This chapter maps the Spanish public equity market, describing the market landscape, infrastructure and recent developments. It also provides data on characteristics of the listed corporate sector, net listings and the main trends in the use of equity markets for both initial public offerings (IPOs) and secondary public offerings (SPOs). Finally, it illustrates the ownership structure of listed companies.
OECD Capital Market Review of Spain 2024
Capital Markets for a Vibrant and Sustainable Spanish Economy and Corporate Sector
Abstract
The Spanish public equity market was Europe’s 8th largest exchange at the end of 2023 with a market capitalisation of EUR 1 202 billion, 128 listed companies on the regulated market, 138 on the growth market (including REITs), and EUR 301 billion in total annual trading volume (BME, 2023[1]).
This chapter provides a mapping of the Spanish public equity market landscape, including the market infrastructure and recent developments. It offers an overview of the listed corporate sector and the main trends in the use of equity markets with respect to both initial public offerings (IPOs) and secondary public offerings (SPOs) as well as delistings from the stock market. It also illustrates the ownership structure of the market and includes international comparisons of capital market policies.
The first Spanish Stock Exchange was founded in Madrid in 1831. This was followed by three other exchanges in Bilbao in 1890, Barcelona in 1915 and Valencia in 1980. The 20th century saw major changes that transformed the stock exchange landscape and boosted foreign investment, including the approval of the Spanish constitution, the inclusion of Spain in the European Monetary System and the approval of the Spanish Securities Market Act in 1988. This was followed by the establishment of the National Securities Market Commission (CNMV) in 1989, the market supervisor, and Sociedad de Bolsas, to manage the technical electronic trading system across the four exchanges. The continuous market began operating in the same year, and in 1992 the main index of Bolsa de Madrid – IBEX 35, still the main benchmark today – was launched.
Fuelled by economic growth, privatisations and modernisation of the stock exchanges, public interest in the market grew and by 1998 nearly 8 million Spaniards had invested in the stock market. In 2001, the existing four exchanges began operating collectively as the Spanish Stock Exchange, Bolsas y Mercados Españoles (BME). The BME combines the secondary markets and systems of registration, clearing and settlement of securities in a single group. Five years later, in 2006 the BME listed its shares on its own exchange. At the same time, the Mercado Alternativo Bursátil (MAB), a multilateral trading facility (MTF), was created to meet the needs of smaller companies, open-ended investment companies (SICAVs), venture capital firms and hedge funds. MAB subsequently became BME Growth, the current growth market exchange on the BME (BME, 2020[2]). In 2009, BME introduced a new electronic trading system aimed at improving trading accessibility and increasing transparency. The exchange also introduced new tradable indices in addition to the main IBEX 35.
Source: BME.
The National Securities Market Commission (Comisión Nacional del Mercado de Valores, henceforth CNMV) is the entity in charge of supervising Spanish securities markets and the actions of all parties involved. CNMV was originally created by the Securities Market Law and since then its mandate has been updated to adapt to the evolution of financial markets and to introduce new measures to protect investors (Securities Market Law 24/1988, 1988[3]). The CNMV aims to ensure the transparency of Spanish securities markets, the correct formation of prices, secure trading and the protection of investors. It focuses primarily on: registration requirements for companies listing securities on the public market; companies that issue or offer securities publicly on secondary securities markets; and companies that provide investment services and collective investment schemes. The CNMV has a prudential supervision role in these markets to guarantee the security of transactions and the solvency of the financial system (CNMV, 2023[4]).
The BME is the main operator of stock markets and financial systems in Spain. It was incorporated in 2001 and has been a part of SIX Group, the third largest exchange group in Europe, since 2020. The BME is structured into three business units: exchanges, which includes equity, fixed income and derivatives markets and market data; securities services, which includes post-trading operations, such as clearing, settlement and registration procedures; and financial information, which includes value-added services. The functions of each business unit are carried out by BME subsidiaries.
The settlement and registration systems are performed by the Spanish Central Securities Depository (CSD), which operates as Iberclear and is a fully held subsidiary of BME. The two main functions of Iberclear are to maintain the register of tradable securities represented by book entries and to manage the securities settlement systems by processing the transfer of securities and cash (BME, 2023[5]). In 2017, Iberclear introduced the TARGET2-Securities, a European platform that aims to enhance the financial market’s harmonisation and integration throughout Europe (BME, 2023[6]; Bank of Spain, 2023[7]).
