or infrastructures; materials or infrastructures used to limit individual rights or personal freedom; games of chance; tobacco-related industries; activities entailing the use of live animals for experimental or scientific purposes; activities whose impact on the environment cannot be mitigated or compensated; activities that are controversial for moral or ethical reasons; activities whose sole purpose is real estate speculation).

  10. Internationalization of R&D&I

    At international level, the CDTI offers support to Spanish enterprises and promotes technological cooperation abroad through various programs aimed at financing cooperation projects and initiatives, including most notably:

    • INNVOLUCRA Program

      With a view to boosting the participation of Spanish entities in international technological cooperation programs and the submission of bids to large scientific/technological facilities, this program establishes various specific measures such as: (i) aid for the preparation of Community proposals (Ayudas a la preparación de Propuestas Comunitarias or “APC”); (ii) aid for participation in bids to large facilities (Ayudas a la Participación en Ofertas a grandes instalaciones or “APO”); (iii) Management Specialization Program in Brussels; (iv) international technological promotion actions (Acciones Internacionales de Promoción Tecnológica or “AIPT”) and (v) information and guidance services for entities that wish to participate in tenders of large scientific/technological facilities.

    • EUROSTARS Program

      The aim of this EU Program is to aid the development of transnational market-based projects by SMEs engaging in intensive R&D activities. It is ultimately about favoring the generation of projects of this nature which represent a break with the technical state of the art and a commercial challenge in such a way as to enable these enterprises to take a significant qualitative leap in their position on the market.

      The mechanisms envisaged for materializing the aid designed under this program are fundamentally the following: (i) creating a sustainable European mechanism to support these organizations; (ii) promoting the creation of economic activities based on R&D findings and introducing products, processes and services on the market more rapidly; (iii) promoting technological and business development and the internationalization of such enterprises; and (iv) securing the public funding of those participating in the projects.

      In Spain, the Ministry of Economy, Industry and Competitiveness, through the CDTI, is in charge of managing this program.

    • ERA–NET

      The ERA – NET scheme consists of a set of European networks of public bodies that provide financing for R&D&I at national level, with the objective of coordinating the research and innovation programs of the European states and regions, and of mobilizing resources to jointly meet technological and strategic challenges in a more focused, consistent and effective manner.

      ERA-NET calls for aid applications comprise an international phase and a national phase, each of which has its own eligibility requirements and application procedures, it being essential to comply with all of them in order to obtain the financing (only projects approved in the international phase of the calls can become candidates eligible to receive CDTI financing).

    • Innovation and Competitiveness Program (Programa de Innovación y Competitividad or CIP)

      The CIP is aimed at bringing together under a common framework specific Community aid programs and the related parts of other Community programs in areas essential to the boosting of productivity, innovative capacity and sustainable growth, at the same time that it addresses supplementary environmental concerns.

      The CIP, with a total budget of €3,621,000, is composed of three specific subprograms:

      • Business Initiative and Innovation Program: with a budget of €2,166,000, this program supports horizontal activities with a view to enhancing, fostering and promoting innovation (including ecological innovation) at enterprises. It fosters, inter alia, innovation by industries, clusters, public-private innovation associations and the application of innovation management. It also helps to provide innovation support services at regional level, especially for transnational knowledge and technology transfers and intellectual and industrial property management.

      • Political ICT Aid Program: with a budget of €728,000, this program is aimed at fostering the adoption of ICT by citizens, enterprises and governments, and intends to intensify public investment in information and communication technologies. The Program will be based on programs such as eTen, eContent and the MODINIS programs, attempting to enhance the synergies among them, as well as their impact. The CIP supports actions targeted at developing the single European information area and to strengthen the domestic information products and services market. Its objective is to foster innovation, increasing the adoption of ICT and investments in ICT in order to develop an exclusive information society and more efficient services in areas of public interest, and in order to enhance the quality of life.

      • Intelligent Energy-Europe Program: with a budget of €727,000, this program is aimed at expediting actions related to the Community strategy and objectives agreed in the area of sustainable energy and, in particular, to facilitate the development and application of the regulatory framework for energy. Its objective is also to increase the level of investments in new and more profitable technologies and to increase the incorporation of and demand for energy efficiency, renewable energy sources and energy diversification, also in transportation, through increased awareness and better knowledge among key agents within the EU.

    • International Technological Cooperation Projects

      These projects are aimed at enhancing the added value of innovation made at international level, and enable Spanish companies to strengthen their technological capacities, while extending the impact of their products, processes and services on global markets.

      Aid for the project will take the form of partially repayable aid, with a financial coverage of up to 75% of the total approved budget, able to rise to 85% on an exceptional basis, with the following tranches:

      • A tranche repayable over 10 years, starting with the project’s center of gravity, which is calculated having regard to the duration of the project and the amount of the budgetary milestones. The first repayment is made 3 years after the project’s center of gravity, with a minimum of 2 years after its completion date. This repayable tranche will have a fixed interest rate equal to 1-year Euribor, to be established upon approval fof the project.

      • A non-repayable tranche for the international nature of the project. In order to qualify for this reduction phase, projects must be in possession of the related stamp certifying the existence of cooperation between entities and the international nature of the proposal. Depending on the characteristics of the project, the non-repayable tranche can be up to 30% of the financial coverage.

The CDTI also provides personalized advice to companies and entrepreneurs on the financing instruments that are best suited to their R&D&I-related needs and projects. To access this service, interested companies need to fill out an electronic form and attach to it the documentation on the project being submitted to the CDTI for its assessment (more information at www.cdti.es).

3.2. Tourism industry

Against the backdrop of the European Monetary Union and economic and social convergence, and in a competitive environment characterized by the globalization of supply and demand and the internationalization of tourism companies, the Spanish tourism industry is seeking to strengthen its leadership position based on quality.

For this purpose, the Spanish Tourism Plan Horizon 2020 is aimed at reaching the following objectives: (i) to increase the social and economic benefits of tourism; (ii) to achieve a social/territorial rebalance which boosts the tourist business at new destinations; or (iii) to improve the quality of the national and cultural environment by reducing the potential negative impact of the tourist business.

Notwithstanding the foregoing, the Integral National Tourism Plan (Plan Nacional Integral de Turismo or PNIT) 2012-2016 was approved in order to palliate the consequences of the global financial crisis for the Spanish tourist industry, and with a view to boosting the competitiveness of tourist enterprises and destinations, recovering the industry’s leadership position.

Specifically the essential objectives of this Plan are as follows: (i) to increase tourism and its profitability; (ii) to generate quality jobs; (iii) to boost market unity; (iv) to improve international positioning; (v) to improve cohesion and public knowledge of the Spanish brand; (vi) to favor joint public/private responsibility; and (vii) to overcome the seasonal nature of tourism.

Although the Plan is no longer formally in force, contacts made with the Ministry of Energy, Tourism and Digital Agenda have not disclosed whether there are plans to prepare a new Tourism Plan in 2017, given the current situation of budgetary extension. Notwithstanding the foregoing, until now, the following have been the main programs that have been instrumented in order to meet the objectives described in connection with the tourism industry:

1) Emprendetur – Young Entrepreneurs

Order IET/2482/2012 regulates the specifications for the grant of aid under this program. The last call for aid applications for projects and actions within this program was the one issued for the year 2015 by way of the Decision of November 24, 2014, of the Secretary of State for Tourism. In general, the aid included in this program had the following characteristics:

  • It took the form of loans, with maximum financing of up to 100% of the eligible cost (although the financed amount could not exceed €1,000,000 or the net worth figure evidenced by the enterprise when applying for the aid). The maximum repayment period was 5 years, including a maximum 2-year grace period.
  • The applicable interest rate was determined in each call for aid applications (specifically, in the call for 2015, the applicable interest rate was 0.967%).
  • Its potential beneficiaries were individuals resident in Spain under 40 years of age and legal entities validly incorporated in Spain at which the average age of the partners was equal to or less than 40, which were SMEs, with a corporate form incorporated not more than 24 months prior to the application.
  • The grant of the aid did not require the beneficiary to provide a guarantee.
  • In connection with their purpose, eligible projects and business models were those which complied with the measures identified in the PNIT and with certain areas of scientific and technological knowledge of the tourist industry provided for in the above-mentioned Decision (energy and sustainability, CIT, materials and construction, humanities, society and legal sciences, transportation and associated services, business management and accessibility). These projects and business models (or the expenses funded out of the loan) had to be executed within not more than 2 years.
  • Eligible expenses were, inter alia, rental or leasing expenses; personnel, advisory or outsourcing expenses, and other operating expenses.
  • It was compatible with other aid, subject to certain rules regarding aid received with a charge to other calls for aid applications.
  • Applications for aid had to be addressed to the Secretary of State for Tourism and filed with the electronic register of the Ministry of Industry, Energy and Tourism.

2) Emprendetur R&D&I Program 

Comprising the “Emprendetur R&D” and “Emprendetur Development of Innovative Products” lines, the essential characteristics of this program are contained in Order IET/2481/2012, establishing the specifications for this aid. The last call for aid applications for projects and actions within this program for the year 2016 was made by way of the Decision of May 6, 2016 of the Secretary of State for Tourism, without it having been possible to confirm, having regard to the information furnished by the Ministry of Energy, Tourism and Digital Agenda, whether a new call is foreseen for 2017.

In general, the aid included in this program had the following characteristics:

  • It took the form of loans, with maximum financing of up to 75% of the eligible cost of the projects or initiatives, although the financed amount could not exceed €1,000,000 or the net worth figure evidenced by the enterprise when applying for the aid. The estimated maximum amount allocated to financing the call for 2016 was €45,000,000 (€10,000,000 for the R&D Emprendetur line and €35,000,000 for the Emprendetur Development of Innovative Products Line).
  • The maximum repayment period was 5 years, including a maximum 2-year grace period.
  • The applicable interest rate for the aid granted under the 2016 call for aid applications was 0.698%.
  • Potential beneficiaries were individuals resident in Spain and legal entities validly incorporated in Spain (excluding public corporate enterprises, state-owned business entities and any other enterprise formed under or governed by public law).
  • For this aid to be collected, it was necessary to provide, in the 2016 call, a guarantee that covered 36% of the amount of the proposed loan. The arrangement of the guarantee had to be evidenced for the proposed loan to be considered accepted and the status of beneficiary acquired.
  • The projects and business models that were deemed eligible for financing were those which fell within the areas of technological and scientific knowledge of the tourism industry provided for in the call (energy, sustainability, CIT, materials and construction, humanities, society and legal sciences, transportation and associated services, business management and accessibility). These projects and business models (or the expenses funded out of the loan) had to be executed within not more than 3 years.
  • Eligible expenses were, inter alia, personnel expenses, the cost of inventories of instruments and other materials, the costs of contractual research, technical knowledge and patents acquired or obtained under license.
  • It was compatible with other aid, subject to certain rules regarding aid received with a charge to other calls for aid applications.

3) Applications for aid

These had to be addressed to the Secretary of State for Tourism and filed with the electronic register of the Ministry of Energy, Tourism and Digital Agenda, Emprendetur Internationalization Program.

Regulated in Order IET/2200/2014, of November 20, 2014, the ultimate goal of this program was the internationalization of the Spanish tourism industry by opening up new international tourism markets, increasing or enhancing pre-existing ones and exporting Spanish tourism products or services to third countries.

The last call for aid applications published within this program was that relating to 2016, called in the Decision of December 28, 2015 of the Secretariat of State for Tourism, by early processing.

3.3. Audiovisual industry

One of the priority objectives of Cinema Law 55/2007 is to bolster the promotion and development of the production, distribution and showing of films and audiovisual works, as well as to establish terms favoring their creation and dissemination and to adopt measures for the preservation of film-making and audiovisual heritage.

Apart from the tax incentives applicable to the film-making industry, the following are some of the main incentives included in the Cinema Law, as well as in Order CUL/2834/2009, of October 19, 2009, and in Order ECD/279/2015, of December 18, 2015, setting forth the rules for applying Cinema Royal Decree 1084/2015, of December 4, 2015 (regulatory implementation of Law 55/2007), in connection with the acknowledgement of film costs and producers’ investments, the establishment of the terms of reference for State aid and the structure of the Administrative Register of Cinematographic and Audiovisual Enterprises.

Spanish-resident individuals and Spanish companies and companies from other European Union or European Economic Area Member States may qualify for these incentives, provided that they have their residence or establishment in Spain at the time of the actual receipt of the aid.

The structure of the aid system is as follows:

Table 11
CREATION AND DEVELOPMENT

Line of aidEligible for aidMaximum amount (€)

Scriptwriting of full-length motion projects.

Projects for the preparation of full-length motion picture scripts which comply with the terms of the call for aid applications (i.e., they are in any of the official languages of Spain, they are original, etc.)

€40,000 per project with a maximum of 15 grants of aid per call.

Development of full-length motion picture projects.

The expenses need to develop the projects (improve the script, search for locations, identification of cast, initial sales plans, etc.)

It cannot exceed €150,000, provided that such amount does not exceed 50% of the budget for developing the project or of the producer’s investment.

Cultural and non-regulated training projects.

Projects (i) belonging to the theoretical field or the field of editing, inter alia, which are capable of enriching the Spanish audiovisual panorama from a cultural standpoint or (ii) supporting specific non-regulated training programs: for professionals (including creative and technical personnel) or for the general public.

It cannot exceed €50,000, provided that such amount does not exceed 50% of the project’s budget.

Table 12
PRODUCTION

Line of aidEligible for aidMaximum amount (€)

Production of full-length motion pictures projects.

General

Projects with proven cultural nature in a position to obtain Spanish nationality.

It can be up to €1,400,000, provided that this amount does not exceed 40% of the cost acknowledged to the full-length motion picture by the Institute of Film-making and Audiovisual Arts (Instituto de Cinematografía y de las Artes Audiovisuales or ICAA)

Selective

Projects (i) of special cinematographic, cultural or social value, (ii) for a documentary, or (iii) incorporating new producers.

The call for aid applications will stipulate the maximum amount of the aid which, within the annual credit assigned to them, can be up to €500,000, provided that such amount does not exceed 40% of the project’s cost.
Not less than 15% and not more than 25% of the annual credit must be used for documentary projects.

Production of TV movie and documentary projects.

TV movie and documentary projects which are longer than 60 minutes and shorter than 200 minutes, and which are not to be shown in movie theaters, provided that, among other requirements, they are filmed on photochemical medium or high definition digital medium. For a project to be eligible for aid, there must be a contract or a statement of interest in the project from one or more radio or television broadcast service providers.

Calculated by applying the appropriate percentage, according to different tranches, to the amount of the budget (which cannot be less than €700,000), with maximum annual credit of €300,000, provided that such amount does not exceed the independent producer’s investment or 50% of the budget.

Production of animated series projects.

Animated series projects. For the project to be eligible for aid there must be a contract or a statement of interest in the project from one or more radio or television broadcast service providers.

It cannot exceed €500,000 for budgets exceeding €2,500,000, and €300,000 for budgets of lower amounts. In both cases, said amounts cannot exceed the independent producer’s investment or 60% of the budget.

Amortization of full-length motion pictures*

General

Amortization of the cost of producing full-length motion pictures which meet a number of requirements (Spanish nationality, classed by age groups, acknowledged cost and producer’s investment, etc.).

The maximum amount of the general aid for amortization cannot exceed €400,000, provided that such amount does not exceed 50% of the film’s cost or 75% of the producer’s investment. The aid will be conditional on the liquidation resulting from the number of spectators. The total maximum amount of the supplementary aid plus the general aid cannot exceed €1,500,000.

Supplementary

Amortization of the cost of producing full-length motion pictures (i) whose acknowledged cost is at least €600,000, (ii) which have not obtained aid for the production of full-length motion picture projects, and (iii) which meet a number of requirements (Spanish nationality, classed by age groups, acknowledged cost and producer’s investment, etc.).

The maximum amount of the aid cannot exceed €1,200,000, provided that such amount does not exceed 50% of the film’s cost or 75% of the producer’s investment. The amount is calculated according to a number of parameters (type of full-length motion picture, invitation to the official section of film festivals of recognized international prestige, nature of the production company, investment, etc.). The total maximum amount of the general aid plus the supplementary aid cannot exceed €1,500,000.

Production of short film projects.

Short film projects.

The maximum amount of the aid cannot exceed the producer’s investment or 75% of the cost acknowledged by the ICAA. Compatible with aid for the production of completed short films, although the sum of the two types of aid cannot exceed the cost of the film or the maximum ceiling of €70,000 per beneficiary film.

Production of completed short films.

Completed short films.

The maximum amount of the aid cannot exceed 75% of the cost acknowledged by the ICAA. Compatible with aid for the production of short film projects, although the sum of the two types of aid cannot exceed the cost of the film or the maximum ceiling of €70,000 per beneficiary film.

