A practical guide to the legal reforms, investment opportunities, and regulatory requirements shaping Saudi Arabia’s transformation.
Saudi Arabia is undergoing the most ambitious economic transformation programme in the Gulf region’s history. Vision 2030, launched in 2016, aims to diversify the Kingdom’s economy away from oil dependence by fostering growth in tourism, entertainment, technology, mining, and manufacturing. For European investors, the programme represents an enormous opportunity, but one that requires careful navigation of a rapidly evolving legal and regulatory landscape.
The New Investment Law
The most significant legal reform for foreign investors is the Investment Law introduced in August 2024 and effective from 7 February 2025. This law repeals the Foreign Investment Law of 2000, which had governed foreign investment for nearly a quarter century, and introduces a comprehensive set of rights and protections for investors.
The new law provides protection from expropriation, guarantees fair and equitable treatment, and grants foreign investors the freedom to manage their investments. In April 2025, the Ministry of Investment published the implementing regulations, though full implementation remains in progress. The law represents a fundamental shift from a regime where foreign investors required specific approval and operated under more restrictive conditions to one designed to provide investment protections comparable to those found in European jurisdictions.
FDI Targets and Current Performance
Saudi Arabia’s National Investment Strategy seeks to increase foreign direct investment to 5.7 per cent of total GDP by 2030, equivalent to approximately 103 billion US dollars annually. The Kingdom also aims to increase domestic investment to 450 billion US dollars annually. However, there is a recognised gap between these targets and current performance: FDI inflows dropped to a three-year low of 20.7 billion US dollars, though fourth-quarter figures showed some recovery.
For European investors, this gap represents an opportunity. The Saudi government is actively seeking to attract foreign capital and has shown willingness to liberalise regulatory requirements in priority sectors to do so. Understanding which sectors are being prioritised and where foreign ownership restrictions have been relaxed is essential for structuring successful investments.
Priority Sectors for European Investors
Renewable energy: Full foreign ownership is now permitted in utility-scale renewable energy projects, making this one of the most accessible sectors for European investors. These projects align with both Vision 2030’s economic diversification goals and ESG standards increasingly demanded by European institutional investors.
Tourism and real estate: The Kingdom has outlined nearly one trillion dollars in planned tourism investments, with giga-projects such as NEOM, Red Sea Global, Amaala, and Qiddiya already under construction. These destinations operate as special economic zones with customised legal regimes and streamlined administrative procedures. Zoning reforms now allow foreign freehold ownership in designated areas including Riyadh, Jeddah, and NEOM.
Mining and minerals: Since 2020, the Saudi government has issued hundreds of exploration licences, established a 182 million US dollar mineral exploration incentive programme, and issued licences covering over 10,000 square kilometres from 2023 to 2024. The Kingdom aims to attract 100 billion US dollars in mineral processing investment by 2035.
Sports and entertainment: In preparation for the FIFA World Cup 2034, Saudi Arabia is building 15 new integrated smart stadiums with AI analytics and sustainability features. For European companies in construction, engineering, and sports technology, these projects offer long-term commercial opportunities.
Regulatory Framework: What European Investors Need to Know
Foreign investment in Saudi Arabia is regulated primarily by the Ministry of Investment. All foreign entities intending to establish a business presence must obtain a foreign investment licence from MISA, which applies to various business structures including limited liability companies and joint stock companies. MISA licences activities based on the International Standard Industrial Classification to ensure foreign entities operate within approved sectors.
In practice, European investors should expect a licensing process that has been significantly streamlined compared to the pre-Vision 2030 era but still requires careful preparation. Key requirements include submission of audited financial statements, a detailed business plan, and evidence of the investor’s technical and financial capacity to execute the proposed project. Processing times vary by sector but have generally improved.
Fiscal Considerations
Saudi Arabia applies a corporate income tax rate of 20 per cent on the profits of foreign investors, compared to Zakat at 2.5 per cent of the Zakat base for Saudi and GCC-owned entities. Non-oil GDP is projected to sustain robust growth averaging 4.4 per cent annually from 2025 onward, providing a supportive macroeconomic backdrop for investment.
It is worth noting that Vision 2030 spending has contributed to fiscal deficits, with estimated shortfalls of 21.9 billion US dollars in 2023 and 32 billion US dollars in 2024, with the 2025 budget projecting a 27 billion US dollar deficit. However, public debt remains manageable at approximately 29 per cent of GDP, and the Kingdom maintains strong international credit ratings.
The Opportunity Ahead
Vision 2030 has created a window of opportunity for European investors that is likely to remain open for the remainder of this decade. The combination of legal reforms, liberalised foreign ownership rules, massive infrastructure spending, and an explicit government strategy to attract international capital makes Saudi Arabia one of the most dynamic investment destinations in the world today.
The EU-Arab Legal Summit will feature dedicated sessions on doing business in Saudi Arabia and other GCC states, providing European investors and their legal advisers with practical insights from practitioners who are executing transactions on the ground.
The EU-Arab Legal Summit takes place on 4 June 2026 in The Hague, Netherlands. For more information, visit our website or contact the organising team.
