Spain's junior coalition partner wants firms that move out to return state aid

FILE PHOTO: The logo of Spanish constructor OHL is seen in Madrid

MADRID (Reuters) - Spain's junior coalition partner on Friday introduced a draft bill to force companies to return state support if they decide to move outside Spain.

The move follows construction conglomerate Ferrovial's controversial decision to change its corporate domicile to the Netherlands, which it announced on Tuesday.

The proposal by far-left party Unidas Podemos, which rules together with the Socialist Party of Prime Minister Pedro Sanchez, would force companies that want to move their domicile out of Spain to return all state aid received in the past decade.

"The purpose of this law is to set up measures to avoid the relocation of companies, industries, productive activities and fiscal domiciles, especially those that have received public aid," it said.

The bill applies to public aid granted before the law enters into force, provided that less than 10 years have passed since it was awarded.

The move has both angered the government and sparked criticism from the conservative opposition, which said the administration was scaring away foreign investments through its tax policies.

Asked in Helsinki about Ferrovial's plans and Unidas Podemos' proposal, Sanchez said: "I believe that the homeland is not just about amassing patrimony. The homeland is about solidarity, about standing shoulder to shoulder and helping, especially when your country needs it."

He did not specify whether his party would support the bill.

The coalition government does not have a parliamentary majority and legislation depends to a large extent on support from regional nationalist groups.

(Reporting by Belén Carreño and Emma Pinedo; Editing by Jan Harvey)