(*) The aid for the amortization of full-length motion pictures provided for in the previous wording of article 26 of the Cinema Law was eliminated by virtue of Royal Decree-Law 6/2015, of May 14, 2015 (amending the Cinema Law). Nonetheless, the Sole Transitional Provision of said Royal Decree-Law stipulates a transitional regime under which (i) the general aid for the production of full-length motion picture projects stipulated in the current wording of said article 26 will progressively replace the aid for the amortization of full-length motion pictures in the budget of the various lines of aid financed by the Film-making and Audiovisual Protection Fund, and (ii) in 2016, 2017 and 2018, in addition to the call for general aid applications pursuant to the current wording of article 26, the ICAA will issue calls for aid applications for amortization, for which only full-length motion pictures whose filming commenced prior to the first call for general aid applications can apply, provided that they are premiered prior to December 31, 2016.

Table 13
OTHER AID

Line of aidEligible for the aidMaximum amount (€)

Distribution of Spanish, EU or Latin American films.

Distribution of full-length and short films, where less than 2 years have elapsed since they opened in the country of origin, which were estined for distribution in movie theaters, mainly in the original version, during the calendar year prior to the publication of the call for aid applications in which they participate.

The maximum amount of the aid cannot exceed €150,000 per full-length beneficiary film or group of short films. The aid may be subsidized up to 50% of the cost of the making of copies, dubbing, subtitling and advertising and promotional expenses, and of the technical means and resources invested in order to prepare the film for persons with disabilities. For the purpose of this aid, the aforesaid costs cannot be subsidized where they have been acknowledged, in whole or in part, as an expense attributed to the producer.

For the preservation of cinematographic heritage.

Making of duplicates necessary to guarantee the preservation of cinematographic and audiovisual works and their original media, for the production companies or owners of films which undertake not to export for at least 10 years the original negative of the films and. among other requirements, deposit the related medium with the Spanish Film Library or the Film Library of the appropriate Autonomous Community

The maximum amount of the aid cannot exceed €75,000, and the amount of each grant of aid cannot exceed 50% of the cost of making such duplicates as are necessary to perform the preservation function.

For promotion.

For the participation of Spanish films in festivals

Participation of films that have (or are in a position to obtain) Spanish nationality in festivals and award ceremonies of recognized prestige.

To be determined in each call for aid applications.

For the organization of film festivals and competitions in Spain.

Organization and holding of film festivals or competitions of recognized prestige in Spain, and which devote special attention to the programming and dissemination of Spanish, EU and Latin American cinema, animated films, documentaries and short films, provided that at least two consecutive editions of those festivals or competitions have been held in the three years preceding the date of publication of the call
for aid applications

To be determined in each call for aid applications.

For the production of audiovisual works using new technologies

Production of audiovisual works which use new technologies in the audiovisual and cinematographic field and are distributed using any electronic means of transmission which allows for the broadcast and receipt of both image and sound other than as transmitted for movie theaters, television or domestic videos.

The maximum amount of the aid cannot exceed €100,000, provided that such amount does not exceed 50% of the project’s budget.

Notwithstanding the foregoing, please note that the ICAA is authorized to set up cooperation agreements with banks and other credit institutions with a view to facilitating and extending the financing of production, distribution and projection activities, technical industries and the video-making sector and for the development of infrastructures or the technological innovation of those sectors.

This financing alternative is materialized in various types of aid:

  • Aid for reducing interest on loans granted for production aimed at facilitating cinematographic production activities by production companies which had not received aid for the production of full-length motion picture projects.
  • Aid for reducing interest on loans granted for distribution and dissemination as film, video and via internet, or the technological renewal of these sectors.
  • Aid for reducing interest on loans for the financing of film projection and post-production infrastructures used by enterprises, laboratories, studios and the production and post-production technical industry.

3.4. Other specific industries

3.4.1. Mining

3.4.1.1. Aid for risk prevention and mining safety

Regulations governing the mining sector are included in Order IET/227/2015, of October 28, 2015, which sets forth the specifications for the grant of aid for risk prevention and mining safety in the area of sustainable mining, for non-energy mining activities.

The aim of the subsidies regulated in the aforesaid Order is to encourage the development of projects related to mining safety, from the standpoint of investment and training, carried out by non-profit enterprises and entities, for the ultimate purpose of attempting to help to reduce mining accidents in Spain and, by extension, to attain sustainable growth in this industry.

The call for aid applications for projects and actions under the aforesaid Order for the year 2017 was made in the Decision of November 7, 2016 of the Secretariat of State for Energy, subsequently amended by the Decision of January 27, 2017, of the same Secretariat of State.

Projects eligible for financing are those carried out in Spain in the area of non-energy mining, included in the following areas: (i) fixed asset investments in safety at mines and beneficiation establishments and (ii) training programs.

Potential beneficiaries of this aid are private enterprises and groupings of such enterprises, provided that they hold the title to the mining public domain covered in the project and do not pursue their activity in the coal-mining industry (and are therefore not affected by the prohibitions on state aid for the closure of mines). Non-profit institutions can also be beneficiaries of this aid, in which case they will not have to hold the title to the mining public domain, it being sufficient for them to provide evidence that they have a lawful interest relating to the mining activity.

The amount of this aid will consist of a percentage of the approved eligible investment and varies according to the following scheme:

  • Aid for fixed assets investments in mining safety: the minimum amount of the aid granted will be €4,000, while the maximum amount cannot exceed 20% of the eligible costs, in the case of SMEs and micro-enterprises, or 10% of such costs in the case of medium-sized enterprises.
  • Mining safety training projects: the intensity of the aid will be (i) up to 100% of the cost of the accepted eligible investment, where the applicant is a non-profit institution; and (ii) up to 50% of the cost of the eligible investment in the case of large enterprises, 60% in the case of medium-sized enterprises, and 70% in the case of SMEs and micro-enterprises. For its part, the minimum amount of the aid will be €12,000. In the specific case of these projects, the maximum amount of the aid will be subject to the following restrictions:
    • If the projects are provided by mining enterprises or groupings of mining enterprises, it cannot be higher than €100,000 per enterprise or grouping and project.
    • A single enterprise cannot receive more that €200,000 of aid for training in this area within a period of three consecutive fiscal years.

3.4.1.2. Action Framework for Coal Mining

Of special relevance within the mining industry is the Action Framework for Coal Mining and Mining Districts in the 2013-2018 Period, which has, among others, the following objectives:

  • To foster the continuation of competitive local coal production that makes it possible to guarantee a certain level of electricity production which, in addition to supporting the security of supply, contributes to developing renewable energy sources.
  • To ensure a sufficient share of national coal in the electricity generation mix, within the limits set by the European legislation, and for the entire period covered by this Framework.
  • To facilitate the orderly closure of non-competitive coal mines.

    Against this backdrop, the government has launched a host of new aid initiatives aimed at alternative development in mining regions, including most notably the following:

    1. Aids to job creating business projects (regulated in Order IET/1158/2014, of June 30, 2014), which promote alternative development in mining regions. These aids are aimed at promoting the establishment of business investment projects (of at least €100,000) in areas affected by the restructuring of coal mining and their surrounding areas in order to generate alternative economic activities to coal mining.

      These aids are available to business investment projects that are established in municipalities affected by the restructuring and modernization of coal mining, subject to the restrictions set out in the new Map of regional aid for the 2014-2018 period.

      The last call for aid applications in connection with this line of aid was that relating to 2016, published in the Decision of June 23, 2016, of the Institute for the Restructuring of Coal Mining and Alternative Development of Mining Districts, the total budget of which is €40,000,000, extendable by a further €10,000,000.

    2. De Minimis Aids (regulated in Order IET/1157/2014, of June 30, 2014), aimed at small business projects that create jobs, which promote alternative development in mining regions. These aids have the same purpose and cover the same type of project as those under section 1) above, although they focus on projects of not less than €30,000 and not more than €500,000.

Lastly, please note that until 2015 calls for specific aid applications were made to facilitate the closure of non-competitive coal mines (social aid for labor costs relating to older workers, for labor costs through terminations with severance pay, to cover losses on the current production of production units, and to cover extraordinary costs deriving from closure and environmental impact mitigation), in compliance with EU legislation. This aid was aimed at covering, in whole or in part, the current losses incurred on native coal production used in the generation of electricity, from the production units of coal mining companies subject to closure plans to be completed on December 31, 2018 at the latest.

However, based on information provided by the Ministry of Economy, Industry and Competitiveness, it is not possible to confirm whether new calls for aid will be made with this aim.

3.4.2. Industrial investment

The process of adapting certain traditional industrial sectors to new forms of production, against a backdrop of processes to rationalize and modernize the business segment, has caused severe losses in the productive fabric and a significant elimination of jobs.

In an effort to mitigate and, to the greatest extent possible, avoid such noxious effects on the industrial fabric as a whole and, in particular, on the areas most affected by the aforesaid adaptation process, the Ministry of Economy, Industry and Competitiveness has been launching support initiatives with a view to promoting, regenerating or creating the industrial fabric.

The current initiative is Order IET/619/2014, of April 11, 2014, setting forth the specifications for the grant of financial aid for industrial investment in the context of the public policy on reindustrialization and fostering industrial competitiveness, which regulates the grant of aid for initiatives in strategic industrial sectors under the aforesaid policy (that amended by Order IET/10/2015, of January 12, 2015, with respect to the restrictions on the amounts of the loans to be granted and to the criteria for evaluating applications).

The specifications bring the criteria of former Reindustrialization Programs into line with that of Programs for the Development of Strategic Industrial Sectors, placing special interest in enterprises which incorporate advanced technologies in their processes and products, create qualified jobs with the greatest possible contribution of added value and, in short, contribute to increasing the country’s export base.

The last call for applications for this type of aid was published in 2016 in the Order of March 4, 2016 of the Secretariat-General of Industry and of SMEs, without it having been possible to confirm, having regard to the information furnished by the Ministry of Economy, Industry and Competitiveness, whether a new call for aid is foreseen for 2017.

Notwithstanding the foregoing, it is important to note that the aid contemplated in the Order setting forth the Specifications was to be used for reindustrialization and competitiveness fostering projects and actions executed throughout Spain. In particular, the Order distinguished between projects that were executed in specific areas (established around certain municipalities considered as meriting special protection) or in the general area (consisting of the rest of the municipalities not included in the above areas). In general, the financial support that these projects could receive was instrumented through long-term loans, with the following types of actions eligible for financing:

  • Creation of industrial establishments: start-up of a new production activity anywhere in Spain.
  • Relocation: changing the location of a prior production activity to anywhere else in Spain.
  • Increases in the production capacity of existing production centers by installing new production lines. For the purposes of classifying the project, “installation of a new production line” means the acquisition of a set of equipment that makes it possible to manufacture a product independently. Actions taken on an existing line, such as replacing the machinery and auxiliary production elements and adapting or improving the line, are excluded from this definition.
  • Improvements and/or modifications to pre-existing production lines.

In this regard, the Order setting forth the Specifications clarified that (i) implementations of technologies from “Connected Industry 4.0.” could form part of the investments arising from each of the above typologies; and (ii) industrial investments arising from any of the above typologies had to be technically viable according to the current state or situation of the technology on an industrial scale.

Potential beneficiaries contemplated in the two initiatives were private enterprises which pursued or were going to pursue a productive industrial activity.

The following were the eligible expenses:

  • For investments in the formation of industrial establishments:
    • expenses incurred on civil works (tangible investments in development and piping, expressly excluding land);
    • building expenses (tangible investments for the acquisition, construction, expansion or fitting out of industrial premises, as well as installations and equipment not directly related to production, and tangible assets directly associated with production).

    The sum of the civil works and building items could not exceed 70% of the total eligible budget.

  • For investments intended to be made in the context of other actions eligible for financing:
    • civil works expenses (tangible investments in development and piping, expressly excluding land);
    • building expenses (tangible investments for the acquisition, construction, expansion and fitting out of industrial premises, as well as installations and equipment not directly related to the production process);
    • production device and equipment expenses (acquisition of fixed assets directly related to production, excluding external transportation elements); and
    • production process engineering expenses (expenses of own staff, necessary materials and external partnerships required to design and/or redesign processes – including those aimed at implementing technologies from “Connected Industry 4.0” – directly linked to the above-mentioned production devices and equipment).

Any form of civil engineering or consultancy associated with the management and processing of the financing requested is expressly excluded.

The sum of the civil works and building items could not exceed the budget of devices and equipment linked to production (except where industrial establishments are relocated, in which case it could reach 70% of the total eligible budget). In addition, production process engineering expenses could not exceed 30% of the acquisition cost of the production devices and equipment.

The financed actions had to be executed from January 1 of the year of the related call, up to the maximum time limit of 18 months from the date of the grant decision.

The minimum eligible budget for the investments was regulated in the relevant call and the funding to be granted will be 75% of that budget. It also stipulated that for enterprises formed in the year to which the call relates, or in the immediately preceding year, the loan could not exceed three times their demonstrable equity. In all other cases, the limit was set at five times the applicant’s equity, notwithstanding the fact that the calls for aid applications could stipulate proportions lower than those indicated in both cases.

The aid was granted in competitive tender procedures in each one of the specific areas and in the general area, and the applicable interest rate was determined according to the classification obtained by the beneficiary in the application evaluation process and to the guarantee provided before the grant decision, according to the following table.

Table 14

Guarantee as percentage of the loan granted
Classification
category
Greater than or equal to 70% and lesser than or equal to 100%Greater than or equal to 41% and lesser than or equal to 70%Lesser than or equal to 41% and greater than or equal to 10%
Excelent (AAA-a)

1.705%

1.705%

1.705%

Good (BBB)

1.705%

1.705%

2.29%

Satisfactory (BB)

1.705%

2.29%

4.09%

Pursuant to the provisions of the aforesaid Order IET/619/2014, the repayment period of the loan is 10 years, with a 3-year grace period, over which the loan is to be repaid in equal annual installments once the grace period ends.

Please note that, in accordance with the specifications of this aid, the applicant must provide, upon submitting the application, a guarantee to the General Depository Agency, in cash or, alternatively, in another one of the forms provided for in the legislation. The amount of the guarantee will be 10% of the loan requested in the application unless the call in question establishes another amount.

4. Incentives for investment in certain regions

4.1. Granted by the State

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

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

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

This policy involves the promotion of start-ups, expansions or modernization of investment projects undertaken by enterprises located in the less developed geographical regions and in areas experiencing particular economic difficulties.

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

They are granted for investment in projects that must be located in one of Spain’s eligible areas, which are demarcated having regard to the GDP per inhabitant and the rate of unemployment.

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

The Royal Decrees demarcating economic development areas have been affected by the new “Guidelines on regional State aid for 2014-2020” published on July 23, 2013 in the Official Journal of the European Union (OJEU), as well as by the new “Regional Aid Map for Spain (2014-2020)” approved by the Commission on May 21, 2014.

The above notwithstanding, within the context of the mid-term review envisaged in the Guidelines for the year 2016, the Commission published Communication 2016/C 231/01 asking the States to present their proposals for the amendment of their respective regional maps.

Spain communicated a proposal for the amendment of its regional aid map to the Commission on July 28, 2016, and the Commission, in its Decision of November 7, 2016, resolved to approve the amendment of the Spanish regional aid for the period January 1, 2017 through to December 31, 2020.

In particular, according to the amended aid map for the Kingdom of Spain, the Spanish region for which the greatest incentives are envisaged continues to be the Autonomous Community of the Canary Islands, with a maximum aid intensity percentage of up to 35% of the eligible investment.

The Autonomous communities of Castilla-La Mancha, Extremadura, Andalucía, the Murcia Region, and the Autonomous City of Melilla are nevertheless included as Spanish regions eligible for regional incentives with a maximum aid percentage of up to 25%, since their GDPs were found to have fallen to below 75% of the average for the EU-28 over the period examined.

Similarly, the provinces of Soria and Teruel continue to feature prominently, with the grant of aid to these regions of up to a maximum intensity of 15% of the net eligible investment being permitted through to December 31, 2020.

Finally, the maximum aid intensity percentage for the Autonomous Community of Galicia has been reduced to 15% of the eligible investment for this year 2017, and to 10% for the sub-period 2018-2020. The maximum intensity for the Autonomous City of Ceuta, on the other hand, has been reduced to 15%.

Chart 1
MAP OF REGIONAL INCENTIVES (2014-2020)

In any case, during this period the Autonomous Community of Madrid, the Basque Country, Navarra and Cataluña, as well as the municipality of the provincial capital of Valencia continue to be regarded as regions ineligible for subsidies, pursuant to the State legislation on regional incentives.

The aforementioned amendments to the regional aid map were incorporated into Spanish legislation through amendments of the corresponding Royal Decrees, approved on December 30, 2016.

The Royal Decrees stipulate the maximum intensity of permitted aid (stipulated as a percentage of the eligible investment), distinguishing among large, medium-size and small enterprises, according to the following table:

Table 15

ECONOMIC DEVELOPMENT AREASPREVIOUS ROYAL DECREESNEW ROYAL DECREES 2014-2020
ALL ENTERPRISES
Large
Medium
sized
SME
Canary Islands

40%

35%

45%

55%

Extremadura

40%

25%

35%

45%

Castilla-La Mancha, Andalucía, Murcia *

40%

25%

35%

45%

Melilla

20%

25%

35%

45%

Soria and Teruel /  Ceuta

15% / 20%

15%

25%

35%

Galicia

30%

15%

25%

35%

Other Areas + previous category from 2018

From 10% al 20%

10%

20%

30%

* Castilla-La Mancha, Andalucía, Murcia and Melilla, from December 30th, 2016.

