International Joint Ventures in Spain

In Spain, a joint venture is not a legal term expressly regulated by law. The concept of a joint venture originated in foreign markets and has been adapted to the Spanish market due to globalization and the influx of foreign investors and market players. They are widely used in sectors such as construction, infrastructure, and energy where international collaboration and expertise is common.

Despite the lack of explicit legal regulation, the notion of joint ventures in Spain has been progressively developed over recent decades, both in terms of their conceptual framework and the practical ways in which they are structured. As a result, joint ventures can be formalized or structured in various ways. The most common are the following:

• Through a collaboration agreement. Joint ventures can be established through the execution of a contract between the participating parties (whether foreign or local companies). However, the main challenge with this structure lies in liability towards third parties (e.g., clients, supplier, employees, public authorities). It is often difficult to ensure that any of the joint venture members will be held liable before third parties during the course of a specific project. For this reason, we will not explore this structure further in this publication, just in some punctual questions.
• Through the incorporation of a new local entity. Joint ventures are frequently structured through the incorporation of a new legal entity jointly owned by the participating partners. This method offers a more secure and operationally efficient framework, particularly in terms of liability management, governance, and day-to-day operations.
  By establishing a new company, the partners define their internal relationship primarily through the company’s articles of association, and, where necessary, through a shareholders’ agreement (SHA). Both instruments must comply with the applicable Spanish corporate law and the specific legal form chosen for the entity.
• Through the incorporation of a Temporary Association of Companies (In Spanish, “Unión Temporal de Empresas” – UTE).  UTEs are one of the few forms of business association expressly recognized under Spanish law. However, they are subject to limited regulation. The primary legal framework governing UTEs is Law 18/1982, of 26 May, on the tax regime applicable to economic interest groupings, temporary business associations (UTEs), and industrial development companies (Ley 18/1982, de 26 de mayo, sobre regimen fiscal de agrupaciones y uniones temporales de empresas y de las sociedades de desarrollo industrial). This law sets out the specific requirements that UTEs must meet in order to qualify for a special tax regime and in order to be recorded in a specific Tax Registry.

In addition, UTEs do not hold legal capacity which is particularly relevant when referring to liability before third parties – joint and severally of its members- and assets’ ownership, among others. Nevertheless, it is considered as employer for labour purposes as well as it can be a party in a lawsuit.

UTEs are often created by companies which aim to collaborate in order to develop a specific and temporary project governed by a public contract, which normally is awarded through a tendering process (infrastructure, public services, constructions).

In addition to the structures mentioned above, there are other specific forms of business association in Spain—such as “Agrupación de Interés Económico” (AIE)—which will not be addressed in this publication, as they are subject to specific legal and operational requirements. For example, an AIE may only carry out activities that are ancillary to those of its member companies, and it is not permitted to generate profit for itself.

The foreign partners of a joint venture are treated in the same way that in other commercial-corporate areas. Hence, there are not specific provisions to foreign partners in a joint venture which are different from foreign shareholders or foreign market players, for instance.

Basically, legal foreign entities that set up a company in Spain or becomes shareholder of one need to obtain the corresponding tax identification number – Número de Identificación Fiscal (NIF)- and declare the investment made by means of a D1A form before the Spanish Foreign Investment.

Regardless of the structure chosen, joint ventures are governed by the contractual freedom principle (also known as autonomy of the will), allowing the parties to regulate their relationship as they see fit, provided they do not contravene public order or mandatory legal provisions. This principle is particularly relevant when the joint venture is structured through the incorporation of a new local entity (where the parties must comply with Spanish corporate law, the articles of association, and any applicable shareholders' agreement) or through a UTE (in which case the parties must adhere to Law 18/1982 -if it is intended to apply for a special tax regime- and other relevant Spanish regulations).

