There are various structures through which non-residents can operate in Spain:
1) CAPITAL COMPANIES:
Capital companies have their own legal personality and limited liability (shareholders are only liable to third parties up to the capital contributed). Their purpose is to carry out an economic activity.
In Spain there are two main types:
– PUBLIC LIMITED COMPANY (SOCIEDAD ANÓNIMA):
Which must have a minimum capital of 60,000 euros divided into shares
– PRIVATE LIMITED COMPANY (SOCIEDAD DE RESPONSABILIDAD LIMITADA):
With a minimum capital of 3,000 euros divided into shares (participaciones).
In both cases:
- Their incorporation requires the execution of a public deed before a Notary and registration in the Commercial Registry.
- They must prepare their own annual accounts which must be approved by the General Meeting and filed with the Commercial Registry.
- And they are required to keep and maintain corporate and accounting books.
- The administrative body may consist of a Board of Directors, a sole director, or two or more joint and several or joint directors.
- They are subject to Corporate Income Tax.
2) BRANCH OF A FOREIGN COMPANY:
- They do not have their own legal personality, and are not independent of their parent company. They are set up to carry out economic activities in Spain with a certain autonomy from the parent company, and liability is not limited, so creditors in Spain can pursue the parent company for the debts and obligations assumed.
- It may have an endowment fund or not, and there is no minimum amount.
- To open one, it requires a public deed and registration in the Commercial Registry.
- Obligation to prove that the parent company has filed its annual accounts in accordance with national legislation. If the parent company is not required to prepare annual accounts, the branch must prepare its accounts in relation to its activity in Spain and file them with the Commercial Registry.
- See is governed by the management body of the foreign parent company which must appoint at least one permanent representative and one tax representative.
- They are subject to Non-resident income tax.
3) REPRESENTATIVE OFFICE OF A FOREIGN COMPANY:
- It is not a legal entity separate from its parent company, its purpose is to carry out collaboration, coordination and/or promotion and commercial information activities, that is, it cannot carry out economic activities.
- No formalities are required to open it, but it is recommended to do so by public deed in order to deal with the employment, tax and Social Security authorities.
- They are not required to prepare annual accounts.
- See is governed by the management body of the foreign parent company, but it must appoint at least one tax representative.
- They are subject to the accounting rules established in the national legislation applicable to the parent company.
- They are subject to Non-Resident Income Tax.
Therefore, depending on the objectives pursued, it will be advisable to set up one structure or another.