Notwithstanding the foregoing, the main characteristics of the regional incentives, in general, are as follows:

4.1.1. Eligible economic sectors

These are stipulated in each Royal Decree demarcating the respective geographical area.

The main eligible sectors, however, notwithstanding what is established in the definition under each Royal Decree of demarcation, are as follows:

  • Processing industries and production support services, particularly those which apply advanced technology, pay attention to environmental enhancement and enhance the process or the product.
  • Industries favoring the introduction of new technologies and the provision of services in the information technologies and communication subsectors.
  • Services which significantly enhance trade networks and structures.
  • Specific tourist facilities with an impact on development in the area which are innovative, especially in terms of environmental improvement, and contribute significantly to the area’s endogenous potential.

4.1.2. Types of eligible investments

The types of investment eligible for incentives are new or first-time use fixed assets, referring to the following investment items:

  • Civil engineering.
  • Capital equipment, excluding external transportation items.
  • In the case of SMEs, up to 50% of the costs incurred on the project’s preliminary studies, which could include: planning, project engineering and project management of the projects.
  • Intangible assets, provided that they do not exceed 30% of the total eligible investment, are used exclusively at the center where the project is carried out, are able to be inventoried and amortized and are acquired at arm’s length from third parties not related to the purchaser.
  • Other items, on an exceptional basis.

The possibility of including lands as an eligible fixed asset was eliminated by the Regulations implementing the Regional Incentives Law when the regional financing Guidelines for the previous period (2007-2013) came into force.

4.1.3. Eligible projects

  • Definition
    • Projects for the creation of new establishments that give rise to the commencement of a business activity and also generate new jobs (which must be maintained for at least two years after the end of the term stipulated in the Individual Resolution granting the aid) and are of an amount of no less than the minimums stipulated in the Royal Decrees of demarcation (generally, at least €900,000).

    • Projects for the expansion of existing activities with a significant increase in production capacity or commencement of new activities in the same establishment which entails the creation of new jobs and the maintenance of existing jobs during the same period stipulated in the preceding paragraph.

    • Projects for the modernization of the business which meet the following requirements:

      • The investment must be an important part of the tangible fixed assets of the establishment being modernized and must entail the acquisition of technologically advanced machinery which produces a notable increase in productivity.

      • The investment must give rise to the diversification of an establishment’s production in order to attend to new and additional product markets or must entail a fundamental transformation of the overall production process of an existing establishment.

      • Existing jobs must be maintained during the aforesaid periods.

      Replacement investments consisting of (i) the technological updating of a machine outfit which has already been depreciated, implying no fundamental change to the product or production process; (ii) the remodeling or adaptation of buildings as a result of the aforesaid investments, in compliance with safety or environmental provisions or by statutory imperative; and (iii) the incorporation of cutting edge technology without fundamental changes to the process or to the product, are excluded.

  • Requirements
    • The project must relate to an eligible sector and activity and be located in one of the designated areas.

    • It must be technically, economically, and financially viable.

    • Generally, at least 25% of the investment must be self-financed. However, depending on the features of the project, a higher rate may be required in the Royal Decrees of demarcation.

    • The company developing the project must have a minimum level of equity, which will be stipulated in the Individual Resolution granting the incentive and must be maintained through the last day on which the subsidy is in force.

    • The application for regional incentives must be submitted before the investment in question begins to be made.

      In this connection, the investment will be held to have begun upon the commencement of the construction works entailed in it, or upon the first firm commitment for the order of equipment or any other commitment making the investment irreversible, whichever comes first. The purchase of lands and preparatory work such as the obtainment of permits and the performance of preliminary viability studies are not regarded as the commencement of work.

      The applicant must prove to the Autonomous Community, using the standardized form known as the “solemn declaration of non-initiation of investments”, that the investments had not been initiated prior to the filing of the application for regional incentives. The Autonomous Community may also request a notarial certificate as evidence of the foregoing (acta notarial de presencia) or perform an on-site inspection of the land, with a view to ensuring that the investment has not been initiated.

    • The aid should serve as an “incentive”—i.e. the applicant undertaking the project would not have done so without the aid—and an explanation must be given of the impact that would be produced on the decision to invest or on the decision regarding location if the regional incentives were not received (large companies must submit documentary evidence).

4.1.4. Types of incentive

The regional incentives available for grant consist of:

  • Non-returnable subsidies for the approved investment.
  • Subsidies for the interest on loans obtained by the beneficiary from financial institutions.
  • Subsidies for the repayment of those loans.
  • Any combination of the foregoing.
  • Reductions in the employer’s social security contribution for common contingencies during a maximum number of years, to be determined by regulation, subject to the provisions of the legislation on incentives for hiring and for fostering employment.

In the cases under letters b), c) and d) above, there is also a possibility of regional incentives being converted into a percentage of the subsidy on the approved investment.

The form of incentive most commonly granted, however, is the non-returnable subsidy.

4.1.5. Project assessment

Projects must be evaluated using the methods stipulated in each Royal Decree of demarcation, which will also determine the percentage of subsidy to be granted for each project. Notwithstanding the specific provisions of each Royal Decree, the main parameters considered to date by the relevant bodies are as follows:

  • Total amount of the eligible investment.
  • Number of jobs created.
  • Contribution to the area’s economic development and use of its production factors.
  • Added value of the project (if newly created) or increase in productivity in other cases.
  • Use of advanced technology.
  • Location in an area considered a “priority” (defined as such in the demarcation Royal Decree).

4.1.6. Compatibility of different incentives

No investment project can receive other financial aid if the amount of the aid granted exceeds the maximum limits on aid stipulated for each approved investment in the Royal Decrees of demarcation of eligible areas.

Therefore, the subsidy received is compatible with other aid, provided that the sum of all the aid obtained does not exceed the limit established by the Royal Decree of demarcation and EU rules do not preclude it (incompatibilities between Structural Funds).

4.1.7. Application procedure

  • Documentation:
    • Standardized application form addressed to the Ministry of Finance and Civil Service, although it is required to be presented to the competent body of the corresponding Autonomous Community.

    • Documentary evidence of the applicant’s personal circumstances or, in the case of an incorporated company, of its registry data. If the company is in the process of being incorporated, the projected registry data and the data of the developer acting in its name.

    • Standardized explanatory investment project memorandum, together with documentation evidencing compliance with all environmental requirements.

    • Formal declaration, on a standardized form, of other aid applied for or obtained by the applicant for the same project.

    • Evidence of the company’s compliance, as of the date in question, with its tax and social security obligations or, as the case may be, authorization to the Directorate-General of Community Funds to obtain the certificates to be issued by the State Tax Agency and by the Social Security General Treasury. In the case of a company being incorporated, the obligation will be deemed to refer to the developer.

  • Where to submit

    The appropriate body of the Autonomous Community where the project is to be carried out.

  • Granting agency

    The Government Delegate Committee for Economic Affairs if the eligible investment exceeds 15 million euros.

    In all other cases, the Ministry of Finance and Civil Service (in particular, through the Sub-directorate General of Regional Incentives, under the Directorate-General of Community Funds).

  • Decision deadline

    The maximum deadline for deciding on applications and serving notice thereof is 6 months from the date on which the application is registered with the Ministry of Finance and Civil Service (although this deadline may be extended).

    If the initial term and, as the case may be, any extended term ends without a decision have been issued, the aid application may be deemed to have been rejected.

  • Acceptance of the grant of aid

    Express notice of acceptance of the aid must be served by applicants on the relevant agency of the Autonomous Community, within the first 15 business days after the date on which notice of the decision to grant the aid is received.

    If no notice is served by the end of such period, the grant of aid will be rendered null and void and the dossier will be shelved.

  • Submission of decisions at the Mercantile Registry

    If notice of acceptance is served, the beneficiary must file the Decision granting the aid with the Mercantile Registry within one month from the date of acceptance.

    All decisions subsequent to the grant of incentives (extensions, amendments, etc.) must also be filed by the same deadline.

    In general, compliance with this requirement must be evidenced to the relevant Autonomous Community agency within four months after acceptance of the related decision. If evidence is not submitted by the deadline, the Directorate-General of Community Funds will render null and void the grant of aid not filed with the Mercantile Registry.

4.1.8. Execution of the project and alterations subsequent to grant

Investments may be initiated without having to wait for the final decision to be adopted, provided that applicants can prove, suitably, as stipulated by the Ministry of Finance and Civil Service, that such investments had not been initiated before the application was filed, without this being able to influence the decision finally adopted.

In general, subsequent incidents in the project (i.e., alteration of the initial project, change in the location of the project, etc.) will be resolved by the Directorate-General of Community Funds.

Applications for alteration of the projects must be submitted to the relevant Autonomous Community agency and addressed to the Ministry of Finance and Civil Service, and must specify the conditions which have been altered since the filing of the initial application. The deadline for deciding on applications and serving notice thereof will be six months following their receipt by the Directorate-General of Community Funds.

4.1.9. Payment procedure

Following issue of a report confirming the degree of compliance with the requirements imposed by the relevant agency on the project in question, the beneficiary must file a request for payment of the subsidy (on a standardized form) together with the other required documentation (evidence of fulfillment of tax and social security obligations, etc.) at the relevant Autonomous Community agency from which it will be referred to the Directorate-General of Community Funds.

4.1.10. Payment system

Subsidies may be paid using the following methods:

  • Final payment: after the end of the term, the beneficiary may only request payment in full of the subsidy granted or to which he is entitled if there have been cases of breach.
  • Payment in full: during the term, the beneficiary may only request a single payment of the total subsidy after the entire investment has been made and subject to the submission of the related bank guarantee. This payment may only be requested subsequent to the dates of compliance, once each and every one of the conditions imposed on the holder have been verified and prior to the end of the term.
  • Payment in part: during the term, the beneficiary may request partial payments of the subsidy as he justifies the partial making of the investment, provided that this is authorized in the individual decision to grant the subsidy.

For more information, please consult the website of the Ministry of Finance and Civil Service (http://www.dgfc.sepg.minhap.gob.es).

4.2. Regional aid granted by the Autonomous Communities

Some Spanish Autonomous Communities also provide similar incentives, on a smaller scale, for investments made in their regions. Only some of these incentives are compatible with EU and State regional incentives. Specifically, if State regional incentives have been applied for in connection with a given project, the limits established in each Royal Decree of demarcation must be taken into account.

In fact, some Autonomous Communities grant investment incentives in areas not covered by State legislation but which are included in EU regional financial aid maps.

Most Autonomous Community incentives are granted on an annual basis, although the general conditions of the incentives do not usually change from year to year.

In view of the impossibility of including a detailed description of the aid granted by each Autonomous Community, we summarize below their main and traditional features (which are generally very similar to those of State regional incentives).

Nonetheless, bear in mind that the incentives granted by the Autonomous Communities have also been affected by the content of the new Guidelines on regional State aid and by the limits and maximum aid intensity percentages established in the new regional aid Map, recently amended (2014-2020), and the regulation of these incentives should therefore be adapted to the new framework established.

4.2.1. Types of project

Opening of new establishments, expansion of activities, modernization and technological innovation. The creation of new jobs is normally required.

4.2.2. Main industries

In general, the main eligible industries are industrial support services, processing industries, tourism, culture, industrial design, electronics and computing, renewable and environmental energies.

4.2.3. Project requirements

They are basically the same as those imposed at State level.

4.2.4. Types of incentive

The main incentives are:

  • Nonrefundable subsidies.
  • Special conditions for loans and credit.
  • Technical counseling and training courses.
  • Tax incentives.
  • Guarantees.
  • Social security relief.

4.3. Special reference to investments in the Canary Islands

The Canary Islands Autonomous Community has traditionally enjoyed a regime of commercial freedom involving less indirect tax pressure and exclusion from the sphere of certain State monopolies. These conditions have given rise to an economic and tax system which is different from that existing in the rest of Spain.

Of course, an attempt has been made to reconcile these special circumstances with the requirements of Spanish membership of the European Union.

In this regard, the Central Government has been increasing flexibility as much as possible in connection with the functioning of regional incentives and localization of investments in the Canary Islands, imposing no further limitations than those stipulated in EU legislation and giving preferential treatment to investments in the peripheral islands by requiring a minimum level of investment lower than that established for the rest of Spain.

These efforts led the European Commission to authorize the creation of the Canary Islands Special Zone (Zona Especial Canaria or “ZEC”) in January 2000, with a view to attracting and encouraging the investment in the Canary Islands of international capital and companies which make a decided contribution to the economic and social progress of the Canary Islands. Use of the benefits of the ZEC is currently in force through December 31, 2026, and may be extended when authorized by the European Commission (please see also Chapter 3 and www.zec.org).

It is important to note that incentives aimed at upgrading and modernizing the banana and tomato growing and fishing-related industries are also available.

Along these same lines, please note the approval of the Integral Strategy for the Canary Islands Autonomous Community by decision of the Council of Ministers dated October 9, 2009, the main objectives of which were implemented in Additional Provision Fourteen of the Sustainable Economy Law as a guide for initiatives of the Government and of the General State Administration on the Canary Islands. In particular, priority is to be given to initiatives connected with the policy to internationalize the Canary Island economy, renewable energies, ground, airport and port infrastructures, subsidies for goods transport to or from the Canary Islands, the fostering of tourism and the contribution to the development of industrial sectors and of telecommunications in the Canary Islands.

In particular, from the standpoint of internationalization, the Sociedad Canaria de Fomento Económico, S.A. (PROEXCA) was formed with a view to fostering the internationalization of the Canary Island enterprises and attracting strategic investments to the Islands. PROEXCA acts as an official agent for the promotion of investments on a regional scale, serving companies which seek to invest in the Islands and which offer them high added value and sustainability.

5. Aid for innovative SMEs

Notwithstanding the special treatment usually given to SMEs in the context of the public financing programs or initiatives examined in other sections of this Chapter, the following is a list, to be taken as an example, of some lines specifically targeted at this type of entity when developing innovative activities. In particular, it is worth mentioning two programs promoted by the National Innovation Enterprise (Empresa Nacional de Innovación or ENISA), which provides financing to SMEs through various lines targeted at the formation of enterprises, corporate growth and the consolidation of enterprises.

As an example, we indicate below the main characteristics of some of the lines of financing currently granted by ENISA, in the terms approved for 2017.

  • ENISA Young entrepreneurs: aimed at stimulating the formation of enterprises backed by young entrepreneurs (not older than 40 years of age), to which is provided access to preferred financing with the sole guarantee of their business project.

    Potential beneficiaries are SMEs (i) which pursue their activity, have their registered office and make the investment in Spain; (ii) which are incorporated as a corporate enterprise or, if already incorporated, whose incorporation took place not more than 24 months prior to the submission of the application; (iii) whose business model is innovative or has obvious competitive advantages; (iv) which evidence the technical/economic viability of the project; (v) whose financial statements for the last year ended were filed with the Commercial Registry; (vi) the majority of whose capital is subscribed by young entrepreneurs (aged under 40); and (vii) which are active in any area of activity other than real estate and finance, and minimum contributions are required from shareholders (of at least 50%), in the form of capital, depending on the amount of the loan.

    Aid will take the form of a participating loan of not less than €25,000 and not more than €75,000, with an applicable interest rate equal to EURIBOR plus 3.25% in the first tranche and, in the second tranche up to 4.5%, depending on the financial return of the enterprise, maturing after a maximum of 7 years and with a grace period of not more than 5 years for the repayment of principal.

  • ENISA Entrepreneurs: aimed at providing financial support to recently formed SMEs, promoted by entrepreneurs of any age, so that they are able to make the investments necessary for carrying out their business project.

    Potential beneficiaries are SMEs (i) which pursue their activity and have their registered office in Spain; (ii) which are incorporated as a corporate enterprise not more than 24 months before the application is filed; (iii) whose business model is innovative or has competitive advantages; (iv) whose shareholders’ contributions are equal to at least the amount of the loan; (v) who evidence the technical/economical viability of the project; (vi) whose financial statements for the last year ended were filed with the Commercial Registry, which have a balanced financial structure and management of a professional nature; (vii) which have co-financing for the financial needs associated with the business project; and (viii) which are active in any area of activity other than real estate and finance.

    This aid will take the form of a participating loan of not less than €25,000 and not more than €300,000, at an applicable fixed interest rate equal to EURIBOR plus 2.5% in the first tranche and, in the second tranche, up to 8%, maturing after a maximum of 7 years and with a grace period of not more than 5 years for the repayment of principal (but not for the payment of interest).

  • ENISA Competitiveness: aimed at financing projects promoted by SMEs which envisage competitive improvements, at consolidation, growth and internationalization projects or corporate transactions, based on viable and profitable business models, focused on (i) the competitive improvement of production systems and/or a change in production model; or (ii) expansion through an increase in production capacity, technological advances, an increase in the range of products/services, diversification of markets; seeking out capitalization and/or debt on regulated markets, and the financing of business projects through corporate transactions.