When a joint venture is structured through the incorporation of a new legal entity under Spanish law, shareholders benefit from limited liability. This makes the use of local companies particularly effective as risk-ringfencing vehicles, since separate projects can be conducted through distinct SPVs, thereby preventing the failure of one venture from impacting others. From a compliance standpoint, shareholders are required to fulfil capital contribution commitments and comply with other statutory obligations. In exceptional cases — such as limited liability companies with share capital below €3,000 — shareholders may ultimately be held jointly and severally liable for the company’s debts upon liquidation, up to the statutory threshold. As regards directors, Spanish corporate law imposes a demanding framework of fiduciary duties. Directors must act with diligence and loyalty, and they may incur personal liability in certain circumstances, such as where damage results from a breach of duty or when they fail to convene the general meeting to resolve on dissolution in cases of legal requirement. They are also responsible for ensuring compliance with formal obligations, including the maintenance of accurate accounting records and the filing of annual accounts.

On the other hand, where the joint venture is established as a Spanish UTE — a structure typically used for single public works or service contracts — it is important to note that the UTE itself lacks separate legal personality. As a consequence, its members are deemed to be jointly and severally liable vis-à-vis third parties, including public authorities. From an internal perspective, the articles of association govern the relationship among members, setting out the allocation of powers and responsibilities, the financial regime, the contribution of funds, and the consequences of non-compliance. At the regulatory level, the civil and commercial framework applicable to UTEs is limited, meaning that members’ contractual freedom, principle plays a central role. Nevertheless, the UTE is predominantly shaped by its tax regime. This includes specific accounting and filing obligations, the application of the special income allocation regime under the Spanish Corporate Income Tax Law, and the joint and several liability of members for tax obligations of the UTE.

The choice of structure in Spain ultimately hinges on the project’s characteristics (such as its intended duration -limited or indefinite-) and the parties’ preferences for liability and governance. Incorporating a company (S.L. or S.A.) ensures liability protection and a formal governance framework, suited to long-term or complex ventures, though with higher compliance costs. UTEs, while more flexible and ideal for project-specific collaborations - especially in public contracting - entail general joint and several liability of its members and require a solid internal agreement between them.

Yes, both structures (new entity and UTEs) may require prior approval or notification by the Spanish National Markets and Competition Commission (Comisión Nacional de los Mercados y la Competencia - CNMC) if their incorporation or modification constitutes an economic concentration under Spanish competition law. This obligation depends on whether the transaction meets certain market share or turnover thresholds established by Law 15/2007 on the Defence of Competition (Ley 15/2007 de Defensa de la Competencia), and on whether the operation has a national or EU dimension.

Regarding new entities, a joint venture is considered an economic concentration when it functions as an autonomous economic entity on a lasting basis (a “full-function joint venture”).

Concerning UTEs, although its lack of legal capacity, they may still fall under antitrust control if their structure results in a de facto concentration, i.e., the creation of a single economic entity with unified and permanent management. However, the abovementioned does not automatically apply to UTEs formed by companies that are not direct competitors, or to those that may be competitors but whose union leads to greater efficiency.

Regarding the notification to CNMC, it is mandatory if at least one of the following thresholds is exceeded: (i) acquiring or increasing a market share equal to or greater than 30% in a relevant product or service market within Spain; or (ii) the combined turnover in Spain of all parties exceeds €240 million in the last financial year, with at least two parties individually exceeding €60 million. There are exemptions where notification is not required if only the market share threshold is met but the acquired turnover is below €10 million and parties’ market shares are below 50%.

Prior authorization must be obtained before implementing the transaction, and the operation cannot proceed without CNMC approval, except in limited circumstances. For transactions with an EU dimension, the European Commission has exclusive jurisdiction, and the CNMC only intervenes if the case is referred.

Before providing an answer, it is necessary to confirm which structure has been selected:

• In the event that the joint venture is structured through the incorporation of a new local entity, the contribution of assets will be governed by Spanish corporate law. A few key considerations apply:
  If the assets consist of real estate, they must be contributed either at the time of incorporation or through a subsequent share capital increase, which must be granted before a Notary Public and duly registered with the Commercial Registry. This is a legal requirement for the valid transfer of real estate to the company. Depending on the legal form of the company, additional requirements may apply—for instance, in the case of a Sociedad Anónima (S.A.), an independent expert’s report is mandatory. Such contribution will entitle the contributing party to a proportional issuance of new shares.
  
