Branches - Spain

Updated 11/2010

Legal requirements

Investing in Spain is a great opportunity for both Spaniards and foreign nationals. It is easy to establish a business and the necessary procedures can even be completed online.

Foreign investment in Spain

In the European Union and Spain, foreign investment is allowed in almost all areas. There are a few exceptions, such as defence.

In some cases, businesses have to declare the foreign investments that they make in Spain. These declarations are for statistical and administrative purposes.

For further information on this subject and to complete the necessary procedures online, use the following links:

INVEST IN SPAIN
Foreign investment in Spain
Rules on investment in Spain

You can declare your investment online by using the help program provided for this purpose.

Dependent or secondary establishments

Businesses can operate in Spain in various ways: by signing agreements with other businesses, for example for the distribution of their goods or services; by forming partnerships with other businesses, for example a temporary joint venture for a specific purpose or project, and so on.

Another way that businesses can operate in Spain is by setting up their own dependent establishments: subsidiaries, branches or representative offices.

Subsidiary:

A company can create a subsidiary or dependent company. This has its own legal personality and share capital, separate from the parent company. The subsidiary is liable for its own obligations and responsibilities through its capital, i.e. the assets of the parent company will not be called upon.

The administrative procedures for creating a subsidiary are similar to those required when setting up any business.

When a foreign company creates a subsidiary in Spain, the subsidiary is regarded as resident in Spain for all purposes: for example, in terms of tax, social security, registration in administrative registers, and so on.

Branch:

A branch is an establishment that forms part of the business. It does not have its own separate legal personality or share capital. Businesses which establish a branch will be liable for the latter’s obligations and responsibilities through their own assets.

Branches can engage in business activities on behalf of the business to which they belong and normally enjoy management independence.

The procedures for setting up a branch are similar to those for setting up a new business, with a few exceptions.

Representative office:

These are establishments that form part of the business, i.e. its organisation. They do not have their own separate legal personality or share capital. Businesses which establish a representative office will be liable for the latter’s obligations and debts.

Normally, businesses which establish a representative office grant powers of attorney to a representative. The latter acts on behalf of the business, using the representative office. These offices do not have a formally established administrative body.

Their activities are usually limited as they generally carry out coordination, collaboration and market study activities, but not business activities.

More information is available through the following links:

Setting up a business in Spain
State Company for the Promotion and Attraction of Foreign Investment

Many of the requirements and procedures for opening a secondary establishment are the same as for starting up a business.

Start-ups — Spain

Administrative procedures

In Spain many administrative procedures can be easily and simply carried out online. Sometimes there is no need for identification, whilst at other times, for security reasons, you will need to identify yourself using passwords, an electronic national identity card or another type of certificate.

Declaration of foreign investment

You can declare your investment online by using the help program provided for this purpose

Setting up a new business in Spain in the form of a subsidiary, branch or representative office

The procedures vary according to the type of operation that the foreign company wants to set up in Spain.

Representative office: as these do not carry out any business activities, no specific procedures are required to set up a representative office.
Procedures for setting up a representative office
Branch: in order to set up a branch in Spain, a sworn translation of the relevant resolution and articles of association of the branch, drawn up by the parent company, must firstly be registered with the Business Register. Other procedures to be completed are: depositing the share capital in a bank account, executing a public deed before a notary, applying for a tax number, paying the tax on capital transfers and documented legal acts, and registering the branch in the Business Register covering its registered office.
Procedures for setting up a branch
Subsidiary: as the subsidiary is regarded as resident for all purposes, the procedures are similar to those for any national business. In addition, a sworn translation of the relevant resolution and articles of association of the subsidiary, drawn up by the parent company, must be registered in the same way as for a branch. The subsidiary must also submit a declaration to the Foreign Investment Register within one month of the investment being made.
Procedures for setting up a subsidiary in Spain

More information on the procedures for setting up businesses is available through the following link:

Start-ups in Spain: Your Europe portal

Usual obligations

Accounting

The branch must keep its own accounts in the same way as any other Spanish business. In addition, the foreign (parent) company must file its annual accounts with the Business Register covering the branch (there is no need to translate or authenticate these; the directors’ signature must simply be authenticated by a local notary).

The accounting obligations for subsidiaries are the same as for any Spanish business, as they are regarded as resident for all purposes.

Accounting in Spain: Your Europe portal

Taxation

Without prejudice to the double taxation agreements that may apply in each specific case, branches must pay Non-Residents Income Tax (Impuesto sobre la Renta de No Residentes – IRNR). As a general rule, but with a few exceptions, branches will determine their tax base in accordance with the Corporation Tax rules.

IRNR - Information
IRNR - Online procedure

Without prejudice to the corresponding double taxation agreements, subsidiaries are subject to the tax laws of Spain and will therefore pay Corporation Tax. In accordance with Directive 90/435/EEC, parent companies resident in the 27 Member States are exempt from paying tax on dividends paid to the parent company.

Resources

Through the INVEST IN SPAIN portal, you can obtain information and personalised help by telephone and through its external network.

Invest in Spain

The State Secretariat for Foreign Trade can provide information and help to foreign investors.

Foreign investment in Spain

The Spanish Institute for Overseas Trade manages the SpainBusiness website, where foreign businesses and professionals interested in doing business in Spain can access all the information they need to invest in Spain.

SpainBusiness

The Start-ups page of the Your Europe portal provides access to information, electronic services, support initiatives and personalised help for entrepreneurs.

Start-ups in Spain: Your Europe portal

A Help Guide can be downloaded from the EUGO.es website. This sets out all the common requirements for accessing and carrying out service activities.

Point of Single Contact on the Services Directive

Check also the legislation on this topic in:

Branches - Spain