BRINGING A FOREIGN COMPANY TO SPAIN

There are several ways to establish a foreign company in Spain, depending on your business needs and intended scale. The advantage is that Spain adopts corporate structures consistent with other OECD member countries, simplifying the initial market entry process.

The three most commonly used options to establish a foreign company in Spain are:

Representative Office

A representative office maintains the same identity as the foreign parent company. It lacks its own legal personality in Spain and operates as an agency managed by a representative based in Spain, authorized to act on behalf of the parent company.

This is a cost-effective option, typically used as a preliminary step before setting up a branch or subsidiary, since it cannot engage in commercial activities. Instead, it may carry out auxiliary functions such as market research, coordination with Spanish partners, local support, and similar tasks.

Depending on the activities performed, registering a public deed may be required. Generally, it will only be subject to Non-Resident Income Tax (IRNR).

Branch office

The branch is the most common form used to establish a foreign business presence in Spain. It is permitted to conduct economic activities but remains legally dependent on the parent company, lacking its own legal identity.

A branch must appoint a tax representative residing in Spain and register a public deed before a notary. In addition, the Transfer Tax and Stamp Duty must be paid, and the branch must be registered with the Mercantile Registry.

The parent company is also required to file the branch’s annual accounts with the Mercantile Registry and will be subject to tax obligations, depending on the provisions of the applicable Double Taxation Agreement.

Subsidiary office

The third most common option is the subsidiary, which differs significantly from the branch in one key aspect: it possesses its own legal personality. This means it operates independently from the parent company and is considered a Spanish company formed with foreign capital.

Like the branch, it must be registered with the Mercantile Registry and a public deed must be signed before a Spanish notary. Additionally, a minimum capital contribution (known as share capital) must be deposited in a Spanish bank account—this is mandatory for subsidiaries, whereas it is optional for branches. The investment must also be registered with the Foreign Investments Registry.

Other options

In addition to these primary structures, foreign investors have other options to establish a presence in Spain, depending on their specific needs. These include:

• A.I.E. Economic Interest Grouping

• E.R.L Limited Liability Entrepreneur

• Franchises

• Participation Accounts

• Commission Agreements

• Etc.