Setting-up a subsidiary in Spain

The setting-up of a subsidiary in Spain involves the creation of an independent entity with its legal personality. Even though the parent Company contributes the share capital to form the subsidiary and directly manages the subsidiary, the subsidiary is an independent legal entity. It is a different entity from the parent Company and it is considered, for all effects and purposes, a resident in Spain and therefore subject to local legal regulations. Accordingly, it is subject to the Spanish tax on Companies and must comply with all tax and accounting obligations in force, as well as record its annual accounts and other company acts in the Commercial Register.

Important aspects worth mentioning of the relationship between a subsidiary and its parent Company are the following:

  • The liability of the foreign parent Company to its Spanish subsidiary is limited to the amount of the capital contributions made;
  • The Spanish subsidiary can fiscally deduct some payments such as those made to its parent Company in the form of patent interests or royalties;
  • Additionally, the return of the Spanish subsidiary’s dividends to its parent Company is generally exempt from taxation in Spain, provided certain requirements are met (EU investor, the minimum percentage of participation, investment maintenance, etc.)

Main types of companies in Spain: the Limited Liability Company and the Public Limited Company

The two main legal forms that a subsidiary in Spain can adopt are the Limited Liability Company (LLC) and the Public Limited Company (PLC). Both entities have several differences worth noting:




Minimum share capital

3.000 €

60.000 €

Capital outlay at the moment of incorporationFull Capital outlayA minimum outlay of 25%, plus the premium share if present
Shares / HoldingsThey are not marketable securitiesThey are marketable securities
Non-monetary contributions to the share capitalA statement of an independent expert is not required, but the partners are jointly liable for the authenticity and value of the non-monetary contributionsOpen Company: in theory, the shares can be transferred freely, unless there is a statutory provision to the contrary
Regime of transfer of the Shares/Holdings Closed Company: The shareholdings cannot be transferred freely (except in transmissions between partners, ascendants, descendants, companies within the same group, etc.) The shareholders and the company have a preferential right of acquisitionOpen Company: in theory the shares can be transferred freely, unless there is a statutory provision to the contrary
Amendments to the bylawsNotification from the directors is not requiredNotification from the directors or, where appropriate, shareholders who propose the amendment is required
Duration of the appointment of directorsThey can be appointed for an indefinite termEligible for a maximum term of 6 years and eligible for re-election for terms of the same duration
Maximum/Minimum number of members of the Board of Directors Minimum number: 3Maximum number: 12Minimum number: 3No ceiling on the number of members

Steps for setting up a subsidiary

To establish a subsidiary in Spain (in the form of a PLC as well as LLC) several ordinary procedures must be followed, which can generally be executed in about 6 or 7 weeks. They are mainly the following:

  • Attain the Tax Identification Number (TIN Spanish NIF) of the foreign investor.
  •  Apply for a certificate of denomination of the Spanish subsidiary before the Commercial Registry (valid for 6 months).
  •  Open a bank account in the name of the Spanish subsidiary and disburse the share capital. The banking institution shall issue a disbursement certificate.
  •  Apply for a provisional NIF of the Spanish subsidiary.
  •  Present the public deed of incorporation of the Spanish subsidiary before a Notary, including inter alia, the bank certificate, the certificate of denomination, the bylaws, identification of the managers, etc.
  • Present the D1-A form for declaration of foreign investments before the Registry of the Directorate General for Trade and Investment of the Ministry of Economy and Competitiveness.
  •  Pay the Property Transfer taxes and Stamp Duty
  •  Apply for a registration of the public deed of incorporation in the Commercial Registry (generally within 15 days for qualification and registration).
  •  Attainment of the final NIF of the Spanish subsidiary.
  • Completion of several census procedures for tax and labour purposes (register with the tax on Economic Activities, VAT, enrol in the Social Security, etc.)

Should you require more information regarding the above or should you need assistance when it comes to completing the relevant formalities for setting up a Spanish subsidiary, do not hesitate to contact Mariscal & Abogados, your legal advisers in Spain.

If you need assistance setting up a subsidiary in Spain,

Please note that this article is not intended to provide legal advice.

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