Photo: Michael Gaida (precondo.ca)
This post describes the basic aspects of the main formulas for crafting a company in Spain, as well as the essential procedures that the foreign investor must comply within each of its modalities.
Establishing a company in Spain is simple. The types of companies are in line with those existing in the OECD countries and there is also a wide range of possibilities to pick from. Each type of company responds to the needs of the different types of investors wishing to invest in Spain. In this post, we are going to explain three of these modalities that we believe are the most common and useful ones.
Open a representative office in Spain
A representative office can carry out all those activities that are not directly involved in the realization of the activity of the company. That is to say, it can carry out auxiliary tasks, such as market studies, advertising, promotional activities, information compilation, preparing all kind of activities for the company, etc.
A representative office has no legal personality separate from its parent company. It does not need to be included in the Commercial Register neither it needs to issue of a public deed of the constitution before a notary. Furthermore, a representative office does not have a minimum share capital.
If you choose to open a representative office in Spain, Dos Aguas could represent your company and carry out all the activities aforementioned. In this case, your company would not have an administrative body in Spain since we would only act according to the powers granted by your company. Therefore, it is important to mention that these representative offices cannot conduct economic operations (issue an invoice). In fact, they are usually the first step before making the decision to settle permanently.
Bring a foreign company to Spain by opening a branch
The creation of a branch is the most common way to bring a foreign company to Spain. A branch has autonomy and can exercise economic activity. It is a secondary establishment that develops the activities of the parent company. However, it does not have its own legal personality.
If you pick this alternative, Dos Aguas could not only do the things described in the representative office but also carry out the following procedures:
– Obtaining a certificate that proves that the parent company complies with the laws in its country of origin,
– entering the share capital in the bank,
– establishing the branch before a notary,
– obtaining the NIF (tax identification number in Spain),
– paying the Spanish tax on property transfers and
– registering the branch in the Spanish Commercial Register.
Bring a foreign company to Spain by opening a subsidiary
This method means the integration of a foreign company in the Spanish market to the greatest possible extent. The main difference between a subsidiary and a branch company is that the subsidiary does have its own legal personality. Subsidiary companies are constituted with foreign capital but for practical purposes are considered Spanish companies. This means that to open a subsidiary company, the process is very similar to creating a new company in Spain.
If you pick this alternative, Dos Aguas could implement the scenarios seen in the other two type of companies plus the following procedures:
– obtaining a definitive CIF (the CIF is the tax identification number of the company, which we will only be assigned after having obtained the provisional NIF),
– adding the name of your company in the Central Commercial Register (giving the name to – the new company so that it does not coincide with the companies that are already registered in Spain),
– registering the subsidiary company in the Foreign Investments Register of the Ministry of Economy.
Overview of Representative Office, Subsidiary and Branch’s differences
