BRINGING A FOREIGN COMPANY TO SPAIN

There are several ways to create in Spain an existing company from another country, according to the needs and volume of activity with which it is intended to start. The advantage is that Spain uses the same type of company as the rest of the OECD members, which will simplify the initial process of adapting to the new market.

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

Representative Office

This form of company maintains the same identity as the foreign parent company. It does not have its own legal personality in Spain, but is an agency managed by a representative in Spain who receives legal powers to act on behalf of the parent company.

This is an economic option that is used as a preliminary step before opening a subsidiary or branch, since it cannot carry out economic activities, only carry out auxiliary activities such as market studies, coordination with other Spanish companies, give local support, etc.

Depending on the activity to be carried out, it may be necessary to register a public deed. Generally, it will be taxed only by the IRNR (non-resident tax).

Branch office

The branch is the most common way to bring a foreign company to Spain. In this case, it can carry out economic activities, although always dependent on the parent company, since it does not have its own legal identity.

The branch must have a tax representative residing in Spain, who will register a public document a notary. In addition, the Tax on Patrimonial Transmissions and Documented Legal Acts will be paid, and it will be registered in the Mercantile Registry.

Subsequently, the parent company is obliged to deposit the annual accounts of the branch in the Mercantile Registry; and will pay taxes, depending on the requirements of the Double Taxation Agreement.

Subsidiary office

The third most used option to bring a foreign company is quite similar to the branch, with one important difference: it has its own legal personality. This means that it acts independently of the parent company, which is why it is considered a Spanish company incorporated with foreign capital.

As with the branch, it must be registered in the Mercantile Registry and a public deed must be executed before a public notary, and all this in Spain. But, in addition, a monetary amount, considered social capital, must be entered into a Spanish bank account, on a mandatory basis (optional in the case of branches) and registered in the Foreign Investments Registry.

Other options

In addition to these ways of settling in Spain, others can be added that, depending on each case, may become more interesting to foreign investors. Some examples are:

• A.I.E. Economic Interest Grouping

• E.R.L Limited Liability Entrepreneur

• Franchises

• Participation accounts

• Commission contracts

• Etc.