Nearly all the activities carried out by a foreign entity when dealing with a client or a counterparty located in Spain are subject to Spanish laws and regulations and, therefore, to supervision by the relevant supervisory authority. However, there are important differences depending on whether the foreign entity is based in an EU member state.

For EU-based foreign entities, please see question 7 relating to “passporting.”

Credit institutions and investment firms from non-EU countries that have not been authorized in another member state need to seek authorization from the Bank of Spain or the CNMV before starting to carry out services in Spain. In these cases, the Bank of Spain and the CNMV may request further information and, if deemed appropriate, deny permission to carry out all or part of the activities for which authorization was sought, or to impose additional requirements.

Neither the Bank of Spain nor the CNMV have issued guidelines in relation to when Spanish law considers a banking or an investment service to be provided in Spain. Although certain specific legislation contains criteria in this regard (e.g., Act 22/2007, dated 11 July 2007, on distance marketing of financial services to consumers), in general terms, and specifically in relation to banking services, Spanish doctrine tends to rely on the European Commission’s Interpretative Communication of 1997 on the “freedom to provide services and the interest of the general good in the second banking directive.” This states that in order to establish the place where an activity is carried out, the analysis must focus on the place where what may be termed as the “characteristic performance” of the service (i.e., the essential supply for which payment is due) is to be provided.