There are several reasons to invest in Spain (business internalization, geographical situation, a highly qualified population… ) However, depending on the foreign investor’s intentions, there are different legal entities to set up a business in Spain, such as a limited Company (S.L - Sociedad Limitada), a representation office or a branch or a subsidiary.
During the last few years, implementation of a series of major structural reforms has strengthened the competitiveness of the business climate, increasing flexibility in the job market and improving the conditions under which new companies and corporate groups can develop and grow in the spanish market.
The tax burden in Spain is lower than the average for the EU-27 countries and for the eurozone. Costs and expenses related to business activities are deductible as long as they are properly recorded and justified. There are also some additional tax incentives for specific costs and expenses.
Spain is also a country that relies upon a model for sustainable economic growth, and it has also become a world leader in various fields in the energy sector.
- 78% of all solar thermal energy projects are carried out by Spanish companies.
- Spain is the #1 country in Europe for reuse of treated water sources and #2 in the world.
- Spain is also a world leader in terms of its model for integrated waste management.
These are just a few of the reasons why Spain is a very attractive destination for investment, but there are many more...
Create a Company in Spain
The decision to establish a business in Spain as a limited Company (S.L - Sociedad Limitada), a representation office or a branch or a subsidiary depends on the foreign investor’s intentions in Spain.
A limited Company in Spain (S.L)
The most popular legal entity for those interested in company formation in Spain is the private limited liability company. The capital of the Spanish SL is divided into nontransferable shares and the liability of each member is limited by his/her contribution to the capital. A minimum share capital of around EUR 3,000 must be deposited when opening a company in Spain.
All the decisions of the Spanish SL are taken by the general meeting of the shareholders which will appoint a director in order to make sure that the articles of association’s regulations are respected, prepare all the documents for the meetings and those which need to be delivered to the authorities and take all the daily decisions.
More information: How to set up a Limited Company in Spain
A representation office in Spain
A representation office is a fast way of introducing a business in Spain. It can rent premises or open bank accounts like a non-resident and freely perform preliminary studies on the market conditions for its activity. This option restricts company activity in Spain to non-economic business because the Spanish Tax
Authorities may determinate that, if other activities are undertaken, it could be considered a permanent establishment and not a representation office.
A branch or a subsidiary in Spain
If the intention of the foreign investor is finally to develop work in Spain, it could be incorporated as a branch or a subsidiary. The main difference between both is in the corporate structure: while the branch is not a separate entity from the foreign company, the subsidiary is a separate company with internal power of decision and responsibilities.
When starting a business in Spain, specific procedures have to be followed during the process of Spanish company formation and in the case of foreign businessmen, especially if they are not familiarized with the local legislation, it is highly advisable to receive legal assistance and legal representation on such procedures.