    The same requirements imposed on the preceding line must also be met in this case. The participating loans granted under this line will range between €25,000 and €1,500,000, repayable in a maximum of 9 years, with a grace period of not more than 7 years for the repayment of the principal, at an interest rate equal to Euribor + 3.75%, in the first tranche, and up to 8% for the second tranche.

  • ENISA Digital Agenda: a product of the cooperation between SETSI and ENISA, this line of financing is aimed at providing financial support for the start-up and development of business projects in the ICT sectors, with a view to boosting the development and launch of new products and services, thus contributing to the creation of jobs and wealth in an industry with a high growth potential.

    The requirements are similar to those described for the above lines, with the exception that, in this case, eligibility for this type of loan will require being part of the TIC industry (services, applications and contents in the area of telecommunications and the information society).

    Participating loans will be for a minimum of €25,000 and a maximum of €2,000,000, with a maximum repayment term of 9 years, and interest will be charged at a rate of Euribor + 3.75%, for the first tranche, and up to 8% in the second tranche, according to the enterprise’s profitability and the transaction’s rating, and with a maximum deferral period of 7 years for repayment of the principal.

6. Preferred financing of the Official Credit Institute (Instituto de Crédito Oficial or ICO)

Consistent with its objective to contribute to economic growth and to the improvement of the distribution of national wealth, the ICO cooperates with other national and international bodies and institutions which work for the benefit of industries which, given their social, cultural, innovative or ecological significance, merit priority attention.

Thus, for a number of years the ICO has been executing multilateral institutional and/or financial cooperation agreements with similar bodies, Autonomous Communities, ministries and financial institutions with a view to helping Spanish enterprises start up new investment projects.

Notwithstanding other lines intended for certain specific sectors, the following are the main ICO lines of financing for 2017: (i) Enterprises and Entrepreneurs, (ii) Mutual Guarantee Society Guarantee/State-owned Agricultural Surety Corporation, (iii) Commercial Credit, (iv) Exporters 2017, (v) International Tranche I “Investment and Liquidity”, and (vi) International Tranche II “Medium and Long-term Exporters”, whose most notable characteristics are:

  • Línea ICO Empresas y Emprendedores 2017 (ICO Enterprises and Entrepreneurs Line):

    Independent professionals and public and private enterprises- both Spanish and foreign - who make productive investments in Spain and/or need to cover their liquidity needs may apply for these loans.

    Transactions are processed directly via credit institutions with which the ICO has executed a cooperation agreement for the implementation of this line.

    The loans may be used to finance:

    1. Liquidity: working capital needs such as current expenses, payroll, payments to suppliers, purchase of goods, etc.
    2. Productive investments within Spain:
      • New or second-hand productive fixed assets (including VAT).
      • Cars whose price does not exceed €30,000 plus VAT. Industrial vehicles may be financed 100%.
      • Acquisition of enterprises.
      • Value added tax (VAT) or similar taxes.
      • Liquidity with a limit of 50% of the financing obtained for this form of investment.

    The maximum amount that can be applied for is €12.5 million, in one or more transactions per client per year. Where used to finance “Investment”, it can be requested in the form of a loan or leasing arrangement, and where it is used to finance “Liquidity”, it will be requested in the form of a loan.

    Investments made prior to the execution of the operation can be financed, provided that their commencement date is not before January 1, 2016. As from the execution of the operation, the client has a one-year period in which to make the investment which is being financed.

    Regarding the applicable interest rate, the client can choose between a fixed or variable rate:

    • For 1-year forward transactions: fixed or variable interest rate plus a 2.30% margin.
    • For 2- and 3- or 4-year forward transactions: fixed or variable interest rate, plus a 4.00% margin.
    • For forward transactions of more than 5 years: fixed or variable interest rate plus a margin of up to 4.30%.

    If the transaction is carried out at a variable interest rate, the rate will be reviewed half-yearly by the credit institution in accordance with the provisions of the financing agreement.

    The repayment period will be of 1, 2, 3 and 4 years, with the possibility of a grace period of up to 1 year, if 100% is used to finance “Liquidity”, and of 1, 2, 3, 4, 5, 6, 7, 8 and 9 years, with a year grace period of up to 1 year, and of 10, 12, 15 and 20 years, with a grace period of up to 2 years, if used to finance “Investment”. And for transactions relating to “Investment” and “Liquidity”, any of the repayment periods for “Investment” may be chosen.

    With regard to fees, it should be noted that credit institutions can charge a fee at the start of the operation, although the cost of such fee plus the interest rate may not exceed the maximum annual percentage rate, or APR, which the institution is able to apply based on the term.

    Lastly, an early repayment fee may be applied (voluntary —which in general will be 2.50% of the amount cancelled, if the remaining life of the transaction is more than 1 year, and 2% if it is 1 year or less— or mandatory, in which case it is 3% of the amount cancelled).

    Transactions can be executed with the credit institution up to December 15, 2017.

  • Línea ICO Garantía SGR/SAECA (Sociedad de Garantía Recíproca/Sociedad Anónima Estatal de Caución Agraria) (ICO Mutual Guarantee Society / SAECA Guarantee):

    Independent professionals, public and private enterprises and entities that have a guarantee or surety from a Mutual Guarantee Society or the SAECA regardless of their registered office or tax domicile, and who make productive investments inside or outside Spain or who wish to cover their liquidity needs can apply for these loans. However, an entity applying for financing to make an investment outside Spain must be domiciled in Spain or its capital must be at least 30% Spanish owned.

    These transactions are processed directly through credit institutions with which the ICO has executed a cooperation agreement for this product, at Mutual Guarantee Societies or at the SAECA.

    Loans may be used to finance:

    • Liquidity: working capital needs such as operating expenses, payroll, payments to suppliers, purchase of goods, etc.

    • Productive investments inside and outside Spain:

      • New or second-hand productive fixed assets (including VAT).
      • Cars whose price does not exceed €30,000 plus VAT. Industrial vehicles may be financed 100%.
      • Acquisition of enterprises.
      • Formation of enterprises abroad.
      • VAT or taxes of an analogous nature.
      • Liquidity up to a limit of 50% of the financing obtained for this form of investment.

    Investments made before the execution date of the transaction can be financed, provided that the commencement date is not before January 1, 2016. After the execution date of the transaction, the client will have one year to make the investment for which the financing was obtained.

    The maximum amount that can be applied for is €2 million, in one or more transactions per client and year. Where the financing is intended for “Investment”, it may be requested in the form of a loan or leasing arrangement and can finance up to 100% of the project, and where it is intended for “Liquidity”, it may be requested in the form of a loan.

    The Mutual Guarantee Society/SAECA may decide the amount of the transaction to be guaranteed, which may be up to 100%.

    As regards the applicable interest rate, the client may choose between a fixed or variable rate. If the transaction is carried out at a variable interest rate, the rate will be reviewed half-yearly by the credit institution in accordance with the provisions of the financing agreement.

    The maximum annual cost of the transaction will be the sum of the amount of the initial fee and the interest rate established by the credit institution, plus the cost of the Mutual Guarantee Society guarantee. This maximum annual cost may not exceed the fixed or variable interest rate plus up to 2.3% for forward transactions equal to 1 year; 4% for forward transactions of 2, 3 or 4 years, and 4.30% for forward transactions equal to or over 5 years.

    The repayment period and grace period will be stipulated according to the use of the financing: 1, 2, 3 or 4 years with the possibility of a 1-year grace period if 100% is financed under a “Liquidity” transaction, and 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10 years, with the possibility of a grace period of up to 1 year, and 12 and 15 years, with the possibility of a grace period of up to 2 years, for financing under an “Investment” transaction. For loans used to finance “Investment” and “Liquidity”, any of the repayment periods stipulated for “Investment” may be chosen.

    The Mutual Guarantee Society/SAECA or the credit institution, as the case may be, may charge an application fee equal to 0.5% of the amount guaranteed. Additionally, the Mutual Guarantee Society may charge a fee based on the amount guaranteed and up to 4% in respect of a mutual society fee, such amount being refundable when the client terminates its relationship with the Mutual Guarantee Society. SAECA does not charge a mutual society fee.

    Finally, the credit institution may charge a single fee at the start of the operation and, in the event of voluntary early repayment), a cancellation fee (generally 2.50% of the amount cancelled when the remaining life of the operation is more than one year, the fee being 2% when the remaining life is one year or less). If the early repayment is mandatory, the penalty accruing is 3.00% of the amount cancelled.

    Transactions can be executed up to December 15, 2017.

  • Línea ICO Crédito Comercial 2017 (ICO 2017 Commercial Credit Line):

    These loans can be applied for by independent professionals and enterprises with registered office in Spain who (i) seek to obtain liquidity through the payment of advances on their billings in respect of their commercial activity within national territory, or (ii) wish to cover prior production or manufacturing costs of goods sold in Spain.

    The advance payment of invoices with a maturity of not more than 180 days after the transaction’s execution date can be made. Similarly, pre-financing can be provided to meet the business’s liquidity needs to cover the costs of production and manufacturing of goods or services sold in such territory. The pre-financing operation must in any event be cancelled prior to formalizing an operation for the payment of advances on billings in respect of assets for which pre-financing was provided.

    The pre-financing operation must in any event be cancelled prior to formalizing an operation for the payment of advances on billings in respect of assets for which pre-financing was provided.

    Transactions are processed directly through credit institutions with which the ICO has executed a cooperation agreement for this product.

    Up to 100% of the amount of the invoice can be financed, provided that it does not exceed the maximum amount of €12.5 million of outstanding balance per client per year, in one or more installments.

    As regards the applicable interest rate, a variable interest rate will be applied (6 months), the conditions and amount being those agreed upon with the credit institution in the corresponding financing agreement.

    As for fees, the credit institution may charge an initial fee at the start of the operation, although the cost of such fee plus the interest rate established may not exceed the maximum APR which the credit institution is able to apply (interest rate plus up to 2.30%). However, no additional fee can be charged to the client, except in cases of mandatory early repayment, in which case a penalty equal to 1.50% of the amount cancelled will accrue.

    Transactions can be executed with the credit institution up to December 15, 2017.

  • Lastly, given its purpose, the ICO 2017 International, Tranche I “Investment and Liquidity” Line and the lines relating to Exporters 2017 and International 2017 Tranche II “Medium- and Long-term Exporters” will be examined in section 7 below, on “Internationalization Incentives”.

For more information in this connection, please see the ICO website: (http://www.ico.es).

7. Internationalization incentives

Although it is not the aim of this publication to address incentives for Spanish investment abroad, this section is included in view of the obvious interest that Spanish investment abroad has sparked in foreign investors as a platform for international expansion.

In this context, please note that the official financial instruments approved by the Spanish government to provide official support for the internationalization of business are:

  • FIEM (enterprise internationalization fund, managed by the Ministry of Economy, Industry and Competitiveness through the Office of the Secretary of State for Trade).
  • FIEX (fund for investments abroad, managed by COFIDES).
  • FONPYME (operating fund for SME investments abroad, managed by COFIDES).
  • FINTEC (line of financing for investments in the electronics and the information and communication technologies industry, managed by COFIDES).
  • FINCONCES (line of financing for investments in the infrastructure concession industry, managed by COFIDES).
  • Country Lines (managed by COFIDES).
  • Commercial Start-up line 3.0 and Commercial Start-up line 4.0 for Young Entrepreneurs (managed by COFIDES).
  • Programs for the Conversion of Debt into Investment managed by the Ministry of Economy, Industry and Competitiveness.
  • The ICO Internationalization and Support for Exports Lines.

Of all the foregoing financial instruments, particular regard must be had to the FIEM, the FIEX and the FONPYME, as well as to the lines of financing for investments in the electronics and information and communication technologies industry, or in the infrastructure concession industry, the Commercial Start-up Lines 3.0 and 4.0 for Young Entrepreneurs and, lastly, the “Línea ICO-Internacional 2016” (2014 ICO International Line) and the “Línea Exportadores a Corto, Medio y Largo plazo” (Short-, Medium- and Long-term Exporters Line).

7.1. FIEM

The FIEM is an instrument intended for the direct financing of international contracts for the supply of goods and services or the execution of projects undertaken by Spanish companies in order to support direct investment by Spanish companies abroad. Its aim is to promote export operations by Spanish companies and direct Spanish investment abroad.

The FIEM finances (i) transactions and projects of special interest to the internationalization strategy of the Spanish economy; (ii) the technical assistance required by such transactions and projects and (iii) technical assistance and consultancy services of special interest to the internationalization strategy, the objective of which is the preparation of viability, feasibility and pre-feasibility studies, studies related to the modernization of economic sectors or regions, and consulting services aimed at institutional modernization of an economic nature or by regions.

In this connection, a transaction or project, technical assistance or consultancy service is deemed to be of special interest to the internationalization strategy where (i) it promotes the internationalization of Spanish SMEs; (ii) it entails the direct investment or exportation of goods and services of Spanish source and manufacture in a sufficiently significant percentage of the financing or (iii) otherwise, where there are circumstances justifying the interest.

In this respect, operations or projects which entail the creation of, or participation in, a productive or concessionaire company or entity (i.e. special purpose entities, provided that there are Spanish companies investing in them), are eligible for financial support to supplement other sources of public financing.

In any case, the following will not be financed: (i) exports of defense, paramilitary and police materials to be used by the armed forces, police forces and security forces or the anti-terrorist services or (ii) projects related to certain basic social services such as education, health and nutrition.

Potential recipients of financing from this Fund are foreign central governments and foreign public, regional, provincial and local authorities, as well as enterprises, groupings and consortiums of foreign publicly-owned and private enterprises, not only from developed countries but also from developing countries.

In exceptional cases, FIEM aid may be granted to international organizations, provided that there is a clear commercial interest, from the point of view of the internationalization of the Spanish economy, in the corresponding contribution.

7.2. FIEX

The purpose of the FIEX is to foster the internationalization and business activities of Spanish companies and, in general, the Spanish economy, through short-term and minority interests in the equity of companies located, in juridical terms, outside Spain, specifically through holdings in the capital (equity) or quasi-equity instruments (coinvestment loans, etc.).

The maximum amount of the financing is €30 million subject to a minimum amount of €250,000.

7.3. FONPYME

The FONPYME is intended to finance direct short-term and minority holdings in the capital stock or equity of Spanish companies located in Spain, for their internationalization, or of Spanish companies located abroad, through any participative financial instruments. Additionally, as introduced by Royal Decree 321/2015, of April 24, 2015, direct short-term and minority holdings may also be acquired in “capital expansion funds” or vehicles with official support, whether already existing or to be established, or in private investment funds, which foster the internationalization of the Spanish enterprise or economy. The maximum amount of the financing is €5 million, with a minimum of €75,000 per transaction.

If the project being funded is located in a country in which COFIDES can operate, the Fund’s participation may be instrumented, if so approved by the Company’s Board of Directors and the Fund’s Executive Committee, through joint financing with COFIDES, using identical or differing financial instruments. Under the joint financing arrangement, different remuneration schemes can be established for each of the support instruments. The percentage of the COFIDES funding in transactions funded with FONPYME will be decided on a case by case basis by its Board of Directors.

7.4. FINTEC

This instrument is aimed at funding, on the medium- and long-term, private and viable projects for investment abroad undertaken by enterprises in the electronics and the information and communication technologies industry in which there is a Spanish interest.

The activities at which this line is targeted are those which require, due to the enterprise’s international expansion, a permanent establishment to be set up in the country in which the investment is made, whether through new production or commercial facilities, the expansion of existing ones or the acquisition of foreign enterprises in the same industry (i.e. consumer electronics, electronic components, telecommunication industries, digital contents, etc.).

The financial support will take the form of: (i) holdings in capital; (ii) instruments similar to quasi-capital; (iii) ordinary loans to the Spanish enterprise; (iv) ordinary loans to the project enterprise and (v) multi-project loans.

The maximum financing provided is €30 million and cannot exceed 50% of the long-term needs of the project, up to the limit of the contribution made by the backer, the minimum amount being €72,000.

7.5. FINCONCES

This line is used to fund projects for investment abroad in concessions of infrastructures and public services owned mostly by Spanish enterprises, under concession or under a public-private partnership (PPP).

Eligible for this funding are projects under concession aimed at, inter alia, the design, construction, operation, maintenance, management and exploitation of a public good or service, the performance of which requires the incorporation of long-term financial resources (i.e. infrastructure for transportation, water and waste, energy, services management, telecommunications).

The financial support may be given in the form of holdings in capital or instruments similar to quasi-capital.

The maximum financing is €30 million and cannot exceed 50% of the long-term needs of the project, up to the limit of the contribution made by the backer, the minimum amount being €75,000.

7.6. Commercial Start-up Lines 3.0 and 4.0 for Young Entrepreneurs

Are two lines which offer financing for the start-up of commercial activities abroad by Spanish companies, through (i) co-investment loans (with remuneration linked to the results of the project) or (ii) ordinary loans made to the Spanish company, to the subsidiary or the branch located abroad.