BME Clearing, entirely owned by the BME, is the market’s central counterpart clearinghouse (CCP). In addition to its clearing role, for trades where it acts as a central counterpart, BME Clearing also performs registration and settlement services. It performs its function of CCP in the following segments: equity, fixed income, financial derivatives, energy, interest rate derivatives and digital assets derivatives. An overview of the BME securities market is shown in Figure 4.1.
Source: BME (2023[8]), Structure and organisation of Spanish markets, https://www.bolsasymercados.es/ing/Studies-Research/Structure-of-the-Spanish-Securities-Market.
Following the implementation of EU regulations in the Spanish equity framework, especially MiFIR/D I and II, the Spanish trading environment has been characterised by the coexistence of regulated markets and MTFs.
4.4.1. Primary and secondary regulated markets
Spain’s regulated markets are managed by the BME and consist of: the stock exchanges; the corporate debt and private fixed income market (AIAF); the futures and options official market (MEFF); and the government bond market represented by book entries.
The Spanish equity market is governed by the stock exchange and operates on the Spanish stock market trading system (SIBE), an electronic platform developed by BME to interconnect the country’s four stock exchanges (Bolsa de Madrid, Bolsa de Barcelona, Bolsa de Bilbao and Bolsa de Valencia), which operate as a single market. In addition to equity, warrants, certificates and exchange‑traded funds are traded in the market. The main stock exchange admission requirements, post-listing requirements and fees are summarised in Table 4.2.
Source: BME (2022[9]), A guide to listing on the stock market, https://www.bolsasymercados.es/bme-exchange/docs/docsSubidos/Listing/Guide-How-to-list-BME-Exchange.pdf.
4.4.2. Multilateral trading facilities
MTFs are specific to European markets and involve the trading of financial instruments between multiple parties under a set of pre-defined rules. These multilateral trading facilities are regulated under MiFID II. They are usually operated by an investment services company or the stock exchange, with only those managed by the latter allowed to list companies. An MTF provides investors with an alternative platform to trade financial securities.
MTFs operating in Spain trade shares that are listed on the regulated markets and public debt securities, along with private fixed income or corporate debt. There are currently six multilateral trading systems operating in Spain which have been authorised by the CNMV: BME MTF Equity, which includes the BME Growth segment and BME Scaleup, BME IIC and BME ECR; Latibex; Fixed Income Market (MARF); Electronic System for Trading of Financial Assets (SENAF); Dowgate MTF; and Portfolio Stock Exchange (Portfolio SE).
BME MTF Equity, a large MTF, is structured into different segments (BME Growth, BME Scaleup, BME IICs and BME ECR) each trading companies with different characteristics. BME Growth is a securities market for small and medium-sized enterprises looking to expand, with a special set of regulations and processes adapted to their characteristics. The main admission requirements, post-listing requirements and fees for BME Growth are summarised in Table 4.3, and are designed to be easier for smaller companies to meet. Further, BME Scaleup, a securities market operated by the BME Group designed for early-stage companies as well as for companies with more mature businesses, was launched on 6 July 2023 (BME, 2023[10]). Companies listed on BME Scaleup, as well as those aiming to list on other BME segments, can join a training, coaching and networking programme, called Pre-Market Environment, to learn to professionalise and accelerate their transformation to meet their growth objectives and accelerate their transformation (BME, 2023[11]). The main admission requirements for BME Scaleup are summarised in Table 4.4. In addition to expanding companies, BME MTF Equity trades open-ended investment companies (SICAVs), hedge funds (SILs) on BME IICs and venture capital companies (ECRs) on BME ECR (BME, 2023[8]; 2023[12]).
The Alternative Fixed Income Market, MARF, is managed by the BME, targeting only institutional investors (both Spanish and foreign) and focusing on fixed income securities issued by medium-sized companies. The market was created in 2013 to channel funds to companies seeking more flexible prerequisites and quicker issue procedures than on regulated markets (BME, 2023[8]). In 2020, the European Central Bank included MARF as an eligible MTF for its monetary policy operations.
