It's very subtle, but expected given the trailing sound of 'de' is identical to the leading sound of 'España'.
In French, the same oral contractions apply, but they're often made explicit in the written form, making it a easier to remember. For example, the same sentence in French would be: "Je suis d'Espagne".
Spanish only has two contractions, "del" (de el, similar to French "du" being short for "de le") and "al" (a el, similar to French "au" being short for "à le"). Apostrophes are not used when the ending sound and starting sound of two words are the same like in French, so no, "Yo soy d'España" is not correct.