Such funds are intended primarily for the financing of expenses associated with the start-up of the company’s commercial activities (structural costs, wages and salaries and promotions expenses assumed by the subsidiary). Depending on the guarantees offered, the percentage financed can be up to 80%.

The limit to this financing is €1,000,000 for Line 3.0 and €500,000 for Line 4.0 Young Entrepreneurs. The minimum amounts financed are €75,000 and €50,000, respectively.

The difference between the two lines is basically that to obtain financing under the 4.0 Young Entrepreneurs Line, the company must belong to a Young Entrepreneurs Association. Similarly, for financing under the 4.0 Young Entrepreneurs Line, the requirement that the company have audited financial statements may be replaced by the requirement that it present a limited review of its accounts.

7.7. “Country Lines”

Offer financing for investment projects in specific international areas with special characteristics: US Line, India Line, EU Expansion Countries Line, Mexico Line, China Line, Brazil Line, Morocco Line, Sub-Saharan Africa Line, Russia Line, Australia Line, Indonesia Line, Singapore Line, South Africa Line, Egypt Line, Algeria Line, Chile Line, Turkey Line, Cuba Line and Golf Cooperation Council Countries Line, of which the following are most notable:

  • US Line: aimed at providing financial support to viable private projects with a Spanish interest performed in the US, independent of the activity with which they are connected, although priority will be given to the following industries: (i) infrastructures; (ii) renewable energies; (iii) environment; (iv) biotechnology and (v) information technology.
  • Brazil Line: aimed at providing financial support to viable private projects with a Spanish interest performed in Brazil, independent of the activity with which they are connected, although priority will be given to the following industries: (i) capital goods, (ii) automobile parts, (iii) renewable energies, (iv) transport infrastructures, (v) environment and clean-up, (vi) transmission of electricity, and (vii) tourism.
  • China Line: aimed at providing financial support to viable private projects with a Spanish interest performed in China, independently of the activity with which they are connected, although priority will be given to the infrastructures and public services industry, which includes: (i) renewable energies and cogeneration, (ii) transport and telecommunications infrastructures, (iii) environment and waste treatment, (iv) platforms of logistics services, (v) water purification and treatment.

In all three lines the financial support is to be instrumented through holdings in capital, subordinate loans, participating loans and joint investment loans.

Maximum financing is €30 million and cannot exceed 70% (FIEX) and 80% (FONPYME) of the volume of the investment in the project, although for holdings in capital, the limit will be up to 49% of the enterprise’s capital stock. The minimum amount is €75,000.

The budget for 2016 was €60 million for the US Line, €35 million for the Brazil Line and €55 million for the China Line.

7.8. “Línea ICO-Internacional 2017 Tramo I “Inversión y Liquidez” (2017 ICO International Line Tranche I “Investment and Liquidity”)

“Línea ICO-Internacional 2017” is aimed at Spanish independent professionals and publicly-owned and private entities (i.e., not only enterprises with registered office in Spain but also those in which, despite having their registered office abroad, at least 30% of capital stock is Spanish-owned, foundations, NGO’s, public authorities) which carry out investment projects abroad. It will be in force until December 15, 2017.

The loans granted under this line may be used to finance operating expenses (payroll, payments to suppliers, purchases of goods) or certain production-related investments outside national territory:

  • new or second-hand productive fixed assets;
  • acquisition of vehicles, whose price does not exceed €30,000 (plus VAT). Industrial vehicles may be financed 100%;
  • acquisition of companies;
  • creation of enterprises abroad;
  • value added tax (VAT) or analogous taxes, if the assets are acquired in Europe.
  • liquidity up to the limit of 50% of the financing obtained.

The investment must not have been made prior to January 1, 2016 and must be made within not more than one year after the execution of the financing.

The maximum financing is €12.5 million or its equivalent in US dollars (USD) per customer per year, in one or more transactions. If the financing is used for “Investment”, it may be requested in the form of a loan or leasing arrangement, and where it is for “Liquidity”, it will be requested in the form of a loan.

Depending on the eligible item, the repayment period and grace periods are 1, 2, 3 and 4 years with the possibility of up to 1 year’s grace for the repayment of principal if the financing corresponds 100% to “Liquidity”, and 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10 years, with up to 1 year’s grace and 12, 15 and 20 years with up to 2 years’ grace if the financing is for “Investment”.

Where loans are made for “Investment” and “Liquidity”, any of the repayment periods listed for “Investment” may be chosen.

The APR on the operation may not exceed the following thresholds:

  • For operations with a term equal to 1 year: a fixed or variable rate (euros or US dollars), plus up to 2.30%.
  • For operations with a term of 2, 3 or 4 years: a fixed or variable rate (euros or US dollars), plus up to 4%.
  • For operations with a term of 5 years or more: a fixed or variable rate (euros or US dollars), plus up to 4.30%.

This type of financing may be combined with other aid granted by the Autonomous Communities and other public institutions.

Lastly, with regard to fees, it is to be noted that the financial institutions can charge a fee at the start of the operation, although the cost of such fee plus the interest rate may not exceed the maximum APR which the institution is able to apply to the operation based on its term.

Similarly, credit institutions can apply a voluntary early repayment fee which is generally 2% of the amount cancelled if the remaining life of the transaction is one year or less, and 2.5% if it is more than one year. In the event of mandatory early repayment, a penalty equal to 3% of the amount cancelled accrues.

7.9. Línea ICO Internacional 2017 Tramo II “Exportadores Medio y Largo Plazo” (2017 ICO International Tranche II “Medium- and Long-Term Exporters Line”)

This financing may be requested by: (i) enterprises with registered office in Spain, for the sale of goods or services, with deferred payment, to enterprises with registered office outside Spain; and (ii) enterprises with registered office outside Spain for the acquisition of goods or services, with deferred payment, from enterprises with registered office in Spain.

In particular, the following items are eligible for financing:

  • Supplier facility: financing targeted at enterprises with registered office in Spain for the sale, with deferred payment, of new or second-hand goods or services to enterprises with registered office outside Spain.
  • Purchaser facility: financing targeted at enterprises with registered office outside Spain, for the acquisition, with deferred payment, of new or second hand goods or services exported by enterprises with registered office in Spain.
  • Supplementary financing: financing required by enterprises with registered office outside Spain which acquire goods or services exported by enterprises with registered office in Spain, the full amount of which was not entirely covered by a Purchaser facility.

The financing may take the form of a loan, with the possibility of disbursement in multiple operations, for a maximum amount of €25 million, or its equivalent in US dollars (USD), per customer, in one or more transactions.

The customer may choose between a fixed or variable interest rate (euros or USD) in the currency in which the transaction is executed. The maximum annual cost of the operation may not, however, exceed the following thresholds:

  • For operations with a term of 2, 3 or 4 years: a fixed or variable rate plus up to 4%.
  • For operations with a term of 5 years or more: a fixed or variable rate plus up to 4.30%.

In turn, the repayment deadline and grace period will be agreed between the customer and the credit institution, the minimum term of the total financing being 2 years and the maximum 12 years, including, where appropriate, any grace period for the repayment of principal, which cannot be more than 3 years.

Lastly, it is to be noted that the credit institution may charge a fee at the start of the operation. It may also apply application costs or arrangement fees of up to 1% for transactions with a term of less than 5 years and up to 1.50% for transactions with a term of 5 years or more. Fees may also be charged for early repayment, whether voluntary (2.50% of the amount cancelled if the remaining life of the transaction is more than 1 year, and 2% if it is 1 year or less) or mandatory (3% of the amount cancelled).

Transactions may be executed until December 15, 2017.

7.10. Línea ICO Exportadores 2017 (ICO Short Term Exporter Line)  

This line of financing may be requested by independent professionals and enterprises with registered office in Spain who wish to obtain liquidity through an advance on the invoices from their export activity. In particular, the financing is limited to invoices issued within the framework of a transaction consisting of the final sale of goods and services supplied to a customer located outside Spain or to those with a document agreed with an enterprise that has its registered office outside Spain, evidencing that the purchaser undertakes to acquire goods from the enterprise that has its registered office in Spain, independent of the name and form given to such document. Invoices must be payable not more than 180 days after the transaction’s execution date.

Financing is also available in the form of pre-financing of the company’s liquidity needs to cover the production and manufacturing costs of the goods or services to be exported. This transaction is required to be executed cancelled prior to the formalization of the transaction consisting of an advance on invoices relating to the goods which were pre-financed.

In both cases, up to 100% of the amount of the invoice or up to 100% of the amount from the sale of the goods will be financed, provided that it does not exceed a maximum of €12.5 million per customer and year, in one or more transactions.

The APR on the operation may not exceed the variable interest rate plus up to 2.30%.

The interest rate applied to the customer will be variable (reviewable six-monthly) plus a margin of up to 2.30%, with the dates and method of payment of the interest being agreed between the credit institution and the customer, according to the type of agreement entered into.

In both cases, up to 100% of the amount of the invoice or up to 100% of the amount from the sale of the goods will be financed, provided that it does not exceed a maximum of €12.5 million per customer and year, in one or more transactions.

Lastly, it should be mentioned that the credit institution can charge a fee at the start of the operation, although such fee plus the interest rate set may not exceed the maximum APR applicable to the operation. Also, the client may be charged a fee in the event of mandatory early repayment, equal to 1.50% of the amount cancelled.

Transactions may be executed until December 15, 2017.

8. EU aid and incentives

Most European Union incentives (specifically loans and subsidies) generally supplement aid programs financed by the Spanish Government. Such aid is routed through the Spanish public authorities and institutions, as well as through finance entities, which act as intermediaries between the granting of aid and beneficiary. Accordingly, the related applications for subsidies must be addressed to these entities, save in the case of the direct aid under, inter alia, programs to support research, development and innovation (R&D&I) for which applications must be submitted in the respective calls for proposals issued by the European Commission.

The broad range of instruments at the EU’s disposal includes most notably the following:

8.1. European Investment Bank (EIB)

Projects eligible for EIB support are basically those which promote the development of less favored regions and those of common interest to several Member States or benefiting the EU as a whole, such as environmental protection, improved use of energy resources, improved industrial competitiveness in the EU, the development of SMEs and middle capitalization enterprises (MID-CAPs) and improved European transport and telecommunications infrastructures. Additionally, projects aiming at extending and modernizing infrastructure in the health and education sectors may also qualify for EIB support.

The EIB is jointly owned by the EU countries and borrows money on the capital markets. It makes loans on favorable terms to projects that support EU objectives, with none of the money coming from the EU budget.

On this basis, the EIB offers two types of loans:

8.1.1. Global loans (“Intermediated loans”)

Global loans are similar to credit lines granted to financial institutions, which lend the funds to small or medium-scale investment projects meeting the EIB’s own criteria. This is the main instrument with which the EIB supports SMEs and MID-CAPs since, by granting loans to banks or other intermediaries, access to funding is provided indirectly to small and medium-scale business initiatives.

The loans are granted by the EIB to banks or other institutions in all the Member States, which act as intermediaries. These financial intermediaries conduct an analysis of the investment, and of the economic, technical and financial viability of each of the projects. They are responsible for granting the loans for small and medium-scale investments and for the administration of such loans.

Specifically in Spain, global loans are routed mainly through Instituto de Crédito Oficial (ICO), Banco Bilbao-Vizcaya Argentaria (BBVA), Santander, Bankinter, Sabadell, Banco Cooperativo, Kutxabank, Banca March, Laboral Kutxa, La Caixa, Unicaja, Bankia and Banco Popular. There are many different types of loans and credits, with varying maturities, amounts and interest rates, but their general terms can be summarized as follows:

  • Coverage of up to 50% of the overall investment costs and, in certain cases, up to 100% of the investment with a guarantee from the intermediary bank.
  • Grace period: up to three years.
  • Repayment period: to be determined by the financial institution acting as intermediary and the EIB, although it tends to fluctuate between 2 and 15 years.
  • Beneficiaries: local authorities, SMEs (for these purposes, SMEs are deemed to be companies that have less than 250 workers) or MID-CAPs (which have up to 3,000 workers).
  • The amount awarded under a global loan may not exceed €12.5 million, including the possibility of working-capital financing.
  • Free of fees and other charges, except for minor administrative expenses.

Applications must be filed with financial institutions or other intermediaries.

8.1.2. Individual loans (“Project loans”)

The EIB grants individual loans directly to investors or through financial intermediaries for projects of over €25 million.

In general, the following are the main characteristics of these loans:

  • Coverage of up to 50% of the total cost of the project.
  • Eligible projects are public or private investments made mainly in the infrastructure and industrial sector.
  • Long-term loans, with repayment periods of between 5 and 12 years for industrial projects, and between 15 and 20 years for infrastructure projects, although the repayment period may be extended in special cases.
  • These loans can be for as much as 50% of the cost of the project, although as a general rule, one third of their amount is secured.
  • Grace period: depends on the nature of the project, usually up to five years.
  • In granting these loans, the EIB requires security, on which the financial terms of the loan will depend.

Once finance has been obtained, the project’s progress is monitored regularly in order to ensure that it reaches its objectives.

The EIB does not directly grant interest relief, although this may be financed by third-party institutions.

El BEI no concede directamente bonificaciones en los tipos de interés, si bien éstas pueden ser financiadas por terceras instituciones.

Thanks to a €10,000 million capital extension which was approved by the EU in 2012, the EIB considerably increased its lending activity, up to €80.3 billion in 2014 (the lending activity increasing by 40% between 2013 and 2015). The projection and commitment assumed by the EIB have been maintained throughout 2016, reaching a figure of €180 billion in that year.

Figure 2
OPERATING SCHEME

In 2016, the EIB financed 112 projects in Spain alone, amounting to a total of €11,540 billion, down 3.3% on the figure for 2015. Spain nevertheless continues to rank first among the recipients of EIB investments.

Lastly, an essential role is being played by the EIB in starting up the European Fund for Strategic Investments (EFSI), created by the European Commission to help meet the objective of mobilizing at least €315 billion in new investments during the 2015-2017 period. It should be noted in this respect that since September 2016, the European Council has been working on a new proposal aimed at extending the EFSI and bringing the total investment to €500 billion. The initial objective is to extend this Fund through to 2020.

Based on these premises, the Commission created the figure of the national development bank so that, together with the European Investment Bank and private investors, such banks make an effort, based on their supplementary nature, which makes it possible to reach the objective of the European Investment Plan. In this connection, Spain has made available to the ICO, as the Spanish national development bank, €1.5 billion for projects that receive financing from the EFSI.

8.2. European Investment Fund (EIF)

The EIF is an EU body which specializes in providing guarantee and venture capital instruments to SMEs for better access to funding. It uses equity capital or funds provided by the EIB or the European Union for its activities. It is neither a lending institution nor does it provide subsidies to enterprises or directly invest in them. All of its work is carried out through banks and other financial intermediaries. Moreover, it ensures the continuity required in the management of EU programs and has accumulated extensive experience in this area.

The EIF was created for the purpose of fostering EU objectives, particularly in the areas of entrepreneurship, growth, innovation, research and development, employment and regional development. Today, the core mission of the EIF is to provide support to SMEs and grant them access to funding at a time of reduced financing granted by credit institutions. To meet this objective, the EIF designs innovative financial products aimed at its partners (financial institutions), according to the needs of each regional market, to reach the local market through such financial intermediaries.

The EIF generally operates by providing guarantees for loans of all kinds and by investing in venture capital to support SMEs. In short, the work of the EIF can be classed according to the financial products (capital and debt) offered, notably including:

  • Venture Capital Products: the EIF invests in venture capital funds that provide financing to innovative SMEs.
  • Debt Products: in these cases, the EIF provides security and credit enhancements to financial intermediaries to facilitate the flow of funds from financial institutions to SMEs.
  • Microfinance: the EIF provides financing, security and technical assistance to financial institutions for their microfinance activities.

Indeed, although the EIF supports venture capital instruments with a view to making capital more available to high-growth innovative SMEs, it also offers debt instruments, since many SMEs seek financing from this more traditional route. From this standpoint, the EIF offers security and credit enhancements by means of the securitization of credit, in order to improve the lending capacity of financial intermediaries and, as a result, the ultimate availability and terms of the debt for the SME beneficiaries.

During 2015 the EIF mobilized €25 billion in European investments, managing to reach one third of the financing objective set for the 2015-2018 period.