Latibex is an MTF for Latin American stock traded in euros on the Spanish stock electronic market system (SIBE) in such a way that the Latin American securities listed on Latibex are traded and settled like any other Spanish security. Listed companies are required to provide the market with the same information, and at the same time, that they supply to the regulatory entities of their markets of origin. The main admissions requirements, post-listing requirements and fees for Latibex are summarised in Table 4.5.
SENAF is the BME’s electronic platform for Spanish public debt traded by primary dealers like spot transactions, repos and reverse repos. It targets institutional investors (BME, 2023[8]).
Dowgate MTF was authorised by the CNMV on 9 May 2019. It is operated by a Spanish investment firm, King & Shaxson Capital Markets, part of a group that operates an MTF based in London. It specialises in the trading of public debt and derivatives instruments (CNMV, 2019[13]). The main difference between SENAF and Dowgate MTF is that the latter focuses mainly on trading activities while SENAF, being operated by the stock exchange, can also list securities.
Portfolio SE is a new MTF that was authorised by the CNMV in 2022 and is managed by the European Digital Securities Exchange. Securities admitted in this market include shares, fixed income, participations in investment funds and commercial papers (CNMV, 2022[14]). It commenced trading in February 2023 and as of July 2024 there were nine companies listed, most of which are REITs. The main admissions requirements, post-listing requirements and fees are summarised in Table 4.6.
Source: BME (2023[15]), How to join, https://www.bmegrowth.es/ing/BME-Growth/How-to-join.aspx#ss_requirements.
Source: BME, (2023[16]), Discover BME Scaleup, https://www.bolsasymercados.es/MTF_Equity/BME-Scaleup/ing/Discover-BME-Scaleup.aspx#Requirements-proceedings.
Note: *Central depository agreements currently exist for Argentina and Brazil.
Source: BME (2023[17]), About Latibex, https://www.latibex.com/ing/About-Latibex/General-Information.
Source: Portfolio Stock Exchange (2023[18]) Portfolio Stock Exchange Rulebook https://portfolio.exchange/docs/Portfolio-Reglamento_Rulebook_VF28072023_signed.pdf; (2023[19]) Fees Brochure, https://www.cnmv.es/webservices/verdocumento/ver?e=ysEkNonry2ynRktxmn6%2Fg%2FIF71VpOYbB8%2BHnd3PZlcYmm%2B55B77Y%2Fq4xE3y7RAPB.
The main market of the Spanish Stock Exchange listed 128 companies with a total market capitalisation of EUR 852 billion at the end of 2023. Out of the total number of listed companies, 120 were listed on the continuous market using the SIBE trading platform (Table 4.7). The BME Growth segment lists 63 expansion companies and 75 real estate investment trusts (REITs) with EUR 8.8 billion and EUR 10 billion of market capitalisation, respectively. There are 517 issuers listed on the BME IICs and BME ECR segments, SICAVs, SILs and ECRs, with a total market capitalisation of EUR 15.7 billion. Labitex, although being the smallest market in terms of number of listed companies (18), is the second largest in terms of market capitalisation (EUR 314.6 billion).
Source: BME. Companies in the Main market segment include REITs.
The industrials is the single largest sector on the Spanish stock exchanges in terms of the number of listed companies, representing 20% of all firms. The consumer cyclicals and basic materials industries are also prominent, representing the 14% and 12% of listed companies, respectively. Shares by market capitalisation paint a different picture. The financials sector, which ranks fifth in terms of the number of listed companies (16 issuers), is the largest industry, followed by the utilities sector, representing 26% and 22% of total market capitalisation, respectively. Similarly, the technology sector accounts for 12% of market capitalisation, compared to 5% of all listed companies. The picture is reversed for the real estate and healthcare sectors: although 13% and 8%, respectively, of listed companies belong to these sectors, they make up 2% of total market capitalisation each (Figure 4.2, Panel A).
The industry composition of BME Growth differs from that of the main market in two main respects. First, the technology sector dominates BME Growth, representing 27% of the total number of listed firms and 30% of market capitalisation. Second, financials and utilities companies make up a limited share of the market, both in terms of number of companies and market capitalisation. The industrials sector is important in both the growth and main markets, ranking second by number of listed companies and market capitalisation on the growth market (Panel B).
