by João Marques, Contributing Editor

Transforming urban Madrid with a free zone 2

At the height of the economic crisis, in 2012, Spain was at odds with a catastrophic level of youth unemployment. Countrywide, that year closed with a 55.13% unemployment rate among people 25 years old and younger.

To counter this problem, the municipality of Madrid launched a pack of 105 measures aimed at creating 150 thousand new jobs for the young. Among these measures was the creation of the country’s first urban cultural and creative free zone, located in the Letras neighbourhood of the capital city; it was the first free zone not associated with an export port.

Creating opportunities: The area became a free zone for cultural and creative industries (CCI), offering exemptions from municipal taxation over circulation, construction, installation and works, garbage collection and street use tax, to a max of €5000 per year for 3 years.

In combination with the designation of the area as a free zone, a number of other policies, grounded on a €42 million budget, were put in place to reinforce the area’s transformative potential to promote the birth of new companies, attract foreign investment to the city and expand on the city’s profile as a business hub and cultural centre.

An €8 million per year seed capital financing fund was set up to help out new creative businesses and an online platform to facilitate the incorporation of new companies was put in place.

Transforming urban Madrid with a free zone

A young, dynamic Europe: The concept followed the success of Silicon Valley, although the real competition lies with London, Amsterdam and Berlin to draw on Europe’s most talented artistic and creative minds.

Madrid’s municipality is betting on becoming a new hub for young professionals in high added value industries within the culture, arts and entertainment sectors.

According to the Spanish Barometer, knowledge-based industries, in which the CCIs are included, represent over 25% of total jobs in the city, over 400 thousand people working under a contract or as freelancers.