Figure 3
EIF IN SPAIN

Key figures (at 31.12.2015)

  • First EIF operation in Spain: 1997
  • 49 supported Spanish private equity funds
  • 24 partner finance and guarantee providers
  • Over 131.000 Spanish SMEs supported

Source: http://www.eif.org/news_centre/publications/country-fact-sheets/EIF_factsheet_spain.pdf

Table 16

Who is eligible?What is available?Initiative

• Innovative SMEs and small Mid-Caps

• Loans

• Bankinter

• SME InnovFin guarantee agreement

• Innovative SMEs and small Mid-Caps

• Loans

• Bankinter
• Deutsche Bank España

• Risk sharing instruments (RSI)

• Micro-enterprises (including individuals)

• Micro-loans

• Cajas Rurales Unidas
• Colonya Caixa Pollenca
• Fundaciò Pinnae
• ICREF
• Laboral Kutxa

• “Progress” microfinance

• Micro-enterprises (including individuals)

• Loans

• CERSA

• EFSI
• COSME + Loan guarantee
mechanism

• SMEs and micro-enterprises (including individuals) with registered office in Extremadura

• Loans

• MicroBank

• Erasmus + Loan guarantee
mechanism

• SMEs and micro-enterprises (including individuals)

• Loans, micro-loans

• CERSA
• Caixa Capital Micro
• MicroBank

• CIP

• SMEs

• Equity

• Persons looking for equity capital should refer to the funds in which the EIF invests, accessible via its web site

• EIF resources and resources from third parties

Source: Own compilation based on information available at: http://www.eif.org/index.htm

8.3. European Structural and Investment Funds

8.3.1. European policy for 2014-2020

In line with the “Europe 2020 Strategy”, while all regions contribute to the general goal by investing in jobs and growth, the methods and scope of the intervention differ according to the level of economic development of each of them, settling down three categories for such purpose.

  • The first category relates to “less developed” regions, those whose GDP per capita is less than 75% of the average GDP of the EU-271 which remain an important priority for EU cohesion policy. The community co-financing rate for this group is capped at 75%-85%.

Table 17
ELIGIBILITY FOR LESS DEVELOPED REGIONS

2007-2013
2014-2020

NUTS 2 regions whose GDP per capita is less than 75% of the EU average

No change

Transitional support for regions which would have remained eligible for the convergence objective if the threshold remained 75% of the average GDP of EU-15 and not of EU-25

Separate category for transition regions

Cohesion Fund: Member States whose GNI per capita is less than 90% of the average GNI of EU-27

No change

Transitional support to Member States who would have been eligible for the Cohesion Fund if the threshold remained 90% of the average GNI of EU-15 and not of EU-27

Transitional support to Member States eligible for funding from the Cohesion Fund in 2013, but whose GNI per capita exceeds 90% of the average GNI per capita of the EU-27

  • The second category comprises the “transition” regions, which are those whose GDP per capita falls between 75% and 90% of the EU average. In this case, the community co-financing can reach up to 60%;

Table 18
ELIGIBILITY FOR TRANSITION REGIONS

2007-2013
2014-2020

Transitional support for NUTS 2 regions which would have been ligible for the convergence objective if the threshold remained 75% of the average GDP of EU-15 and not of EU-25 (Convergence phasing-out)

NUTS 2 regions whose GDP per capita is between 75% and 90% of the average GDP of EU-27 with a differentiated treatment for regions which are eligible under the Convergence objective in 2007-2013

Transitional support for NUTS 2 regions which were covered by Objective 1 in 2000-2006 but whose GDP exceed 75% of EU-15 GDP average (RCE phasing-in)

  • The last are the “more developed” regions, whose GDP per capita is more than 90% of the average. The co-financing rate may not exceed 50%.

Having regard to the foregoing classification, the map of the EU by regions is as follows:

Figure 4
ALLOCATION OF AID BY REGION

On the basis of the foregoing, the budget established in the Community cohesion policy is distributed as follows:

Figure 5
COHESION POLICY FUNDING 2014-2020
(€ 351.8 billion)

By country, the budget for the 2014-2010 period is distributed as follows:

Figure 6
FINANCIAL ALLOCATIONS 2014-2020
Total EU allocations of Cohesion Policy 2014-2020 (million €, current prices)

Figure 7
TOTAL AMOUNT OF ALLOCATION

8.3.2. Common provisions on the European Structural and Investment Funds (ESI Funds)

Regulation (EU) No 1303/2013 of 17 December lays down common provisions applicable to all of the European Structural and Investment Funds (ERDF, ESF, Cohesion Fund, EAFRD and EMFF) and general provisions applicable to some of them, in order to ensure the effectiveness of the ESI Funds and their coordination with one another and with other EU instruments, notwithstanding the specific rules regulating each Fund and which are set out below.

The purpose of this Regulation is to improve the coordination and harmonize the execution of the Structural Investment Funds (ESI Funds) to ensure “smart, sustainable and inclusive growth” focused on the attainment of eleven thematic objectives:

  1. Strengthening research, technological development and innovation;
  2. Enhancing access to, and use and quality of ICT;
  3. Enhancing the competitiveness of SMEs, of the agricultural sector (for the EAFRD) and of the fishery and aquaculture sector (for the EMFF);
  4. Supporting the shift towards a low-carbon economy in all sectors;
  5. Promoting climate change adaptation, risk prevention and management;
  6. Preserving and protecting the environment and promoting resource efficiency;
  7. Promoting sustainable transport and removing bottlenecks;
  8. Promoting sustainable and quality employment and supporting labor mobility;
  9. Promoting social inclusion, combating poverty and any discrimination;
  10. Investing in education, training and vocational training for skills and lifelong learning;
  11. Enhancing institutional capacity of public authorities and stakeholders and efficient public administration.

To this end, a Common Strategic Framework (CSF) is created (which can be reviewed by the Commission where there are major changes in the social and economic situation in the Union), setting a number of common recommendations and criteria for those opting for financing from the ESI Funds.

Based on the foregoing premises, the aim of the Funds is to supplement the financing provided through national, regional and local interventions, in order to achieve the “2020 Strategy”, as well as the objectives specific to each Fund. The Member States, in accordance with their institutional, legal and financial framework, and the bodies designated by them, shall be responsible for preparing and implementing programs and carrying out their tasks, in partnership with the relevant partners. To this end, each Member State must promote a partnership which, in addition to the competent local and regional authorities, counts with the participation of the following partners:

  • Economic and social partners, and
  • Other bodies representing civil society, including environmental partners, non-governmental organizations and bodies responsible for promoting social inclusion, gender equality and non-discrimination.

With this premise, the Partnership Agreement is the national document prepared by each Member State for the period between January 1, 2014 and December 31, 2020, which explains the investment strategy and priorities of the respective Funds (ERDF, ESF, EAFRD and EMFF) in such State and must be approved by the Commission. Such strategy must be based on a previous analysis of the current situation of the Member State and its regions (in particular of the disparities existing between those regions), the opportunities for growth and the weaknesses of all its regions and territories, focusing on the thematic objectives, which will entail the identification of the actions deemed to be the priorities of each Fund in that State. In the case of Spain, the Partnership Agreement for the period 2014-2020 was approved by the European Commission on November 4, 2014. It establishes as specific objectives of the Funds, in Spain, to promote the competitiveness and the convergence of all territories, giving priority (i) to the thematic areas included in the recommendations given by the European Council, (ii) to those contained in the Position Paper prepared by the Commission2, as well as (iii) to those set forth in the National Reform Program approved by the Council of Ministers on April 30, 2014.

This Partnership Agreement promotes an investment of €28,580 million aimed at financing the entire Community cohesion policy in Spain for the period 2014-20203, a figure which must be increased by €8,290 million to be used for the performance of Rural Development Programmes and €160 million intended for the fisheries and maritime sectors.

This financing is to be used to execute the specific proposal for action described in the Partnership Agreement in connection with each of the thematic objectives listed above, their main priorities being the following:

  • Increasing participation in the labor market and labor productivity, as well as enhancing education, training and social inclusion policies, giving special attention to youth and vulnerable groups;
  • Supporting the adaptation of the productive system toward activities with greater added value, by increasing the competitiveness of SMEs;
  • Promoting a suitable business environment targeted at innovation and strengthening R&D&I systems;
  • Attaining a more efficient use of natural resources.

Notwithstanding the foregoing, the material implementation of the Funds is to be carried out through the respective Operational Programs prepared by each Member State in accordance with the terms of the Partnership Agreement and presented to the Commission for its approval. Each program will define priorities and proposals for action, specifying the projected investment and breaking it down by each of the years of the period in which it is applied. In the case of Spain, almost all of the Operational Programs have now been approved by the European Commission4.

Table 19
STRATEGIC PROGRAMMING 2014-2020

EU levelCommon Strategic Framework

(FEDER, FSE, FC, FEADER, FEMP)
Establishes strategic priorities and territorial challenges in line with Europe 2020.

National levelPartnership Agreement

(FEDER, FSE, FC, FEADER, FEMP)
Prepared by the Member State
Translates the elements of the MEC to national context.
Includes commitments to Fund programming.

National or regional
level
Operating Programmes

MEC and Partnership Agreements will be implemented in
Member States through OPs.
Prepared in close collaboration with the various agents
(partnership).

O.P. ERDF

O.P. ESF

O.P. CF

O.P. EAFRD

O.P. EMFF

Multi-fund O.P. (ERDF, ESF, CF)

8.3.3. Funds under the Cohesion Policy: ERDF, ESF and Cohesion Fund

The Funds under the Cohesion Policy include Structural Funds (ERDF and ESF) and the Cohesion Fund, which contribute to enhancing economic, societal and territorial cohesion.

The Community cohesion policy pursues two objectives:

  1. Investment in growth and jobs in Member States and their regions:

    Los recursos para este objetivo ascienden al 97% de la inversión total prevista en España (aproximadamente 28.580 millones de euros) y se asignan como sigue:

    • €2 billion to less developed regions (Extremadura);

    • €13.4 billion to transition regions (Andalucía, Canary Islands, Castilla-La Mancha, Melilla and Murcia);

    • €11 billion to more developed regions (Aragón, Asturias, Balearic Islands, Cantabria, Castilla y León, Cataluña, Ceuta, Valencia, Galicia, La Rioja, Madrid, Navarra, Basque Country);

    • €484.1 million as special funding for the outermost regions (Canary Islands).

  2. European Territorial Cooperation:

    The resources earmarked for this objective amount to approximately 3% of the total resources allocated to Spain with a charge to the ESI Funds during the 2014-2020 period (i.e., a total of €643 million).

    In summary, the articulation of the Cohesion Policy during this new budgetary period will be instrumented according to the following scheme:

Table 20
COHESION POLICY ARCHITECTURE

2007-2013
2014-2020
OBJECTIVESGOALSCATEGORY OF REGIONSFUNDS

Convergence

ERDF
ESF

Investment in Growth and Jobs

Less developed regions

ERDF
ESF

Convergence Phasing Out

Transition regions

Regional Competitiveness and
Employment Phasing in

Cohesion Fund

Cohesion Fund

Regional Competitiveness and
Employment

ERDF
ESF

More developed regions

ERDF
ESF

European Territorial Cooperation

ERDF

European Territorial Cooperation

ERDF

Based on the foregoing premises, the following is a description of the main characteristics of the Structural Funds (ERDF and ESF) and the Cohesion Fund:

8.3.3.1. European Regional Development Fund (ERDF)

This Fund will contribute to the funding of aid targeted at enhancing economic, societal and territorial cohesion by correcting the Union’s main regional imbalances through sustainable development and the structural adjustment of regional economies, as well as by restructuring industrial regions in decline and less developed regions.

The activities that can be cofinanced by the ERDF are the following:

  • Investments in production which contribute to creating or preserving long-term employment, through direct aid and investment in SMEs;
  • Productive investments, independent of the size of the company in question, which contribute to boosting research, technological development and innovation and to supporting a shift towards a low-carbon economy in all sectors. Also, where such investment entails cooperation between large companies and SMEs to enhance access to, and use and quality of information and communication technologies.
  • Investments in societal, health, research, innovation, business and educational infrastructures;
  • Investment in the development of native potential through ongoing investments in capital goods and small infrastructures, including small cultural and sustainable tourist infrastructures, corporate services, aid to research and innovation bodies and investment in technology and applied research at companies.
  • Online interconnection, cooperation and exchange of experiences between competent regional, local, urban and other public authorities, economic and social partners and the related bodies representing civil society referred to in article 5.1 of Regulation (EU) No 1303/2013, as well as the performance of studies, preparatory actions and the development of capacities.

However, the following activities are not eligible for funding under this Fund: (i) disassembly or construction of nuclear power plants; (ii) investments aimed at reducing greenhouse gas emissions pursuant to Annex 1 of Directive 2003/87/EC; (iii) manufacture, processing and marketing of tobacco and manufactured tobacco; (iv) enterprises undergoing difficulties; as well as (v) in general, investments in airport infrastructures, unless they are related to environmental protection or are accompanied by the investments necessary to mitigate or reduce their negative impact on the environment.

Although the ERDF Fund contributes to financing the eleven thematic objectives described above, its main priority is targeted at the attainment of Objectives nos. 1 through 4, more related to the business context (infrastructures, service enterprises, support for corporate activities, innovation, CIT and research) as well as to the provision of services to citizens in certain areas (energy, online services, education, health, societal and research infrastructures, accessibility, environmental quality).

Table 21
EUROPEAN REGIONAL DEVELOPMENT FUND

INVESTING IN GROWTH

Research and Innovation

Information and communication technologies

Competitiveness of SMEs

Low-carbon economy

During the 2014-2020 period Spain will manage 22 Operational Programmes co-financed by the ERDF with an amount of €19,408,883,778, pursuant to the Partnership Agreement approved by the Commission.

Under the objective entitled “Investment in growth and jobs”, the ERDF will use the respective Operating Programmes to support sustainable urban development through strategies which establish measures to meet economic, environmental, climate, demographic and societal challenges with an impact on urban areas, also bearing in mind the need to promote the relationship between the urban and rural environments. For such purpose, at least 5% of the resources of the ERDF assigned at national level will be used for sustainable urban development.

The Partnership Agreement signed by Spain and the Commission also includes a specific reference to the attainment of the “Investment in growth and jobs” objective, through which financing will be obtained for a number of proposals targeted at promoting the development of cities from a threefold perspective: (i) sustainable city (aimed at enhancing the physical and environmental dimension); (ii) smart city (aimed at enhancing the economic and competitiveness dimension); and (iii) inclusive city (aimed at enhancing the social dimension).

In turn, under the objective “European Territorial Cooperation”, the ERDF will support:

  • Cross-border cooperation between adjoining regions aimed at favoring regional development between regions with terrestrial and maritime borders between two or more Member States or with a third country on the Union’s outer borders.

    It is sufficient to indicate, in this connection, that Spain participates in the following cross-border cooperation programs:

    • Territorial Cooperation Programme Spain-France-Andorra (POCTEFA) 2007-2013.

    • INTERREG V A Cooperation Programme Spain-Portugal (POCTEP) 2014-2020.

    • European Neighbourhood Instrument Cross-border Cooperation Programme (ENI-CBC).

    • INTERACT III.

  • Transnational cooperation in large transnational areas in which national, regional and local partners participate and which also includes maritime cross-border cooperation in cases not covered by cross-border cooperation, with a view to attaining a higher degree of territorial integration in those territories.

Figure 9

Source: http://ec.europa.eu/regional_policy/sources/docgener/informat/basic/ basic_2014_en.pdf (“An Introduction to Reformed Cohesion Policy 2014-2020”).

Spain participates in the following transnational cooperation programs:

  • Madeira-Azores-Canary Islands Territorial Cooperation Programme (POMAC) 2014-2020
  • Atlantic Area European Territorial Cooperation Programme (2014-2020)
  • INTERREG V B MED Programme
  • Southwest Europe Interreg V-B Transnational Cooperation Programme (Interreg V-B SUDOE)
  • Interregional cooperation to enhance the efficiency of the cohesion policy, its scope of application being the entire territory of the EU.

    Spain participates in the following interregional cooperation program:

    • INTERREG EUROPE

For more detailed information on these programmes, please visit the website of the Ministry of Finance and Civil Service: http://www.dgfc.sgpg.meh.es/sitios/dgfc/es-ES/ipr/fcp1420/p/pa/Documents/20141022_AA_Espa%c3%b1a_2014_2020.pdf

8.3.3.2. European Social Fund (ESF)

The mission of the ESF is: (i) to promote high levels of employment and of job quality, (ii) improve access to the job market, (iii) foster the geographical and professional mobility of workers, (iv) facilitate their adaptation to the industrial change and to the changes in production systems necessary to guarantee sustainable development, (v) favor a high level of education and training for all and support the transition from education to employment among youth, (vi) combat poverty, back social inclusion and (vii) foster equality between the sexes, non-discrimination and equal opportunity, thus responding to the EU’s priorities in matters of improving economic, societal and territorial cohesion.

The Fund seeks to benefit citizens and, in particular, disadvantaged persons, such as long-term unemployed persons, disabled persons, immigrants, ethnic minorities, outcast communities and persons of any age living in poverty and social exclusion. The ESF will also provide aid to workers, enterprises, including agents of the social economy, and entrepreneurs, as well as to systems and structures, with a view to facilitating their adaptation to new challenges (including greater suitability of professional qualifications), and fostering good governance, social progress and the implementation of reforms, especially in the area of employment, education, training and social policies.

Similarly, the European Parliament, in its Resolution of July 5, 2016, stressed that professional integration is the first step towards social inclusion and that the ESF can therefore be applied to for the financing of measures designed to facilitate the integration of refugees.

