A foreign company interested in incorporating a subsidiary in Spain shall submit proof of its incorporation and existence under the laws of the country where it is incorporated. Usually this proof is given through a certificate of the foreign Commercial Registry.
Further, the foreign company’s representatives that appear in front of the Spanish Notary Public to incorporate the Spanish subsidiary should be duly empowered under the laws of the country where the parent company is constituted.
All foreign documents will need to be notarized, legalized and translated into Spanish. A sworn translation will be necessary.
Finally, in Spain the foreign company shall file for a tax number. In order to obtain this identification number, the foreign company has to appoint a representative, who has to be a Spanish resident. At an early stage, local advisers could assume this preliminary representation and later on passed it on to the subsidiary.
COVID-19 Update:
Due to the COVID-19 pandemic, the Spanish Government has issued the Royal Decree 8/2020, of March 17, 2020, of urgent measures given to the COVID-19. Under these regulations direct foreign investment requires a previous authorization from the Spanish authorities for those investors from non-EU countries. As for direct investment under this regulations it is understood, those made from outside the European Union, and the Free Trade European Association and the investor either holds 10% or more of the Spanish subsidiary or it participates effectively in the management or control of the company. This suspension applies to a few sectors such as, infrastructures, technology, energy supply, and media, amongst others. Besides having a few investments restricted by sector there are other restrictions applicable to the following: (a) foreign investor controlled directly or indirectly by third party governments or public organizations; (ii) foreign investor being part of a litigation or administrative claim filed against the investor; (iii) foreign investor with participation or investments in activities involving public safety or public health of other member state.
What is the process for the incorporation of the subsidiary in Spain?
The process to incorporate a SL in Spain will be as follows.
- Name Request. A petition for a name request should be filed before the Central Commercial Registry. This registry shall confirm the company can use the name requested since no other company or entity holds a similar or exact name as such requested. The name confirmation is valid for six (6) months from the date of approval to the date of the company’s incorporation.
- Request for National Identification Number (NIE) for directors.
- Request for Tax Identification Number (CIF) for the foreign holding company.
- Drafting of by-laws.
- Appearance before the Spanish Notary to grant the Public Deed of Incorporation. This Deed would state, amongst several issues, the amount of the share capital and the identity of the beneficial owner of the company.
- Obtention of the Spanish Tax Number for the incorporated SL.
- Registration of the Public Deed before the Commercial Registry.
- Form D1-A duly completed and submitted before the Ministry of Industry, Commerce and Tourism. This form is the Non-Public Spanish Company’s declaration as recipient of foreign investment.
What are the usual challenges for foreign companies setting up a subsidiary in Spain?
To incorporate a Spanish SL could be in general terms a very easy and fast process. However, since it entails multiple administrative proceedings and the Spanish administration is experiencing a high workload, the average term to have the company registered is around 30 days. It is therefore very important to fulfil all requirements to have this process running smoothly.
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