Why do British companies decide to set up subsidiaries in Spain?

Many UK companies are rushing to set up subsidiaries in Spain because of Brexit. Dozens of them have rushed to hire law firms to build subsidiaries as soon as possible in Spain, and thus avoid many of the limitations and commercial obstacles derived from the implementation of Brexit.

But what are the benefits of establishing a subsidiary in Spain?

Well, through a subsidiary, British firms can continue to market their products and services in the European Union. Therefore, by doing so from Spain, they have the same advantages as any other EU country.

The costs are minimal for any company, and the bureaucratic procedures and requirements can be complete in less than a month. Broadly speaking, it is a matter of setting up a new company, with its own legal personality and registering it in the Commercial Register, so that it can operate as if it were a resident company, with the same rights and obligations as local companies, even if the capital comes from far away or from any other part of Europe.

And what are the formalities for setting up a subsidiary?

There are certain particularities arising from the fact that the shareholder is a non-resident person, but they are generally very similar to those required to create a company in Spain. They are as follows:


  1. Obtaining a certificate from the Mercantile Register, or equivalent, of the foreign country in which the parent company is located, stating the existence of the company with the details identifying the company and its administrative body, or, alternatively, the Deed of Incorporation and Articles of Association of the parent company. The documents must be translated into Spanish and must be legalised or bear the Hague Apostille.


  1. Power of attorney in favour of the person who will represent the parent company in the execution of the public deed of incorporation of the subsidiary company. The document must be translated into Spanish and must be legalised or bear the Hague Apostille.


  1. Obtaining a Spanish NIF for the non-resident parent company that will be a partner of the subsidiary, and a NIE for the representative, if applicable.


  1. Application for a negative certificate of denomination at the Central Mercantile Register.


  1. Deposit of the share capital in a bank.


  1. Execution of the public deed of incorporation before a notary.


  1. Application for the provisional NIF.


  1. Payment of Transfer Tax and Stamp Duty (Impuesto de Transmisiones Patrimoniales y Actos Jurídicos Documentados).


  1. Registration of the subsidiary in the Mercantile Register.


  1. Declaration of the incorporation of the subsidiary in the Register of Foreign Investments, which depends on the Ministry of Economy.


  1. Application for the definitive NIF.


 What must be take into account in relation to the taxation of subsidiaries?

In the case of subsidiaries, as they are independent from their parent company, although the latter controls them, they are subject to the tax regulations of the state of residence (in this case Spain), so they will have to pay, among others, the following taxes: Corporation Tax, Value Added Tax and Income Tax. In addition to the above, they will have to file their accounting books and annual accounts with the Mercantile Register, just like any other company in Spain.

At OBN& we have the necessary services if you are planning to open a subsidiary in Spain. You can consult our specialised lawyers to receive personalised advice and thus facilitate all the procedures.