Forcam Lawyers > How To Successfully Establish Foreign Company In Spain
How to successfully establish a foreign company in Spain
There are different ways to successfully establish a foreign company in Spain. Each of them will be applied to a specific situation, so the first step will always be to analyze the project.
When expanding, the parent company may resort to different legal institutions, so it is advisable to consult the situation with a law firm specialized in matters such as Corporate, Tax, Labor or Commercial Law.
Only from experience can a specific response be given to the needs of the company, although in our article today we will explore some of the most recurrent figures when importing a business to Spain.
On the other hand, the assistance of our law firm in Barcelona, made up of lawyers specialized in companies, can help the company to speed up certain procedures, such as the constitution and / or registration of its establishments or the legal form, obtaining the NIF, paying taxes ...
The establishment of new companies
One of the options to import a business to Spain is to set up a new company. There are different legal forms to carry out commercial activities, similar to those of any member of the OECD. There are also alternative legal forms to companies, such as cooperatives or foundations.
However, in this article we want to focus on business import, since:
- We have other articles on our page in which we study in detail each of the existing legal forms.
- In addition, when the foreign company is already established beyond our borders, the most common is that it wants to preserve intangible assets such as its brand and know-how.
Note that the establishment of new projects in Spain, when the entrepreneur is a foreigner, may be subject to certain additional requirements. We will talk about these in future occasions.
The key figures to bring a company to Spain
As company lawyers recommend, importing a working company to Spain has many advantages. The preservation of the trademark and other elements of Intellectual and Industrial Property stand out (although it is true that in some cases the corresponding registration will have to be carried out).
Of course, national legislation does not have to coincide with that of the place of origin, so it is important to obtain prior advice to know in detail the impact that national regulations will have on the operation of the company. In this sense, the normative harmonization of Community Law will help make the legislation in many of the Member States of the European Union identical or very similar.
Branch offices
The branches are secondary establishments without their own legal personality, but which can carry out the economic activity of the parent company. The simplicity in their opening makes them the most common legal form when importing businesses to Spain.
The art. 295 of the Mercantile Registry Regulations defines branches as:
<< [...] any secondary establishment endowed with permanent representation and a certain autonomy of management, through which the activities of the company are developed, totally or partially >>.
The problem is that outside of this narrow definition, national law does not contain intensive regulation of branches. Therefore, it is essential to attend to the doctrine, jurisprudence and the pronouncements of the DGRN to properly process the establishment of branches. Community regulations and the case law of the CJEU are also useful.
The characteristics of the branch are:
- It is a secondary establishment.
- It has permanent representation and management autonomy.
- It does not have a legal personality different from that of the parent company. Which implies that it is this who holds the powers of control and direction.
The fact that the branch lacks legal personality implies that:
- Its creation does not suppose that of a new society.
- It lacks its own capital or corporate purpose (although it may have its own resources, but these correspond to the parent company).
- It is extinguished by free decision of the parent company or when it is extinguished.
Subsidiaries
The subsidiary represents another step in the integration of the company in Spain, since unlike what happens with the branches, the subsidiaries do have their own legal personality. This supposes a very similar constitution procedure to that of the creation of Spanish companies.
The fact of having its own legal personality also implies the separation of responsibilities. In fact, it implies a separate constitution, with its own social capital and, in some cases, even a different corporate purpose from that of the parent company.
However, control of these companies continues to lie with the parent company and its results are integrated into those of the parent company.
Representative offices or agencies
Representative offices actually carry out auxiliary activities to those of the parent company. It is, therefore, the figure with the least integration among those analyzed. They are usually the prelude to the constitution of a subsidiary or branch.
As with branches, representative offices do not have their own legal personality. This facilitates the opening procedures, but also limits the scope of the office. In fact, it is usually managed at the local level, through the empowerment of Spanish lawyers specialists.
A figure very similar to that of representative offices (extended in the banking sector) is that of the agency. Again, we are faced with an establishment that provides auxiliary services to the main one, without autonomy or differentiated legal personality.
Permanent establishments
Permanent establishments are usually associated with tax notions, since they do not have their own entity in the field of Commercial Law. Like representative offices or branches, they lack their own legal personality.
Their particularity lies in the fact that they carry out the activity of the parent company in Spain, being able to close the business cycle or work exclusively for this or its group. They are subject to Non-Resident Income Tax and Corporation Tax.
They require the appointment of a representative, whose appointment will be communicated to the AEAT so that it can carry out the appropriate tax procedures.
Note that this figure is straddling the representative offices or agencies and the branches:
- Like representative offices and agencies, it implies a physical presence in Spain, and is also completely dependent on the parent company. However, their activity may be the one that develops the main one.
- Like branches, they carry out the activity of the parent company through their physical presence (establishment) in the territory. However, branches have autonomy (although not legal personality), which is not the case with permanent establishments (which do not have autonomy or legal personality).
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