Source: OECD Capital Market Series dataset; see Annex A for details.
Financial companies represent 25% of Spanish stock market capitalisation, the third highest among peer countries, after Italy and Sweden (Figure 4.3, Panel A). This is due to a small number of very large companies, as evidenced by the fact that Spain also has one of the lowest shares of financial companies in terms of the total number of companies, a structure similar to that in Sweden. In France and the Netherlands, the financial sector represents a small share of the market both in terms of number of companies and market capitalisation.
Source: OECD Capital Market Series dataset; see Annex A for details.
Since 2000, 107 companies listed on the main market in Spain, while 200 companies delisted, leading to a net loss of 93 companies. Since 2000, net listings have only been positive in 2006, 2007, 2011 and 2014 (Figure 4.4, Panel A). Activity on the growth market has been greater, with 90 new listings and 26 delistings since 2009, resulting in 64 new expansion companies. Net listings have only been negative once, in 2019 (Figure 4.4, Panel B). Net listings of real estate investment trusts (REITs) have been negative only in 2023. Since 2013, 103 REITs have listed on the growth market, compared to 28 delistings. However, the REIT market has seen a decreasing trend in the number of net listings since 2018 (Figure 4.4, Panel C).
Note: Does not consider corporations in Latibex, SICAV, SIL and ECRs
Source: BME.
There have been 114 IPOs by Spanish companies since 2000, 14 financial and 100 non‑financial companies, collectively raising EUR 71 billion (Figure 4.5). Sixty-seven per cent of this was raised prior to 2012 (52% by number of IPOs). The decrease in proceeds in recent years can partly be attributed to the decrease in the number of IPOs by financial companies coupled with stagnant non-financial IPOs. The IPO market in the last five years has been characterised by fewer IPOs and a low volume of equity raised.
Source: OECD Capital Market Series dataset; see Annex A for details.
Since 2000, Spanish companies’ IPO activity has been substantially lower than that for peer countries, both in terms of the number of IPOs and the capital raised. Compared to selected European peer countries, Spain ranks second to last after the Netherlands in terms of the number of non‑financial IPOs since 2000. Having raised a total of EUR 56 billion, Spain’s primary market activity for non-financial companies represent an aggregate of 0.2% of GDP, a greater share than in Germany, France and Italy, but lower than in Sweden and the Netherlands (Figure 4.6). The strong presence of financial companies in the current stock market landscape is also reflected in the use of public equity markets by these companies. Indeed, when compared to selected European peer countries, Spain is the country with the second highest share of total equity raised by financial companies since 2000, despite having the lowest number of financial IPOs for the same period.
Source: OECD Capital Market Series dataset; see Annex A for details.
The largest IPO in Spain took place in 2007 when the renewable energy company Iberdrola Renovables raised EUR 4.8 billion on the Madrid Stock Exchange. 2007 was also the record year for equity raising; among the 20 largest Spanish IPOs, 3 occurred in 2007, collectively raising EUR 9.6 billion. The most recent top 20 IPO was in 2024, when retail company Puig Brands raised EUR 2.7 billion. The list of the largest IPOs reveals the importance of financial companies in the stock market as 4 of the top 20 IPOs (accounting for 22% of total proceeds) correspond to financial companies (Table 4.8).
Note: Industry classification is based on LSEG’s TRBC Economic Sector. In certain cases where the high-level classification is not deemed representative, the lower-level TRBC Business Sector/Industry Group classification is used instead. Proceeds include overallotments.
Source: OECD Capital Market Series dataset; see Annex A for details.
Financial company IPOs accounted for 24% of total proceeds raised by Spanish companies over the 2000-23 period, followed by the industrials (21%) and the consumer cyclicals (16%) sectors. Basic materials, with no capital raised, and consumer non-cyclicals accounting for 0.2% of the proceeds, are the least relevant industries (Figure 4.7). Certain cross-country trends are visible. The financial sector accounts for the highest share of total proceeds in Spain and the Netherlands, revealing, once again, the industry’s dominance. The technology sector shows great heterogeneity in the share of total proceeds, with values ranging from 4% in Italy to 21% in Germany.
