Madrid: the engine of the Spanish economy

Updated: Dec 22, 2021



In the past several years, The Community of Madrid has become, by far from other communities, the engine of the Spanish economy. Either because of the political stability the Government of Madrid supposes, its special location in the center of Spain, the tax advantages, its accesses, the modern infrastructure, public and private sports facilities, or due to its extraordinary quality of life, Madrid is a privileged investment destination not only for the rest of the Spanish regions but also for the foreign capital. The Government of Madrid, through its institution Invest Madrid, an entity whose final purpose is to promote the internalization of the local companies and attract foreign investment, has decisively committed to this objective.


Furthermore, the parameters will comment upon stand as good proof of these affirmations.


The Community of Madrid projects its economic policy to reach the levels of Gross Domestic Product prior to the Covid-19 pandemic in the second half of 2022. The regional government will continue to work in the same line as up to now, which has allowed a GDP growth of 31,7% between June 2020 and 2021 (12 points above the national average), to lead retail sales, and to monopolize a 60.2% of the foreign investment of the whole country or to be at the forefront in the ranking of new business creation, with a 23.5% of the total.


On the other hand, the cancelation of all own taxes in the region, has already meant a saving of 16,000 euros per taxpayer in the last 17 years and a total of 50,000 million euros. Undoubtedly, the regional government has renounced having its own taxes to send companies a message of tranquility.


Additionally, the reduction of half of point in all sections of the Personal Income Tax for 2022 translates into savings of more than 300 million euros for citizens, with a greater impact on low incomes, which also means an “increase in collection”, as has happened on other occasions.


Moreover, the Government has decided to set out the open line against hyper-regulation, a direct communication channel with the citizens, to eliminate all regulatory obstacles that interfere with the development of an idea or business in the region.


The economic management of the Community of Madrid is endorsed by the numbers, the market favor and the investments that are committed to the capital of Spain. The truth is that the Community of Madrid has received 4,149.8 million euros of foreign investment in the first six months of 2021, which represents 60.2% of the national total.


This figure reaffirms the leadership of the región in terms of attracting foreign investment, as reflected in the latest data released by the Ministry of Industry, Commerce and Tourism, relative to the second quarter of the year. Regarding the main investing countries in the región, the ranking is led by Luxembourg (25.4%), USA (23.2%), France (15.7%),the Netherlands (13.7%) and the United Kingdom (9.0%).


The main sectors affected by a fall of foreign investment so far this year have been: Telecommunications (21.6%), electricity, gas, steam and air supply (20.8%); Real Estate activities (6.2%); Sports, recreational and entertainment activities (5.3%), and Financial Services, except insurance and pension funds (5.2%).


The data also reveals the leadership of the Community of Madrid in attracting foreign investment during the second quarter of the year. In this manner, the región has received a total of 2,105.6 million euros, 66% of the national total, followed by Catalonia (11.4%), the Valencian Community (6.3%), Castilla-La Mancha (4.6%) and Aragon (3%).


Madrid constituted 22.5% of the companies created in Spain in August and 21.2% of the national investment was made in the capital.


The Community of Madrid leads the regional classification in the constitution of new companies and investment made by new companies, in the first eight months of 2021. Madrid also continues to attract companies from other regions. According to oficial data, in the accrued through January – September, 1,668 companies have changed their registered office to the Community of Madrid, half of them from the industry sector or dedicated to profesional and administrative activities (37.9% and 12.1% respectively).


Certainly, these data support the interest of Madrid as a privileged destination for the foreign capital.

Abogado Gonzalo Lopez Cobo Zurita and Abogada Eugenia Ravagnan Venezze


This article is written by licensed lawyers in Spain, members of our international network. The content of this article does not constitute legal advice, but has an informative function. For personalized legal advice, contact the firm by e-mail to: info@dongpartners.eu or by phone +39 06 916505710. © Dong & Partners International Law Firm, All rights reserved

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