Table 22
EUROPEAN SOCIAL FUND

INVESTING IN PEOPLE

Employment and Mobility

Better education

Social inclusion

Better public administration

Although the ESF is aimed at attaining specifically the following four investment priorities of the eleven thematic objectives (i.e., objectives 8 through 11) [(i) employment and labor mobility; (ii) education, skills and lifelong learning; (iii) promoting social inclusion and combating poverty; and (iv) enhancing institutional capacity], this does not mean that the initiatives supported by the ESF cannot also contribute to the achievement of other objectives.

According to the terms of the Partnership Agreement, Spain will manage 23 Operational Programmes with ESF co-financing of at least €7.6 billion (28.1% of the total budgets of the Cohesion Policy), without counting the budget to be used for the Youth Employment Initiative.

In particular, and in connection with the youth employment initiative, Spain has been allocated an additional €943.5 million to be used to back the fight against youth unemployment among youths under 25 years of age who are not integrated in educational or training systems and are inactive or unemployed.

The regions eligible for funding under the Youth Employment Initiative are:

Figure 10

8.3.3.3. Cohesion Fund

The Cohesion Fund is targeted at Member States with GNI (gross national income) per capita of less than 90% of the average income of the EU. The primary objective of the Fund is to reduce the socio-economic disparities among Member States and to promote sustainable development. The Cohesion Fund allocates a total of €63.4 billion to activities in the following categories:

  • Trans-European transport networks: in particular priority projects of European interest identified by the EU. The Cohesion Fund backs infrastructure projects in the context of the Connecting Europe Facility;
  • Environment: in this connection, the Cohesion Fund will support projects relating to energy or transport, provided that they are clearly beneficial to the environment in terms of energy efficiency, using renewable energies, developing rail transport, enhancing intermodality, strengthening public transport, etc.

As indicated, the Cohesion Fund is currently subject to the same programming, management and supervisory rules as the ERDF and the ESF, under Regulation (EU) No. 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No. 1083/2006 the common provisions regulation. During the 2014-2020 period, the Cohesion Fund may finance projects and initiatives taking place in Bulgaria, Croatia, Cyprus, Slovakia, Slovenia, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, the Czech Republic and Romania. In other words, Spain, during the 2014-2020 period will not receive financing from this Fund.

Table 23
ANUAL BREAKDOWN OF COMMITED CREDITS FOR THE 2014-2020 PERIOD

YEAR€ MILLION

2014

36.196

2015

60.320

2016

50.837

2017

52.461

2018

54.032

2019

55.670

2020

57.275

TOTAL366.791

8.4. The funding policy of the Common Agricultural Policy (CAP)

The Common Agricultural Policy (CAP) absorbs around 40% of the total budget of the EU for this period. Despite its heavy budgetary weight, justified in part by its being one of the few sectors whose policy is financed principally by the EU, its specific weight has been reduced substantially over the last 30 years, dropping from 75% to the current 40%. The budget for direct payments assigned to Spain is equal to €29,227,900,000,000, which entails 11.56% of the total.

The financing and functioning of the CAP is regulated under Regulation No. 1306/2013 of the European Parliament and of the Council, of 17 December 2013, on the financing, management and monitoring of the Common Agricultural Policy, and repealing Council Regulations (EC) No. 352/78, (EC) No. 165/94, (EC) No. 2799/98, (EC) No. 814/2000, (EC) No. 1290/2005 and (EC) No. 485/2008, which sets up the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD).

In particular, the CAP for the 2014-2020 period is based on two structural pillars:

  • The first pillar, instrumented through the EAGF, provides direct support to farmers and funds market measures. The direct support and market measures are funded in their entirety and exclusively by the EU budget, with a view to guaranteeing the application of a common policy throughout the single market and with the integrated management and control system.
  • The second pillar, instrumented through the EAFRD, improves the competitiveness of agricultural and forestry industries and promotes the diversification of economic activity and quality of life in rural areas, including regions with specific problems, i.e. it is primarily intended to support rural development. Member States must co-finance these measures.

Figure 11
THE TWO-PILLAR STRUCTURE IS MAINTAINED

The following is a description of the main characteristics of these two Funds:

8.4.1. EAGF

In general, the EAGF funds the following actions, managed jointly by the Member States and the Commission:

  • Measures aimed at regulating or supporting agricultural markets;
  • Direct payments to farmers established within the scope of the CAP;
  • The financial participation of the Union in the measures taken by Member States to report and promote agricultural products on the Community domestic market and in third countries;
  • The financial participation of the Union in the Union school fruit and vegetable scheme referred to in article 23 of Regulation (EU) No. 1308/2013 and the measures concerning animal diseases and loss of consumer confidence referred to in article 155 of the same Regulation.

In turn, the EAFRD provides direct funding for the following expenditure:

  • Promotion of agricultural products, undertaken either directly by the Commission or through international organizations;
  • Measures, taken in accordance with Union law, to ensure the conservation, characterization, collection and utilization of genetic resources in agriculture;
  • The establishment and maintenance of agricultural accounting information systems.

The Commission provides Member States with the credit necessary to cover the expenses financed by the EAGF, in the form of monthly reimbursements.

8.4.2. EAFRD

In the field of local development, consideration must be given to Regulation No. 1305/2013, of the European Parliament and of the Council, of 17 December 2013, on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) nº 1698/2005.

In particular, the EAFRD has three basic objectives in the context of the 2020 European Strategy:

  • Fostering the competitiveness of agriculture;
  • Ensuring the sustainable management of natural resources, and climate action;
  • Achieving a balanced territorial development of rural economies and communities including the creation and maintenance of employment.

In order to meet these objectives, the EAFRD has six priorities:

  • Fostering knowledge transfer and innovation in agriculture, forestry, and rural areas;
  • Enhancing farm viability and competitiveness of all types of agriculture in all regions and promoting innovative farm technologies and the sustainable management of forests;
  • Restoring, preserving and enhancing ecosystems related to agriculture and forestry;
  • Promoting resource efficiency and supporting the shift towards a low carbon and climate resilient economy in agriculture, food and forestry sectors;
  • Promoting social inclusion, poverty reduction and economic development in rural areas.

Pursuant to the Partnership Agreement approved by the Commission for Spain, 18 Operational Programmes will be eligible for co-financing with a charge to the EAFRD, its allocation for the entire period amounting to €8,209,828,821.

8.5. European Maritime and Fisheries Fund (EMFF)

For the 2014-2020 period, a new Fund has been created for EU maritime and fishery policies known as the European Maritime and Fisheries Fund (EMFF) and regulated in Regulation (EU) No. 508/2014 of the European Parliament and of the Council, of 15 May 2014 on the European Maritime and Fisheries Fund and repealing Council Regulations (EC) No. 2328/2003, (EC) No. 861/2006, (EC) No. 1198/2006 and (EC) No. 791/2007, and Regulation (EU) No. 1255/2011 of the European Parliament and of the Council.

Pursuant to the aforesaid Regulation and in line with the “2020 European Strategy” and with the start-up of the Common Fisheries Policy, the Fund pursues the following priorities concerning the sustainable development of fishing and aquaculture activities and connected activities:

  • Fostering environmentally sustainable, resource efficient, innovative, competitive and knowledge-based fisheries, by pursuing the following specific objectives

    • The reduction of the impact of fisheries on the marine environment, including the avoidance and reduction, as far as possible, of unwanted catches;
    • The protection and restoration of aquatic biodiversity and ecosystems;
    • The ensuring of a balance between fishing capacity and available fishing opportunities;
    • The enhancement of the competitiveness and viability of fisheries enterprises, including small-scale coastal fleet and the improvement of safety and working conditions;
    • The provision of support to strengthen technological development and innovation, including increasing energy efficiency and knowledge transfer;
    • The development of professional training, new professional skills and lifelong learning.
  • Fostering environmentally sustainable, resource efficient, innovative, competitive and knowledge-based aquaculture, by pursuing the following specific objectives:

    • The provision of support to strengthen technological development, innovation and knowledge transfer;
    • The enhancement of the competitiveness and viability of aquaculture enterprises, including the improvement of safety and working conditions, in particular of SMEs;
    • The protection and restoration of aquatic biodiversity and the enhancement of ecosystems related to aquaculture and the promotion of resource-efficient aquaculture;
    • The promotion of aquaculture having a high level of environmental protection, and the promotion of animal health and welfare and of public health and safety;
    • The development of professional training, new professional skills and lifelong learning.
  • Fostering the implementation of the Common Fisheries Policy by pursuing the following specific objectives:

    • The improvement and supply of scientific knowledge as well as the improvement of the collection and management of data;
    • The provision of support for monitoring, control and for the enhancing of institutional capacity and the efficiency of public administration, without increasing the administrative burden.
  • Increasing employment and territorial cohesion by pursuing the following specific objective:

    The promotion of economic grown, social inclusion and job creation, and providing support to employability and labor mobility in coastal and inland communities which depend on fishing and aquaculture, including the diversification of activities within fisheries and into other sectors of maritime economy.

  • Fostering marketing and processing by pursuing the following specific objectives:

    • The improvement of market organization for fishing and aquaculture products;
    • The encouragement of investment in the processing and marketing sectors.
  • Lastly, fostering the implementation of the Integrated Maritime Policy, i.e., the Union policy whose aim is to foster coordinated and coherent decision-making to maximize the sustainable development, economic growth and social cohesion of Member States, in particular, promoting the developing of maritime industries in the coastal, insular and outermost regions in the Union, through coherent maritime-related policies and international cooperation criteria.

The EMFF has a budget of €5,749,331,600 for the shared management measures, i.e., those taken in cooperation with the Member States and in compliance with the common provisions set forth in Regulation (EU) No. 1303/2013. A breakdown of allocations between the Member States is provided below:

Figure 11
TOTAL EU ALLOCATION OF EMFF (2014-2020)

In the case of Spain, there has been a specific Operating Program pertaining to this Fund in force since November 13, 2015, managed by the Directorate-General of Fisheries under the Secretariat-General of Fisheries of the Ministry of Agriculture, Fisheries, Food and the Environment, with a total budget of €1,161,620,889.

8.6. European Union Research and Innovation Programs

8.6.1. Horizon 2020

The EU has been approving successive multi-year programmes which set out the lines of action of the Community research and innovation policy, allocating considerable economic resources to their performance.

Currently the EU Research and Innovation Programme for the 2014-2020 period is called “Horizon 2020” and is regulated by Regulation (EU) No. 1291/2013 of the European Parliament and of the Council, of 11 December 2013, which was amended by Regulation (EU) No. 1017/2015 of the European Parliament and of the Council, of 25 June 2015.

The objective of the programme is to contribute to building a society and an economy based on knowledge and innovation across the Union mobilizing, for this purpose, financing aimed at attaining, over this period, a target of 3% of GDP used to promote research, development and innovation (R&D&I) throughout the EU.

This programme has a total budget of €74,828.3 million to finance research, technological development and innovation initiatives and projects with obvious European added value.

Horizon 2020 is based on three fundamental pillars:

  1. Excellent Science (with a budget of €24,232.1 million), with the target to raise the level of excellence in European basic science and to ensure a constant flow of quality research with a view to guaranteeing Europe’s long-term competitiveness. In order to reach this goal, it supports the best ideas and seeks to develop talent within Europe. It also aims to ensure that researchers have access to priority research infrastructure, making Europe an attractive place for the best researchers in the world.

    It has four specific objectives:

    • Providing attractive and flexible funding through the European Research Council (ERC) to enable talented and creative individual researchers and their teams to pursue the most promising avenues at the frontier of science, on the basis of Union-wide competition.
    • Supporting collaborative research in Future and Emerging Technologies in order to expand Europe’s capacity for advanced innovation capable of changing the established research paradigms, in particular, by fostering scientific collaboration across disciplines on radically new, high-risk ideas and promoting the development of the most promising emerging areas of science and technology and well as the structuring of the scientific communities existing Union wide.
    • Providing, through Marie Skłodowska-Curie (MSCA) actions, excellent and innovative research training as well as attractive career and knowledge-exchange opportunities through cross-border and cross-sector mobility of researchers, all in order to prepare them to face optimally both current and future societal challenges.
    • Developing and supporting excellent European research infrastructures and assisting them to contribute to the European Research Area by fostering their innovation potential, attracting world-level researchers and training human capital, and complementing these initiatives with the related Union policy and international cooperation.
  2. Industrial Leadership (with a budget of €16,466.5 million). This priority has a twofold aim: (i) speeding up the development of the technologies and innovations which serve to create tomorrow’s businesses, and (ii) helping innovative SMEs to grow into world-leading companies. It has three specific objectives:

    • Leadership in enabling and industrial technologies, provides specific support for research, development and demonstration (and, where appropriate, for standardization and certification), on information and communications technology (ICT), nanotechnology, advanced materials, biotechnology, advanced manufacturing and processing and space. Emphasis is placed on the needs of users in all these fields, promoting enabling technologies able to be used in multiple sectors, industries and services.
    • Access to risk finance, aims to overcome deficits in the availability of debt and equity finance for R&D and innovation-driven companies and projects at all stages of development. Thus SMEs have available to them a group of financial intermediaries to which they may apply for capital, guarantees or counterguarantees for their R&D projects. The development of Union-level venture capital is also fostered with the equity instrument of the “Programme for the Competitiveness of Enterprises and SMEs” (currently the COSME programme).
    • Innovation in SMEs, provides SME-tailored support to stimulate all forms of innovation, targeting those SMEs with the potential to grow and internationalize across the single market and beyond. In particular, under the “Horizon 2020” programme at least 20% of the funding budgeted for the areas “Leadership in enabling and industrial technologies” and “Societal Challenges” is to be allocated to SMEs, which means that, throughout the period, they will be able to receive approximately €7.6 billion, distributed as follows:

      • 7% through the SME Instrument (a total of approximately €2.7 billion);
      • the remaining 13%, through the strategies of each Challenge or Technology where SMEs are involved in their “normal” collaborative projects, either with SME-targeted calls for applications or with more or less relevant topics to encourage SMEs to participate in projects.

The “SME Instrument” is a 3-phase scheme of funding aimed at supporting SMEs showing a strong ambition to grow, develop and internationalize, through an innovation project with a European dimension. The Programme has 3 phases which cover the complete innovation cycle:

  • Phase 1: Concept and assessment of feasibility (Optional): SMEs receive funding of €50,000 per project for an assessment of the scientific or technical feasibility and commercial potential of a new idea (concept test) in order to develop an innovative project. A positive result of this assessment will allow them to access funding through the following phases.

    This phase has a term of approximately 6 months.

  • Phase 2: R&D, demonstration and market replication: This phase supports Research and Development focused on demonstration activities (testing, prototype, scale-up studies, design, innovative processes, products and services, performance verification, etc.) and the analysis of their possible implementation and commercial development.

    The R&D projects selected could obtain funding of up to €2.5 million, which could be as much as €5 million for health-related biotechnology projects.

    This phase has an approximate term of between 1 and 2 years.

  • Phase 3: Commercializing: This phase does not provide direct funding (apart from support activities), but rather aims to facilitate access to private capital and to environments enabling innovation. Links are to be established with access to risk finance.

Each phase is open to all SMEs and the transition between one phase and another is immediate, provided that evidence has been given of the need to receive additional funding based on the success of the previous phase.

Figure 13

The SME Instrument has the following characteristics differentiating it from collaborative projects:

  • Each thematic or societal challenge of Horizon 2020 has at least one “topic” or theme for the SME Instrument with an open content in the context of each technology or societal challenge.
  • SMEs are the only ones able to apply for it, although projects may be submitted together with entities of any type, which may be subcontracted.
  • The formation of a previously-defined minimum consortium is not required. The SME is free to choose the consortium most suitable to its needs, and may even go it alone, but it is important to remember that European added value is a fundamental selection criteria.
  • It functions with various submission deadlines per year both for Phase 1 and for Phase 2.
  • SMEs which have received funding in Phases 1 and/or 2 will have priority access to the financial instruments made available under the “Access to Risk Finance” programme.
  • All SMEs participating in the SME Instrument will benefit from a coaching scheme associated with the Instrument.
  • A “Seal of Excellence” has been created to set apart projects which were evaluated as satisfactory but have not yet been able to access funding under the “SME Instrument”, and thus to provide them with access to other alternative sources of funding.
  1. Societal Challenges (with a budget of €28,629.6 million), aimed at researching the major issues affecting European citizens. This line of action focuses on six areas essential to achieve a better life:

    • Health, demographic change and wellbeing.
    • Food security, sustainable agriculture and forestry, marine, maritime and inland water research and the bioeconomy.
    • Safe, clean and efficient energy.
    • Smart, green and integrated transport.
    • Climate action, environment, resource efficiency and raw materials.
    • Europe in a changing world: inclusive, innovative and reflective societies.
    • Secure societies: protection of the freedom and security of Europe and its citizens.

The focus of all activities must be based on responding to the challenges facing society, including basic or applied research, technology or innovation transfer, targeting political priorities without predetermining the technologies or solutions which will have to be developed. Emphasis is placed on bringing together a critical mass of resources and knowledge of different fields, technologies, scientific disciplines and research infrastructures in order to meet the challenges. The activities must cover the complete cycle, from research through to placement on the market, emphasizing activities relating to innovation, such as pilot projects, demonstration activities, testing banks, support for public contracting, design, innovation promoted by the end user, social innovation, technology transfer and assimilation of innovations by the market.

