SHARE
COPY LINK

ECONOMY

Spain to invest €11 billion to become Europe’s microchip factory

Spanish Prime Minister Pedro Sánchez on Monday announced his government will use €11 billion of EU funds for Spain to become a manufacturer of microchips, key components in our digital world and an element of "global geostrategic importance”. 

Spain to invest €11 billion to become Europe's microchip factory
The Spanish government doesn't want to miss out on the chance to make Spain the leading producer of microchips in Europe.(Photo by JENS SCHLUETER / AFP)

Spain wants to lead the way in Europe in terms of microchip and semiconductor development. 

In the words of Pedro Sánchez at the ‘Wake up, Spain’ tech conference on Monday April 4th: “The Spanish government wants our country to be at the forefront of industrial and technological progress”.

Microchips and semiconductors are everywhere and needed for all manner of modern technology to function. Digital products in everyday life such as smartphones, digital cameras, televisions, washing machines, cars, fridges, medical devices and LED bulbs all use these tiny integrated circuits.

In 2020, more than 932 billion chips were manufactured around the world and in 2021 production continued growing into a €550 billion industry.

Covid-19 restrictions led to a global shortage of microchips and semiconductors as well as supply chain bottlenecks, in part as a result of their production still being mainly centred in Asia, namely in Taiwan. 

“Semiconductors are essential elements in all energy sectors and acquire global geostrategic importance in the context of digital transformation”, Sánchez stressed.

His words come at a time when the war in Ukraine has forced many European countries to question their dependency on Russian natural gas and their lack of self-sustainability overall.

Spain’s Prime Minister highlighted that Spain is at the centre of economic recovery plans in Europe and that it has already received €19 billion from the European Commission.

“Receiving the funds was the first of the challenges, but the important challenge now is to execute (the measures) quickly and efficiently,” he added, and that “they have an impact on people’s daily lives”.

US tech giant Intel is also set to invest an initial US$17 billion (€15.4  billion) to build a semiconductor factory in Germany and R&D facilities in France, Poland and Ireland.

The Spanish government is yet to give more details about what its new €11 billion microchip plan will consist of, but it is set to be approved by the European Commission soon.

READ ALSO – Meta, IBM, Google, Amazon: How thousands of tech jobs are being created in Spain

Member comments

  1. This is great news. An excellent opportunity to rejuvenate Spain’s industrial regions and stabilise the supply and price of essential electronic components within the EU.

Log in here to leave a comment.
Become a Member to leave a comment.
For members

TAX

EXPLAINED: What are Spain’s new regional tax breaks?

Seven Spanish regions have announced tax breaks which act as an extra benefit to the income tax reductions announced by the national government recently. Read on to find out what they are and how they could help you save.

EXPLAINED: What are Spain's new regional tax breaks?

With Spain gearing up for local elections in May 2023 and a general election expected at the end of next year, regional governments and the left-wing national government are immersed in a tax war to sway the voting balance in their favour, with the official message being to help people across the country deal with the consequences of inflation and the rising energy and daily costs.

The biggest news so far has been that the national government has decided to reduce the income tax of people earning up to €21,000 ($20,200) per year, while introducing a new “solidarity tax” for those with more than €3 million.

READ MORE: How much will you save with Spain’s national income tax cut?

Spain’s Personal Income Tax (IRPF) is a state tax, but half of its collection is controlled by the autonomous communities.

As such, each region can change its income tax brackets and the reductions will apply to the 50 percent of IRPF collected by the regional government. It does not represent a reduction in the overall income tax rate, but it certainly helps.

In recent weeks, several regions have announced tax breaks as well, but unlike those announced by the country’s Tax Minister María Jesús Montero, they’re not all related to income tax for low earners alone.

Madrid

Madrid has announced that it will reduce its regional IRPF by 4.1 percent. It is scheduled to come into force at the beginning of 2023 and is aimed at helping its citizens “face high inflation and the rise in energy, fuel or food prices,” according to the local government.

Once it is fully approved this year, it will be added to the tax validated by the Community of Madrid and which will mean an estimated collective saving of more than €300 million.

Madrid also recently announced that from Q1 2023, new autónomos in the region will have their social security fees paid for by her government for their first year of being self-employed. If their monthly earnings are below minimum wage in the second year (€1,166 gross a month), they will also have their social security fees covered by the regional government.

READ ALSO: New self-employed workers in Madrid to pay no social security tax

Valencia region

In late September, Valencian regional president Ximo Puig announced several financial reforms, which will make taxes in the region more progressive.

The biggest of these reforms was a reduction in the regonal income tax rates for those earning under €60,000 gross a year. This is estimated to help 97.4 percent of Valencian taxpayers or 1.34 million workers.

The new income rates will be retroactive and apply to earnings from January 1st 2022, so will be applied to the 2022 annual income tax declaration next year.

READ ALSO: Spain’s Valencia region lowers income tax for yearly earnings under €60K

Balearic Islands

On Monday, October 3rd Prime Minister Pedro Sánchez announced several fiscal incentives for the Balearic Islands.

The 2023 General State Budget will incorporate new specific tax deductions for the Balearic Islands. This will mean a deduction of 90 percent of the tax base in the corporate tax and income tax for non-residents for investments that promote job creation in the region.

There will also be a bonus of 10 to 20 percent for the sale of assets produced in the Balearic Islands within the industrial, livestock, agricultural and fishing industries.

Both of these are due to come into effect on January 1st, 2023. The Balearic Government estimates that these incentives will mean savings of €208 million for 47,000 companies and 71,000 self-employed workers.

Galicia

The government of Galicia has also announced certain tax breaks for its residents, including lowering personal income tax, from 9.4 to 9 percent, for those who earn below €35,000. This will also be in effect retroactively from January 1st, 2022.

Galician regional president Alfonso Rueda has also decided to reduce its wealth tax for residents with worldwide assets above €700,000 by a further 25 percent to reach 50 percent.

Andalusia

In Andalusia, the authorities will reduce the IRPF rate by 4.3 percent. It will affect all taxpayers and will be applied retroactively from January 1st, 2022 and will be reflected in the personal income tax return filed next year.

Andalusian regional president Juanma Moreno also announced that Spanish nationals and foreigners who reside in the southern Spanish region or have a second home there, and whose worldwide assets are above €700,000, will receive a 100 percent tax deduction on the region’s wealth tax. In other words, they will not have to pay any tax on their assets as is the case in almost all of Spain’s regions.

Murcia

Murcia will reduce its regional personal income tax by 4.1 percent, a measure which it estimates will benefit 330,000 residents, resulting in total savings between €8.5 and €10 million. It will affect 96 percent of those required to submit the income tax return, according to the regional government. 

Castilla y León

The regional government of Castilla y León has approved a draft law on tax reductions, which will allow personal income in the first tax bracket to be lowered by 5.3 percent.

Aragón, Cantabria and Navarra

Although the northern regions of Aragón, Cantabria and Navarra have not yet announced tax breaks, all three of them are currently contemplating it.  

In late September, Aragón’s regional president Javier Lambán admitted that it was a “possibility” if the four parties that make up his government agree.

In Navarra, the government is working on an “extraordinary deduction” on personal income tax for those who earn less than €32,000 gross per year.

The leader of the Cantabrian region Miguel Ángel Revilla also stated that “If the tide goes that way, we are not going to be left out”.

SHOW COMMENTS