Source: OECD Capital Market Series dataset; see Annex A for details
The industry composition of Spanish IPOs, and to a lesser extent those in the EU, has changed since the early 2000s. Companies belonging to the consumer cyclicals sector made up 34% of total Spanish IPOs proceeds between 2016 and 2023, a significantly higher share compared to the previous periods: 18% between 2000 and 2007 and 3% in the 2008-15 period. Similarly, the energy sector has increased in importance, with corresponding decreases in the financials and telecommunication services sectors (Figure 4.8). Technology companies have also shown a marked decrease from representing 21% over the 2008-2015 period to 5% between 2016 and 2023.
Source: OECD Capital Market Series dataset; see Annex A for details
The amount of capital raised through secondary public offerings (SPOs) by Spanish companies has been on a declining trend since 2016. In the last six years, with the exception of 2021, the amount of equity capital raised via SPOs has been below the yearly average between 2000 and 2023. In line with global trends, Spanish listed companies raised significant amounts of capital in 2021 before contracting to a record-low in 2022 (Figure 4.9).
Over the last two decades, financial companies represented 45% of total proceeds by Spanish firms (but only 15% of the total number of SPOs). However, over the last six years the activity from financial companies has been very small, adding to the overall decline in SPO activity.
Source: OECD Capital Market Series dataset; see Annex A for details.
The main limitation of the Spanish market compared to peers is the low activity of non-financial companies. Spanish companies have been the least active since 2000 in terms of both the number of non-financial SPOs (461) and capital raised, totalling EUR 130 billion, equivalent to 0.41% of GDP (Figure 4.10). In contrast, non-financial Swedish companies have been the most active with 3 014 SPOs between 2000 and 2023, raising close to 1% of the country’s GDP. Meanwhile, the amount of capital raised by Spanish financial firms via secondary offerings is the second the highest (0.34% of GDP) after those in the Netherlands, again highlighting the overrepresentation of the financial sector in the Spanish market compared to European peer countries.
Source: OECD Capital Market Series dataset; see Annex A for details.
Financial companies account for 46% of total proceeds raised through SPOs since 2000, the highest share after Italy (48%). This is significantly higher than the EU figure of 36%. Apart from financials, companies in the utilities, industrials and telecommunication services sectors are major users of secondary offerings to raise financing in Spain, accounting for 14%, 11% and 10% of the total capital, respectively (Figure 4.11).
In contrast, Spanish firms in the basic materials, consumer cyclicals, consumer non-cyclicals and healthcare sectors are not active in raising financing via secondary offerings. The healthcare sector represents less than 1% of total proceeds since 2000, compared to 12% in Sweden and 7% in France. The same is true for consumer cyclicals, an inactive industry in the Spanish SPO market accounting for only 3% of total proceeds, whereas in its peer countries the weight of this sector over total proceeds ranges between 10% in the Netherlands and Italy to 21% in Germany (Figure 4.11).
Source: OECD Capital Market Series dataset; see Annex A for details.
Overall, the use of public equity markets by Spanish companies has slowed down in the last five years with less public offerings and decreasing amounts of capital raised. This trend can partly be attributed to the lack of new transactions by non-financial companies and the recent lack of activity of already listed financial companies. In particular, the lack of new companies joining the public markets affects the number of secondary public offerings. Figure 4.12 shows the number of IPOs and SPOs at different points in time for both Spain and the EU. While a higher number of IPOs drives a higher number of SPOs at the EU level, this is not the case in Spain where SPOs have remained modest in number in line with IPOs.
Source: OECD Capital Market Series dataset; see Annex A for details.
The level of liquidity in the secondary stock market affects the willingness of both investors and companies to participate in the market. Higher liquidity is associated with greater demand for stocks, reducing the risk premium of holding them and increasing the efficiency of the price discovery mechanism. In addition, a liquid market may also help attract more issuers, who would expect the market to price their securities more accurately. Importantly, empirical evidence shows that low liquidity levels can increase the cost of equity for companies wanting to raise capital as investors require a higher expected return to compensate for the extra risk of reduced liquidity. The higher cost of equity can lead firms to either decrease investments or to use more debt as a source of fundings. The level of liquidity of the secondary stock market also has an indirect impact on innovation and firm creation, making IPOs more difficult and expensive (IMF, 2016[20]).
