Thinking about setting up a Branch in Spain? International companies usually expand their business activities into Spain through a Subsidiary; however that is not the only available option. A Branch could possibly better fit to your initial needs.
Over our 20 years in service, we have helped companies set up branches in Spain and are make it our job to keep track of any changing trends, considerations and government obligations.
The choice between forming a branch or a subsidiary in Spain may be influenced by commercial considerations (e.g., a company might provide a more «stable» presence than a branch) or by considerations of legal certainty (a subsidiary limits the shareholder’s liability). If you conclude that the best option to run operations in Spain is to set up a permanent establishment to serve as a vehicle for the parent company’s activities, and wish to enjoy certain degree of management independence but acting with no separate legal personality from its parent company, then you need a Branch.
Broadly speaking, the requirements, formalities and costs related to opening a branch are very similar to those for forming a subsidiary. The steps required would be as follow:
- To open a Branch a public deed must be signed before a Public Notary and registered at the Mercantile Registry. Under Spanish foreign investment legislation, the branch must be allocated capital, although there is no minimum capital requirement. The D-1 for foreign investments’ application form must also be completed.
- To this end the following documents will be required in advance: a certification from the Chamber of Commerce attesting the existence of the parent company, its Articles of Association in force and its current Directorship. All documents must be apostilled and translated into Spanish (sworn translations required). And last but not least a Board of Directors certification including the decision of opening a Branch in Spain and empowering someone to carry out such legal process; this document must be also duly notarized, apostilled and translated into Spanish.
- Then, all the above documents must be registered at the Spanish Mercantile Registry.
- The branch must have a legal permanent representative with authority to manage its affairs and act as Tax-representative. A branch does not have any formal managing or administrative body as such, but largely operates as if it were a company in its commercial dealings with third parties. Therefore a local manager (not a Company Director) needs to be appointed and the corresponding limited POA must be issued.
- The permanent representative, the local manager (if different person), the Parent Company as an entity and the Directors of the parent company will each need a Spanish Tax Number for foreigners (NIE and NIF).
- An ultimate beneficial ownership statement to comply with Spanish money laundering provisions will be also required when signing before a Public Notary.
- To complete the process, the branch’s activity must be registered before the Spanish Tax Agency, the Spanish Social Security and the local Government authorities.
- And finally do not forget to think about a registered office address (most probably a rental) and the opening of a bank account with an entity able to operate with Spanish tax and labour authorities.
At this stage you will only have to deal with unexpected issues trying to accommodate your calendar constraints and personal circumstances to what is legally required (which varies from time to time). Choosing the right Notary and assistance might be the key to ensuring you are completing the process in a correct and timely manner.