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Quick, online guide to Company investment and operation in Spain

Ways for a foreign entity to Invest and operate in Spain

Josep Conesa. abogado laboralista (Barcelona)


Written by Josep Conesa

Labour and bankruptcy lawyer



  1. To create a Limited Liability Company ('Sociedad de responsabilidad limitada'), with its own legal personality.

  2. To operate through a branch ('sucursal') or a representative office ('establecimiento permanente'), without its own separate, legal personality. 

The main differences between such entities are the following:

1. Limited Liability Company in spain

  • Personal Liability of the shareholders: generally limited to the amount of the share capital contributed by each of them (except in the case of abuse of the law).

  • Minimum capital stock: €3000 (payment in full upon incorporation).

  • No minimum number of shareholders required. Shareholders can be individuals or companies.

  • Governing bodies:

    1. Shareholder's meeting (the supreme governing body): The Ordinary shareholders meeting takes place within the first six months of the financial year to approve, if appropriate, the annual accounts of the prior year;

    2. Director/s ('administradores') (the governing body, which may be entrusted either to a sole director, several directors acting on a a several or joint basis, or a board of a minimum of three directors). Directors do not need to be Spanish citizens and do not need to be shareholders

  • Shares can be transferred through a public deed.

  • Financial statements: Annual accounts  and the distribution of profit proposal put foward by the director(s) are approved by the Ordinary shareholders' meeting within six months of the fiscal year ending. Annual accounts of the Spanish company must be registered at the Commercial Registry.

  • Dividend distribution: The profit can be distributed by dividends to the shareholders in proportion to the capital they have contributed. Payment of interim dividends is also possible.

  • Steps to set up the company:

    • Obtain a Certificate issued by the Central Commercial Registry with the corporate name

    • Open a Spanish bank account

    • Prepare the Articles of Association

    • Notarise the Deed of Incorporation and submit it to the Commercial Registry

    • Obtain the NIF (fiscal identity number) of the Spanish Company

    • Obtain the company's electronic signature certificate

    • Register the company with the Spanish Tax Agency, the Tax Agency of Cataluña and the Social Security Office.

    • Inform the Ministry of the Economy about the foreign investment.

  • Tax: Liable for corporate income tax (15% rate for the first two tax periods in which they have taxable incomes, and a 25% rate for the third and following tax periods)

2. Branch in spain

  • Secondary establishment with a permanent representation and certain managerial independence.

  • Liability: no limit to the parent company's liability, i.e. their activity and legal liability will be directly related to the foreign investor parent company.

  • There is no capital required. (However, it is advisable for practical reasons).

  • A branch does not have a decision-making body in the form of  a board or meeting. It requires a resident representative in Spain, who acts as attorney of the branch in the name and on behalf of the parent company, especially for tax matters (tax representative).

  • A branch can not be transferred because it does not have legal personality.

  • Financial statements: The branch must keep its own accounts with respect to the transactions it performs and its assets. The branch must submit the annual accounts of the foreign parent company to the Spanish Commercial Registry.

  • Dividends distribution: dividends do not exist because profits strictly pertain to the parent company.

  • Steps to set up the branch:

    • Public deed creating the branch (with some documents from the foreign head office) which must be registered at the Commercial Registry.

    • Open a bank account.

    • Grant special powers attorney with regards to correspondance with Spanish banks, representation for tax purposes, etc.

    • Obtain a Spanish Fiscal Identification Number (NIF)

    • Obtain the electronic signature certificate of the branch

    • Register the branch with the Spanish Tax Agency, the Tax Agency of Cataluña and the Social Security Office

    • Inform the Ministry of the Economy about the foreign investment.

  • Tax: Liable for the non-resident income (in general terms, this is taxed at the same rate as Spanish companies, 25%).

3. Representative office in spain

A representative office does not have its own legal personality independent from the parent company (no limit to the parent company's liability). The steps of incorporation are the same as that of a branch, except that there is no need to grant a public deed and it is not necessary to register the representative office at the Commercial Registry. It is, however, necessary to appoint a tax resident representative in Spain.

In principle, the activities of a representative office are limited, essentially consisting of coordination, collaboration etc.

The steps and cost of incorporation, formal obligations and maintenance costs (tax, accounting, and labour issues) are almost the same for all entities. That's why we consider that the best option is, generally speaking, to create a limited liability company. In fact, the key difference boils down to the level of independence (and liability) as related to the parent company.

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Tax issues

The remittance of branch profits and the payment of a subsidiary's dividend to a non-EU parent company, resident in a non-treaty country, are taxable in Spain at the rate of 19%. If the parent company is resident in a non-EU country with which Spain does have a tax treaty, the dividends would be taxable at the reduced treaty rate (under most such treaties, the remittance of branch profits would be exempt from tax in Spain).

Its is usually easier to categorise parent company overhead as deductible expenses in the case of a branch than in the case of a subsidiary.

The interest on loans from the shareholders of a subsidiary is usually tax-deductible for the subsidiary (subject to certain requirements). The interest on loans from a foreign parent company to its Spanish branch is not tax-deductible for the branch.

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Labour formalities when opening a branch or a subsidiary

It is necessary to register the company/branch/representative office with the Spanish Social Security authorities (and to obtain a social security contribution account code) and to notify the Social Security authorities of the hiring of employees before they start work. Moreover, it is necessary to notify the labour authorities of the commencement of activity in the workplace.

In any event, shareholders (companies or individuals) and directors/tax representatives of companies/branches will need to obtain a Spanish Fiscal Identification Number (NIF) (in the case of foreign companies) and a foreigner tax identification number (NIE) for the individuals.  Documents required:

  • Certificate from the Commercial Registry where the parent company is incorporated, legalised by a Notary and apostilled, with a sworn translation.
  • Copy of the passport of the director (or tax representative) in Spain, legalised by a Notary and duly certified by apostille.
  • Copy of the passport of the director of the parent company, legalised by a Notary and duly certified by apostille.

Please do not hesitate to contact to our English-speaking lawyers in Barcelona for further information.


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Date published: 13 April 2020

Last updated: 26 March 2024