If you are thinking about setting up a business in Spain, you can set up a subsidiary over there. A Spanish subsidiary is basically a foreign company’s child company, but it’s legally independent. This means the parent company’s shareholders aren’t personally liable for the subsidiary’s debts. OnDemand International knows all about starting a subsidiary in Spain. Let us help you navigate the process!
Advantages for Establishing a Subsidiary in Spain
The following benefits for establishing a subsidiary in Spain includes:
1. Limited Liability: As a separate legal entity, a Spanish subsidiary shields the parent company from potential liabilities and debts incurred by the subsidiary.
2. Tax Benefits: Spain has a favorable tax regime for foreign companies, including double taxation treaties that can reduce the overall tax burden.
3. Brand Recognition and Local Presence: Establishing a subsidiary can enhance a company’s brand image and reputation within the Spanish market.
4. Government Incentives: The Spanish government often offers incentives and support to foreign investors, including tax breaks, grants, and subsidized loans.
5. Strategic Expansion: A subsidiary can be a strategic move for companies looking to expand their operations into new markets or regions.
6. Protection of Intellectual Property: Spanish law provides robust protection for intellectual property rights, ensuring that a company’s assets are safeguarded.
7. Part of an EEIG: A Spanish subsidiary can join a European Economic Interest Grouping (EEIG), opening up new avenues for partnership and growth.
Process for Opening a Subsidiary in Spain
The following steps required to open a subsidiary in Spain are:
1. Choose the Appropriate Legal Structure: The most common legal structures for subsidiaries in Spain are limited liability companies (SL) and public limited companies (SA). The choice depends on factors such as the size of the company, ownership structure, and future growth plans.
2. Prepare the Necessary Documents: This includes the company’s articles of association, a business plan, and proof of identity and address for the shareholders and directors.
3. Reserve the Company Name: A unique company name must be chosen and reserved with the Spanish Mercantile Registry.
4. Open a Bank Account: A Spanish bank account needs to be opened in the name of the subsidiary.
5. Notarize the Articles of Association: The articles of association must be notarized by a Spanish notary public.
6. Register with the Mercantile Registry: The company must be registered with the Mercantile Registry, providing all the necessary documentation.
7. Obtain Tax Identification Number (CIF): The Spanish tax authorities will issue a CIF to the subsidiary.
8. Comply with Labor and Social Security Regulations: The subsidiary must comply with Spanish labor and social security laws.
Documents Required to Register a Subsidiary in Spain
The lists of documents required to register a subsidiary in Spain includes:
- Business plan
- Valid identity card or passport
- NIE number
- Business name certificate
- CIF number
- Article of incorporation
- Company’s bylaws
- Evidence of initial share capital
Requirements to Establish a Subsidiary in Spain
Establishing a subsidiary in Spain requires some of the key requirements. The minimum share capital required for a Spanish subsidiary varies based on its legal form. A Sociedad Limitada (S.L.) necessitates a minimum capital of 3,000 euros, whereas a Sociedad Anónima (S.A.) mandates a minimum of 60,000 euros. Additionally, a subsidiary must appoint a legal representative with the authority to act on its behalf. Furthermore, it is imperative to establish a Spanish bank account for the subsidiary to facilitate the initial capital deposit and manage subsequent financial transactions. While a subsidiary is a part of a foreign parent company, it must maintain its operational independence, possessing distinct assets, liabilities, and legal responsibilities.
Difference between Branch and a Subsidiary in Spain
| Feature | Branch | Subsidiary |
| Legal Entity | Not a separate legal entity; it’s an extension of the parent company | A separate legal entity with its own rights and obligations |
| Liability | Parent company is fully liable for the branch’s debts and obligations | Subsidiary is liable for its own debts and obligations |
| Taxation | Usually taxed as part of the parent company | Taxed as a separate entity |
| Capital | No separate capital required; funds are provided by the parent company | Requires minimum capital of €3,000 for SL. For an SA, it’s €60,000. |
| Management | Managed directly by the parent company | Has its own management team |
| Regulatory Compliance | Follows the regulations of the parent company’s country | Must comply with the regulations of the host country |
| Establishment | Easier and quicker to establish | More complex and time-consuming to establish |
| Purpose | Often used for sales, marketing, or customer service | Can be used for various purposes, including manufacturing, research and development, or regional expansion |
Conclusion
OnDemand International offers a streamlined process for setting up subsidiaries in Spain. Without requiring physical presence, we can establish your company in 7 to 14 weeks. Our priority is providing comprehensive pre-setup consultation to ensure you’re fully informed about operating in Spain. We’re dedicated to making your Spanish business venture smooth, efficient, and professional. You can book a free virtual meeting with our Spanish incorporation expert as well.
Frequently Asked Questions
What is the cost to start a subsidiary in Spain?
The costs to start a subsidiary in Spain varies according to the requirements. But, the minimum capital required to set up a subsidiary is €3,000. Additional costs include legal, notary, and registration fees.
What is the corporate tax rate for subsidiaries in Spain?
The standard corporate tax rates for subsidiaries in Spain is 25%. But if you are a startup or newly made firm, the CIT reduces to 15% for the first two years.
Can I open my subsidiary in Spain remotely?
It is feasible to establish a subsidiary in Spain without a physical presence. This can be achieved by utilizing a power of attorney and seeking the guidance of legal professionals.
How much time does it take to set up a subsidiary in Spain?
Opening a subsidiary in Spain is an easy and straightforward process which can be complete in 7 to 14 days. At OnDemand International, our team of lawyers specializes in establishing subsidiaries and can assist you in obtaining a Spanish company and NIF number without requiring clients to be present in person.
