Costa del Sol is one of the few regions in Europe that is still managing to attract real estate investment. If you read more, you’ll learn the legal, financial and political benefits of investing in Andalusia.
Past, present, and future of Andalusia for real estate investors.
During the past decade, Spaniards kicked off loads of corrupt politicians, and that happened in most regions, including Andalusia.
Thanks to that trend, two former Andalusian Prime Ministers got convicted, and, in 2018, people rejected the political party that had run the region for over forty years.
Andalusia is currently changing its politics towards a conservative-liberal government, and the latest economic and fiscal decisions are designed to be an improvement for newcomers to most markets. Nowadays:
- The unemployment rate is high. Therefore, funds can be obtained to hire.
- Foreign investment is a priority for local authorities in other sectors than services, agricultural, aeronautical and tourism.
- The regulation system is getting easier to understand.
Talking about labour, young Spanish citizens are often well-educated and obtain a Master’s Degree easily, but local companies feel uncomfortable when hiring young talent.
Furthermore, international companies such as Oracle, Ericsson or TDK have already chosen Andalusia for placing their headquarters. These companies are taking profit from the whole situation: they are hiring young, talented workers and getting bonuses. Also, the regional and national governments are helping them legally and fiscally, and they have their offices under Andalusia’s 300 days of sun.
Taxes in Andalusia vs. taxes in other regions of Spain.
Among the biggest and the most inhabited regions in Spain, Andalusia is the one with a more favourable tax regime for establishing big companies.
After having taken a snap at this chart, if you’re not familiar with the Spanish tax regulation, you might be wondering: what taxes do I have to pay if I want to establish my new business in Andalusia?
- IRPF: Obviously, each employee has to pay taxes depending on how big his income is. Rates are 16.6% if one makes less than €45K and 27.9% if one makes more than €45K. Compared to other regions, these rates are average.
- Heritage: each individual has to pay a rate for his belongings’ value. Andalusia has average rates for people whose wealth value is smaller than €1M and favourable rates for people whose wealth value is higher than €1M.
- Inheritance & donations: Andalusia is one of the few regions in Spain that have a 0% rate for those who inherit or donate properties or money.
- ITP & AJD: in case of purchasing a second-hand property will have to pay the ITP, whereas when buying a new property, he’ll have to pay the AJD tax. Both of them are average in Andalusia. If you’d like to read more about these taxes, check out this post.
Labour wages and other reasons to invest in Andalusia
Unit labour costs are more competitive (20-40% less) in Andalusia than in the rest of Spain and Europe.
The employer contribution rate is fixed at 30,9% in case of a permanent contract. Furthermore, there are specific cases in which you can get a full reduction in employers’ social security contribution. For further information, check out the following chart.
In Andalusia, there are also incentive programmes funded by the EU, the National and the Regional government, whether:
- Direct, non-repayable or repayable grants.
- Interest rate subsidies.
- Participatory and other loans.
- Venture capitals.
The public administrations created these incentives to support company creation (in specific sectors: Agro-industry, Biotech and Renewable energy), modernisation, business cooperation promotion and R&D is incentivised as well.
Last but not least, the Jeremy Fund offers financial support in the form of risk capital, loans and guarantees financed 75% by the European Regional Development Fund and 25% by the government of Andalusia.
As explained in this post, Andalusia is not only a holiday destination but also an ideal region to invest or set up a business, especially for foreigners. If you need any further information about why companies invest in Andalusia, reach out to our Corporate Sales Team.