Table 21
BREAKDOWN OF THE BUDGET FOR “HORIZON 2020”

I Excellent science, of which:24,232.1

1. European Research Council (ERC)

13,094.8

2. Future and Emerging Technologies (FET)

2,585.4

3. Marie Skłodowska-Curie actions

6,162.3

4. Research infrastructures

2,389.6

II Industrial leadership, of which:16,466.5

1.  Leadership in enabling industrial enabling and industrial technologies

13,035

2. Access to risk finance

2,842.3

3. SME innovation

589.2

III Societal challenges, of which:28,629.6

1. Health, demographic change and wellbeing

7,256.7

2.  Food security, sustainable agriculture and forestry, marine, maritime and inland water research and the bioeconomy

3,707.7

3. Secure, clean and efficient energy

5,688.1

4. Smart, green and integrated transport

6,149.4

5.  Climate action, environment, resource efficiency and raw materials

2,956.5

6.  Europe in a changing world - Iinclusive, innovative and reflective societies

1,258.5

7.  Secure societies – protecting freedom and security of Europe and its citizens

1,612.7

IV Spreading excellence and widening participation816.5
V Science with and for society444.9
VI Non-nuclear direct actions of the Joint Research Centre (JRC)1,855.7
VII The European Institute of Innovation and Technology (EIT)2,383
TOTAL 74,828.3

Source: Annex II “Breakdown of the Budget” of Regulation 1291/2013.

With respect to funding, most of the activities are instrumented as competitive tenders in “Horizon 2020” managed by the European Commission with pre-established priorities in the respective working programmes which are previously published.

The calls for proposals have, in general, fixed launch and closing dates (generally comprising between three and four months) and can refer to a certain priority and/or area of action of “Horizon 2020”.

Based on these premises, the Working Programme of “Horizon 2020” approved by the Commission for 2016-2017 focuses its interest on the following priorities:

  • A new boost for jobs, growth and investment;
  • A connected digital single market;
  • A resilient energy union with a forward-looking climate change policy;
  • A deeper and fairer internal market with a strengthened industrial base;
  • A stronger global actor, towards a new policy on migration, and an area of justice and fundamental rights based on mutual trust.

In general, any European enterprise, university, research center or legal entity that wishes to develop a R&D&I project whose content is consistent with the lines and priorities stipulated in any of the pillars of “Horizon 2020” may participate in the calls.

To be able to participate in most of the actions included in this programme, it is developed through consortium projects, which must involve at least three independent legal entities, each one established in a different EU Member State or associated State.

Nonetheless certain exceptions are provided, such as research initiatives “on the frontiers of knowledge” of the European Research Council (ERC), coordination and support initiatives and mobility and training initiatives, in which legal entities or individuals can participate on an individual basis.

In any case, the working plans or programmes under the calls for proposals may stipulate terms additional to those mentioned above, depending on the nature and objectives of the initiative in question.

Lastly, in order to apply for funding for any R&D&I project a proposal must be submitted in a previously published call for proposals. Calls for proposals, as well as all documents related thereto, in which submission deadlines and forms are indicated, are posted on the participant portal made available on the website of the European Commission, through which participants can access the electronic system for submitting proposals.

Normally a potential participant in “Horizon 2020” has two forms of taking part in a proposal: (i) based on his own idea (either as coordinator of the project or by participating individually in the instruments which so permit); or, on the contrary, (ii) by participating in a consortium led by a third party.

Schematically, the basic steps to take from the time the idea arises until the project becomes a reality would be:

Figure 14

For more information on “Horizon 2020” as well as on the calls for proposals, please check the Participant Portal and the “Horizon 2020” online manual on the following website of the European Commission http://ec.europa.eu/research/participants/portal/desktop/en/funding/index.html

Finally, it should be mentioned that the European Commission has already published its guidelines for the “Horizon 2020” 2018-2020 Work Program. It is expected that the work programme will be approved and published in 2017.

8.6.2. Other Research and Innovation Programmes

Parallel to “Horizon 2020”, the European Commission extends funding opportunities through additional programmes of significance in the context of the European Research and Innovation Strategy.

This section includes two programmes with differentiated objectives and targets.

The COST (European Cooperation in Science and Technology) programme was initiated in 1971 and is one of the oldest European framework programmes supporting cooperation among scientists in all of Europe in different areas of research. On the other hand, the EURATOM (European Atomic Energy Community) programme arose under the Treaty of the same name, with a view to coordinating the research programmes of Member States in the peaceful use of nuclear energy.

  • COST Program

The COST programme is the first, as well as one of the largest, intergovernmental European networks for the coordination of European scientific and technical research and currently involves 36 countries and Israel as a cooperating State. It also has four reciprocity agreements (with Australia, New Zealand, Argentina and South Africa).

Figure 14
37 COST COUNTRIES

The programme is targeted at researchers who work: (i) in universities and research centers, regardless of size, both public and private, in any of the 36 COST countries or Israel (cooperating State); (ii) in any technological or scientific field; and (iii) provided that they have an original and innovative idea.

Its objective is to strengthen scientific and technical research in Europe, financing the establishment of cooperation and interaction networks between researchers, organized around a specific scientific objective.

The programme functions through networks known as COST Actions, which are established at the initiative of researchers without pre-defined thematic priorities. At least five participants from different COST countries must join together in order to apply for an Action.

The projects selected will receive funding for the activities previously established in the joint working programme, for a term of 4 years, to carry out the following networking activities:

  • Scientific meetings of working groups
  • Workshops and seminars
  • Short-term Scientific Missions (STSMs)
  • Training workshops and scientific conferences
  • Dissemination publications and activities

COST calls for proposals are permanently open, with two submission deadlines per year (spring and autumn). The procedure for selection and grant of aid is carried out in accordance with the following scheme:

Figure 16
COUNTRY’S PARTICIPATION IN COST ACTIONS

Spain is one of the countries which is most active in COST, since it is present in more than 300 actions, approximately, which makes it third in the ranking of countries with the highest degree of participation.

The representative of Spain in the COST program (delegate in the committee of senior officials, CSO, and COST National Coordinator, CNC) is the Ministry of Economy, Industry and Competitiveness through the Subdirectorate-General of International Relations and with Europe (SGRIE).

The following Figure shows each country’s participation in COST actions:

Figure 17
COUNTRY’S PARTICIPATION IN COST ACTIONS

  • EURATOM program

    EURATOM energy research activities are carried out under the treaty with the same name, which in 1957 established the European Atomic Energy Community (EURATOM). EURATOM is legally separated from the European Community and has its own Framework Research and Training Programme, that is managed by the common Community institutions and regulated in Council Regulation (EURATOM) No. 1314/2013 of 16 December 2013 on the Research and Training Programme of the European Atomic Energy Community (2014-2018) complementing the Horizon 2020 Framework Programme for Research and Innovation.

    Although Member States retain most competences in energy policy, whether based on nuclear or other sources, the EURATOM Treaty has achieved an important degree of harmonization at European level. It legislates for a number of specific tasks for the management of nuclear resources and research activities.

    The general Objective of the EURATOM programme, with a budget of €1,603,329 for the full period (2014-2018) is to pursue nuclear research and training activities with an emphasis on continuous improvement of nuclear safety, security and radiation protection, in particular with a view to contributing to the long-term decarbonization of the energy system in a safe, efficient and secure way.

    This objective is implemented through:

    • Indirect actions targeted at:
      • supporting safety of nuclear systems;
      • contributing to the development of safe, long-term solutions for the management of ultimate nuclear waste;
      • supporting the development and sustainability of nuclear expertise and excellence in the Union;
      • supporting radiation protection and development of medical applications of radiation;
      • moving towards demonstration of feasibility of fusion as a power source;
      • laying the foundations for future fusion power plants;
      • promoting innovation and industrial competitiveness;
      • insuring availability and use of research infrastructures of pan-European relevance.
    • Direct actions focused on:
      • improving nuclear safety;
      • improving nuclear security;
      • increasing excellence in the nuclear science base for standardization;
      • fostering knowledge management, education and training;
      • supporting the policy of the Union on nuclear safety and security.

EURATOM is supplementary to “Horizon 2020” since both have the same rules on participation. Under “Horizon 2020” there is also a possibility of carrying out trans-actions within the EURATOM programme and between the EURATOM programme and “Horizon 2020” through co-funding and externalization.

8.7. Community initiatives in favor of corporate finance

The Community initiatives aimed at favoring corporate finance include most notably the COSME programme and the Gate2Growth initiative:

8.7.1. COSME Programme

The COSME (Competitiveness of Enterprises and Small and Medium-sized Enterprises) programme is an EU programme aimed at improving the competitiveness of enterprises, with special emphasis on small and medium-sized enterprises, during the 2014-2020 period.

COSME helps entrepreneurs and small and medium-sized enterprises to begin to operate, access financing and internationalize, in addition to supporting the authorities in the improvement of the business environment and boosting economic growth in the European Union. It is regulated in Regulation (EU) No. 1287/2013 of the European Parliament and of the Council, of 11 December 2013, establishing a Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME) (2014-2020) and repealing Decision No. 1639/2006/EC.

COSME has a budget of approximately €2.3 billion and supplements the policies implemented by the Member States themselves in their support of SMEs, helping to strengthen the competitiveness and sustainability of the Union’s enterprises and encouraging entrepreneurial culture.

The programme’s objectives are:

  • to improve access to finance for SMEs in the form of equity and debt through financial intermediaries;
  • to improve access by enterprises to markets, in particular within the Union: The Enterprise Europe Network will provide support services aimed at facilitating the expansion of enterprises inside and outside the European Union and will fund international industrial cooperation with a view to reducing the differences between the EU and its main commercial partners;
  • to improve the general conditions for the competitiveness and sustainability of SMEs, including those pursuing their activity in the tourism industry;
  • to promote entrepreneurship and business culture: to develop the entrepreneurial abilities and attitudes, especially among new entrepreneurs, youth and women.

In addition to supporting internationalization, competitiveness and entrepreneurial culture, COSME is, above all, a financial instrument which will make it possible to improve a SME’s access to financing, since at least 60% of the programme’s total budget (€1.4 billion) is earmarked for this purpose.

The allocation of these funds is managed by the intermediary entities and bodies of each country that have been previously selected by the EIF. These bodies will be in charge of launching the financial products they have selected, in order to offer them to the SMEs, so that they can benefit from the terms of the programme’s aid and, accordingly, they will also develop the financial instruments contained therein.

The promotion and dissemination of COSME among the business sector depends on the active participation of the nearly 600 members of the Enterprise Europe Network, in more than 60 countries, which, in addition to furnishing information on European financing, help enterprises to develop their businesses on new markets and to license new technologies.

En España existen 9 nodos que dan soporte en todo el territorio nacional:

  • GALACTEA PLUS: Galicia; Principality of Asturias; Cantabria and Castilla y León.
  • Basque Enterprise Europe Network: Basque Country.
  • ACTIS: La Rioja; Navarra; Aragón; Castilla La Mancha and Extremadura.
  • Enterprise Europe Network madri+d: Madrid Autonomous Community
  • CATCIM: Cataluña.
  • SEIMED: Valencia and Murcia.
  • IB SERVICES: Balearic Islands.
  • CESEAND: Andalucía.
  • EEN CANARIAS: Canary Islands.

For more information on the COSME programme and the calls open in Spain, see the following websites:

8.7.2. Iniciativa InvestorNet – Gate2Growth 

The InvestorNet – Gate2Growth initiative (www.gate2growth.com) is a one-stop shop for innovative entrepreneurs seeking financing. It also offers investors, intermediaries and innovation service-providers, a community for sharing knowledge and good practice.

The initiative incorporates all knowledge acquired through the implementation of previous pilot programs, some of the most noteworthy of which are the I-TEC project, the LIFT project and the FIT project.

One of the most notable characteristics of this initiative is that it acts as a meeting point for innovative entrepreneurs, innovation professionals and potential investors. InvestorNet – Gate2Growth aids innovative European companies with the processes of marketing, internationalization and financial growth, by:

  • Being a partner in commercialization and value chain modeling. Consulting in term-sheet and shareholder agreement negotiations.
  • Raising capital for high-tech ventures and public private partnerships.
  • Finding strategic partnerships for spin-offs from universities and research institutions.
  • Conducting master classes in “How to Attract Investors” “Horizon 2020 SME Instrument” &”Train the Trainers in How to Attract Investors”.

Particularly noteworthy is the fact that, within the framework of the InvestorNet – Gate2Growth initiative, the following projects are currently being carried out:

  • MEMAN: integral material and energy flow management in manufacturing metal-mechanic sector (value optimization chain in the metal sector) (2015-2018).
  • ProBio: innovation and business development for knowledge based bio economy projects (conversion of organic waste into useful products) (2015-2017).
  • SCIM: promotes low-impact sustainable solutions for the exploitation of mineral deposits using advanced environmental technologies.

On the other hand, together with other initiatives such as the one analyzed, business financing initiatives according to activity sector are also available at Community level.

9. Compatibility

As a general rule, the compatibility of these different incentives depends on the specific regulations governing each one, some of which identify certain incompatibilities (either absolute or up to certain limits), while for others it is expressly stated that they are compatible with other forms of aid (subsidies or other forms of public funding), without prejudice to the maximum limits on the accumulation of state aid established in EU legislation.

In general, without limitation and notwithstanding the legislation applicable in each specific case, the general situation in relation to compatibility is as follows:

9.1. General State initiatives

9.1.1. Training

In principle, there are no incompatibilities with other types of aid.

9.1.2. Employment

In principle, there are no incompatibilities with other types of aid. However, taken in conjunction with other incentives, this aid cannot exceed 60% of the social security cost of each contract created under these programs.

9.2. State incentives for specific industries

These incentives are compatible with the other types of aid, but they cannot exceed (in terms of net subsidy) the limits set by the EU for incentives in certain areas.

9.3. Regional incentives

9.3.1. Granted by the State

In principle, no investment project will be able to receive additional financial or industry subsidies (of any nature or from any granting agency) if the maximum percentage stated in each Royal Decree of demarcation is exceeded, since both types of aid are combined with the regional aid received for the project when computing the related ceilings. In no case may the limits established by the EU in the Guidelines on regional aid and maps approved for each State be exceeded.

9.3.2. Granted by Autonomous Communities and Municipalities and Municipal Authorities

The general limit applicable to regional and industry financial aid also covers these incentives.

9.4. EU aid and incentives

These are, in principle, compatible with other types of aid, with the specific limitations described above.

In fact, EU funds habitually finance many of the incentives (industry and regional) described in previous sections.

Table 19
SUMMARY OF AIDS AND INCENTIVES TO INVESTMENT

Level of grantWhere to applyWhen to applyHow to applyOn-line information
EU

EIB

EIB Spanish intermediary entities (banks, etc.)

No specific rules.

Ask intermediaries.

http://www.eib.org/

EIF

EIF, Spanish intermediary entities.

No specific rules.

Ask intermediaries.

http://www.eif.org/index.htm

ERDF

Autonomous Communities.
Ministry of Finance and Public Authorities. General-
Subdirectorate of Regional Incentives. Other granting
agencies.

Depends on national rules.

Depends on national rules.

http://ec.europa.eu/regional_policy/thefunds/regional/index_es.cfm

ESF

Provincial offices of the Ministry of Labor and Social Security.
Autonomous Community in which investment will be located.

Depends on each program.

See Regulation 1081/2006.

http://ec.europa.eu/regional_policy/thefunds/social/index_es.cfm

EAGF and EAFRD (financing the Common
Agricultural Policy)

Autonomous Community in which investment will be located.

Depends on each program.

See Regulation 1306/2013.

http://europa.eu/legislation_summaries/agriculture/general_framework/l11096_es.htm

http://europa.eu/legislation_summaries/agriculture/general_framework/l60032_es.htm

EMFF

Autonomous Communities.
Ministry of Agriculture, Food and the Environment.

Depends on national rules.

See Regulation 508/2014

http://www.magrama.gob.es/es/pesca/temas/fondos-europeos/femp/

R&D&I Programs

European Commission General Directorate of Science, Research and Development.

See rules on each program.

See rules on each program and Regulation 1291/2013.

https://ec.europa.eu/programmes/horizon2020/

http://ec.europa.eu/research/index.cfm?pg=dg
1. Based on figures previous to the entry of Croatia in July 2013.
2. Report on the Position of the Commission Services on the development of a Partnership Agreement and Programmes in SPAIN for the period 2014-2020. October 2012.
3. Including the financing of European territorial cooperation and the allocation for the youth employment initiative.
4. In this line, the ERDF Regional Operational Programs have been approved for all of the regions of Spain, as have the Multi-regional and most of the Territorial Cooperation Operational Programs of the same Fund; two of the ESF Operational Programs have also been approved. Approval has also been given for the Operational Program for Spain of the European Maritime and Fisheries Fund and the EAFRD. Spain no longer has access in this period to the Cohesion Fund.