Over the past years, liquidity, measured as the stock market turnover ratio1, has shown a declining trend on the BME going from 158% in 2008 to just 25% in 2023 (Figure 4.13). The same trend is visible in the Spanish market as a whole, although it is less pronounced (see 1.3.2)
Note: The stock market turnover ratio is computed as the ratio between total traded volumes and total market capitalisation. Data refer to BME stock exchanges.
Source: OECD calculations based on BME data.
The ownership structure of listed companies in Spain shares common aspects with those in other EU countries but also highlights some important differences. To identify the ownership structure, investors were classified into the following categories: corporations, public sector, strategic individuals, institutional investors, and other free float following the methodology in De La Cruz, Medina and Tang (2019[21]). Like in all peer countries, institutional investors is the largest investor category in Spain. Still, their ownership share (26%) is the lowest among the comparison countries, including the EU aggregate. Strategic individuals make up a significant share (17%) – the highest share among peer countries together with France.
The public sector owns 7% of the listed equity in Spain, in line with other European peer countries that show values ranging from 3% in the Netherlands to 12% in Italy (Figure 4.14). The limited share of the Spanish public equity market owned by the public sector is due to the privatisation of large state-owned companies at the end of the 1990s (BME, 2022[22]). Spain has historically been characterised by high levels of household participation, which is partly reflected in the high share of “other free float” (shares in the hands of investors that are below thresholds for disclosing their holdings and for which no information is therefore available) compared to peer countries (BME, 2022[22]).
Source: OECD Capital Market Series dataset, FactSet, LSEG, Bloomberg; see Annex A for details.
Ownership concentration in Spain is moderate compared to selected European peer countries. The largest shareholder owns more than half of the equity capital in a third of all listed companies, which compares to more than half in Italy and 38% in Germany. Economies that are more capital market intensive, such as Sweden and Netherlands, have much lower levels (Figure 4.15, Panel A).
The most common single largest shareholder is a strategic individual. This is the case in 49% of companies. In these companies, the single largest investor holds an average of 38% of total equity. A corporation is the largest shareholder in 33% of companies, holding an average of 42% of the equity in these companies. This is followed by institutional investors (15% of companies, holding an average of 31% of equity) and the public sector (3% of companies, holding an average of 19% of equity) Figure 4.15, Panels B and C).
Note: Panel C shows the average ownership share of the single largest investor by their investor category. For example, in the 49% of companies where a strategic individual is the largest shareholder, the average share of equity held by that individual is 38%.
Source: OECD Capital Market Series dataset, FactSet, Thomson Reuters, Bloomberg; see Annex A for details.
At the industry level, institutional investors’ holdings vary. The industries with the highest institutional investor concentration are the technology, healthcare and real estate sectors (Figure 4.16, Panel A). There is also an overwhelming dominance of foreign institutional investors, representing 95% of total institutional investor investment in Spain (Figure 4.16, Panel B). A BME report on the ownership of listed Spanish stocks also notes this, attributing the low level of domestic institutional participation to the conservative profile of Spanish investors and the growing geographical diversification of collective investment institutions. A lack of incentives for national institutional investors to support Spanish listed companies is highlighted as a particular detriment to Spanish SMEs, which have more difficulties in attracting foreign investment (BME, 2022[22]).
Note: Panel A refers to the share of total industry market capitalisation held by institutional investors in each industry.
Source: OECD Capital Market Series dataset, FactSet, Thomson Reuters, Bloomberg; see Annex A for details.
Generally, institutional investors have a preference for large, listed companies. Spain is no exception: the average ownership by institutional investors is 23% in large, listed companies compared to 7% in small, listed companies (Figure 4.17).
Note: Large (small) companies are those with a total market capitalisation above (below) the sample median. Source: OECD Capital Market Series dataset, FactSet, Thomson Reuters, Bloomberg; see Annex A for details
Institutional investors is the largest foreign investor category, owning 24% of the total market at the end of 2023. The public sector (4%) and corporations (3%) rank distant second and third, followed by strategic individuals with 2% of the listed shares.
