When is a corporate presence of a foreign company in Spain necessary?

In recent years Spain has become an attractive destination for foreign investment. Its competitive environment, functionality and variety of business models are just some advantages foreign companies have recognised to expand their activities in Spain.

What determines the need for corporate presence?

The factor determining the obligation for a foreign company to have a corporate presence in Spain is that its main activity is carried out or developed in Spanish territory.

Thus, for example, if the foreign company carries out its main activity outside Spanish territory, it is not required to have a corporate presence in Spain.

On the other hand, if the foreign company carries out its main activity from or in Spain, it must have a corporate presence in the country.

On the other hand, sometimes, foreign companies with no physical presence in Spain but with employees working remotely in Spanish territory wonder whether they are obliged to have a corporate presence in Spain. In these cases:

  • If the company’s commercial and employment activity is very limited in Spain, it is not legally required to have a corporate presence in Spain. The company is only required to be registered in Spain as a non-resident and to comply with tax and social security obligations related to its employees in Spain.
  • If there is a continuous or permanent increase in the company’s activity or turnover in Spain, the corporate presence in Spain is advisable but not mandatory. Current regulations offer different legal forms for carrying out business activities in Spain.

Forms of physical corporate presence in Spain 

Incorporation of a subsidiary company

The subsidiary can be a public limited company (Sociedad Anónima), or a private limited company (Sociedad Limitada), among others. By placing the subsidiary as an independent company under the control of another parent company (usually abroad), the foreign company can effectively conduct its business in Spain while maintaining control over its operations there.

Establishment of a branch

An extension of a foreign company in Spain, without legal personality and subject to the same legal and tax obligations as the foreign company.

Opening a commercial office

A physical space to promote and sell products or services of a foreign company in Spain. It has no legal personality and is not considered a permanent establishment.

Acquiring an existing business

Another option is to invest in an existing business in Spain by buying a company or an equity stake.

Each of these alternatives has its own legal and tax requirements, and the most appropriate option will depend on the needs and objectives of the business.

More information on branches and subsidiaries:

If you need additional information regarding the need of a corporate presence in Spain,

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

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