Source: OECD Capital Market Series dataset, FactSet, Thomson Reuters, Bloomberg; see Annex A for details.
Household savings play an important role in a country’s economic growth, as a source of funding for domestic investment and thus contributing to the creation of new jobs and growth. Low household savings can be a source of financial vulnerability both for households, who must borrow to smooth consumption in the event of external shocks, as well as for the country at large, because domestic investment becomes more dependent on other sources of funding.
Since 2000, the financial assets of Spanish households have grown significantly, rising from 158% of GDP in 2000 to a peak of 227% in 2020, after which it has decreased to 190% in 2023.
The longer-term increase in households’ financial assets is mainly due to an increase in currency and deposits, as well as equity. The savings growth has not been evenly distributed across households, with concentration in the high-income group which drastically decreased its consumption due to pandemic-related restrictions, while negative income effects were muted (BdE, 2023[23]). In 2022, due to the high rates of inflation that prompted a growth in nominal consumption, households’ savings further decreased back to pre-pandemic levels (Figure 4.19, Panel B).
In the last two decades, households increased their ownership in all financial assets relative to GDP, with the exception of debt securities, for which holdings decreased from 3.7% of GDP in 2000 to 2.4% in 2023. Equity and currency and deposits have shown the greatest increase, by 13% and 10% percentage points, respectively (Panel B).
Despite the significant rise in households’ financial assets, when compared to selected European peer countries, Spain ranks second to last, after Germany (187%), in terms of financial asset ownership in 2023 (Figure 4.19, Panel A). It is also worth noticing that Spanish households show a low ownership of insurances, pensions and standardised guarantees compared to other European peer countries (Panel A).
Source: Eurostat.
Despite the increase in the share of equity in households’ financial assets, the share of direct household ownership in total domestic market value has been decreasing over time, roughly halving from over 30% in 2000 to 16% in 2022 (Figure 4.20). This may partly have been offset by indirect participation through funds.
Note: Data refer to direct holdings on BME stock exchanges.
Source: BME.
This section provides a high-level overview of the taxation framework for listed companies and investors. The taxation framework should be designed to fulfil the goal of raising government revenue without hindering the development of capital markets.
Taxation of listed companies
The general corporate income tax in Spain is 25%, which may vary depending on the type of company and the type of business. Newly created companies are taxed at 15% for both the first year they make a profit and the following tax period. However, the reduction in tax rate is not applicable to equity companies (companies that do not carry out business activity), nor to newly created companies that were previously part of national or international groups, or companies whose business activity was previously carried out by a related company or individual. The reduced tax of 15% is applicable to start-ups for the first tax period in which the company obtains positive taxable income and in the following three periods, as long as they meet the requirements to qualify as a start-up (as specified in law 28/2022, see endnote 2). A reduced tax rate of 23% is applicable to entities whose turnover in the previous tax year was less than EUR 1 million, and an increased tax rate of 30% is applied to bank institutions and companies belonging to the hydrocarbon industry. Other businesses subject to lower tax rates include investment funds (1%), charitable entities, non-profits and pension funds (0%) and listed companies investing in the real estate market (SOCIMIs, 0%) (PwC, 2023[24]). However, Law 11/2021 establishes that SOCIMIs have to pay a 15% rate on the non-distributed benefits derived from the income that has not been subject to any corporate income tax. This is in addition to what was previously established in Law 11/2009 where this type of firm is subject to a rate of 19% on the distributed benefits (though dividends or shares in profits) to shareholders whose holding in the capital of the entity is 5% or higher, where such dividends are exempt or taxed at a rate of taxation lower than 10% on behalf of the shareholders.
The main tax relief provided to companies in Spain are tax exemptions/deductions to prevent internal and international double taxation, tax credits for research and development, and tax credits for technological innovation (PwC, 2023[25]).
While resident companies are taxed on their worldwide income, permanent establishments in Spain of foreign companies are charged the non-resident income tax of 25% solely on the income that may be allocated to the establishment in Spain. The non-resident income tax is also chargeable on non-established foreign companies that obtain income in Spain (PwC, 2023[24]).
4.10.1. Taxation of investors
Investors are subject to three different types of taxation related to investment in the stock market: taxes on capital gains, taxes on dividend income and financial transaction taxes.
In Spain, capital gains are included in savings income and are taxed at the corresponding progressive personal income tax rates of 19% to 28%.2 Capital gains obtained in Spain by non-residents without a permanent establishment are taxed at a rate of 19% when they are generated from the transfer of assets (PwC, 2023[24]). There is also a transitory tax regime applied for transfers of assets or rights that are not used to carry on a business activity and that were initially acquired before 31 December 1994 (PwC, 2024[26]).
Dividends and other income generated from holding interests in companies, similar to capital gains, are included in the personal income tax savings income and taxed between 19% and 28% depending on the income level. Dividend income obtained by Spanish non-resident persons without a permanent establishment is taxed by Spanish withholding tax at a flat rate of 19% (PwC, 2023[24]). Even though the withholding tax rate is set at 19%, Spain has one of the most extensive double taxation treaty networks that reduces or eliminates the Spanish withholding tax rate on capital gains and dividends.
Financial transaction taxes have been on the regulatory agenda since the global financial crisis as instruments to address financial market instabilities and as a source for tax revenues. In 2013, the European Commission tabled a proposal to introduce a minimum 0.1% financial transaction tax on transactions in all types of financial instruments made by eleven member countries, mirroring the scope and objectives of the 2011 EU-wide Financial Transactions Tax proposal. Since then, many European and non-European countries have introduced such taxes. Financial transactions taxes differ among adopters along three dimensions: tax rate, in-scope transactions and persons subject to the tax.
In October 2020, the Spanish Parliament approved the Financial Transactions Tax (FTT) Act, which entered into force on 16 January 2021. The tax applies to the acquisition of shares of Spanish companies listed on a Spanish or other regulated market, with a market capitalisation of at least EUR 1 billion – the Ministry of Finance publishes the list of companies for which the tax is applicable before 31 December of each year. In addition to shares, the tax applies to any acquisition of certificates of deposit representing the same share, and to any acquisition derived from the exchange or conversion of bonds. The FTT Act lists several transactions exempted from the tax, including the acquisition of shares in the primary market, the acquisition of Treasury shares, the acquisition of shares by and between entities belonging to the same group and acquisitions deriving from a merger or spin-off of collective investment institutions. The purchaser bears the tax whose rate is set at 0.2% of total amount paid, excluding transaction costs, the intermediary’s fees and any other expense related to the acquisition cost (Clifford Chance, 2020[27]).
Turning to peer countries, in August 2012, France introduced the French Financial Transaction Tax, establishing a 0.3% tax rate for trades of French listed equity with a market capitalisation above EUR 1 billion and 0.01% on high frequency trading. In-scope transactions also include credit default swaps against EU sovereign debt and certain corporate actions. The taxpayer is typically the investment service provider on the buy-side of the transaction, the broker executing the purchase order or the custodian holding the shares for the buyer (BNY Mellon, 2018[28]).
The Italian Financial Transaction Tax, adopted in 2013, is applied on the transfer of shares and participating financial instruments issued by Italian resident companies, derivatives for which more than 50% of their underlying value is shares or values of Italian shares, including options, warrants, covered warrants and certificates. The tax also applies to high frequency trading. The legislation set three different tax rates: 0.1% on transactions on a qualified market, 0.02% on high frequency trading and 0.2% otherwise. In case of equity shares, the tax is to be borne by the buyer, while in the case of equity derivatives, it is shared by both parties (Clifford Chance, 2013[29]).
The other selected European peer countries, namely Germany, the Netherlands and Sweden, do not have FTTs in place. Sweden implemented an FTT between 1984 and 1991 that had as in-scope transactions only trades intermediated by Swedish brokerages, with an observed migration of trading out of the country (Umlauf, 1993[30]).
References
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← 1. The stock market turnover ratio is defined as the annual volume traded over total market capitalisation.
← 2. The progressive personal income tax rates are 19% for the first EUR 6 000 of income, 21% for EUR 6 000 to EUR 50 000, 23% for EUR 50 000 to EUR 200 000, 27% for EUR 200 000 to EUR 300 000 of income, and a 28% tax rate on any remaining income above EUR 300 000.