  For other types of assets (excluding real estate), contributions may also be made by means of shareholders’ contributions (in Spanish, aportaciones de socios), which are made without consideration (i.e., non-reimbursable and without the issuance of shares). However, this method can pose practical issues when the contributed assets are subject to registration (e.g., vehicles, cranes, industrial equipment), as public registries may reject the contribution documentation (typically board or shareholders’ resolution minutes) due to the absence of a formal transfer instrument such as a purchase agreement or an invoice.
  
  
• In the event that the chosen structure is a UTE, the contribution of assets must be made in accordance with the provisions previously agreed upon in the articles of association. However, from a civil law perspective, since the UTE does not possess its own legal capacity, ownership of the contributed assets will remain with the contributing member. Alternatively, it may be agreed that the assets will be held as a condominium arrangement, in proportion to each member’s share in the UTE.
• To summarise, the transfer and ownership regime of the assets engaged to the UTE for developing a project would depend on the content of the articles of association.

Apart from the specific methods of contributing assets to the joint venture depending on its structure, there is also the possibility of acquiring assets by means of a purchase. In the case of a newly incorporated local company, the asset would be purchased directly by the company itself. However, in the case of a UTE, since it does not have its own legal personality, one of its members would acquire the asset in its own name and subsequently contribute it to the UTE. In such case, the acquiring member would remain the legal owner of the asses, unless otherwise agreed.

In terms of governance and management, the joint venture incorporated through a new entity is governed by the statutory corporate bodies (shareholders’ meeting and governing body, basically), with flexibility to design voting rights, quorums, minority protections, and other decision-making mechanisms through the articles of association and shareholders’ agreements (SHAs). A UTE, however, is managed by a single Gerente vested with powers by all members; decision-making rules are typically set out in the UTE agreement (which includes its articles of association), where unanimity or qualified majorities are often required for material decisions.

Commercially, the UTE is best suited for specific, temporary projects, especially in the context of public works or service contracts, given its flexibility and simplified framework. In contrast, the joint venture incorporated through a new entity is a more permanent and versatile structure, allowing for long-term or complex projects, as well as a more sophisticated allocation of rights and obligations among participants.

On the tax and accounting side, UTEs may benefit from a special tax regime provided they meet statutory requirements (public deed, registration in the special register, limited purpose, Gerente, etc.). Although UTEs are deemed taxpayers for corporate income tax purposes, their income is subject to allocation to the members, who report it in proportion to their participation. For accounting purposes, a UTE does not prepare stand-alone annual accounts; instead, each member reflects its proportional share of assets, liabilities, income, and expenses in its own financial statements. Conversely, a joint venture incorporated through a new entity is a full corporate taxpayer (subject to corporate income tax on its profits), and shareholders are taxed only on distributions or capital gains. The company must also comply with all corporate accounting, reporting, and audit requirements under Spanish corporate law, as mentioned above.

It would depend on the structure chosen.

If the joint venture is implemented through the incorporation of a local company, the requirements for appointing officers (understood as directors) or board members would primarily depend on the provisions set out in the company's articles of association, and, in the absence of specific provisions, on the applicable legal rules according to the corporate form selected—most commonly, a Sociedad Limitada (S.L.) or a Sociedad Anónima (S.A.).

On the other hand, if a UTE is ultimately incorporated, the appointment of its Gerente—a specific and mandatory position, acting as the sole director of the UTE—or the appointment of a management committee will be strictly governed by the provisions set out in its articles of association. This is particularly relevant given that the supplementary legal framework applicable to UTEs is very limited, meaning that the internal governance structure must be clearly defined by the parties in the incorporating documents.

Again, the answer depends on the structure chosen and the documents involved.

• If the joint venture is set up as a private collaboration agreement, generally the parties may choose the governing law, except for such provisions that may contravene mandatory rules in Spain. However, opting for foreign law often complicates management and dispute resolution when the project is based in Spain. It can be hard for a Spanish court to hear - or efficiently apply - a contract governed by non-Spanish law; and if disputes go to a foreign court, litigating abroad adds cost and time, especially when neither party operates there and the only nexus is the chosen law.
• If the joint venture is set up through a new local entity, the applicable law depends on the company type (e.g., S.A. or S.L.) and, above all, on the registered office (domicilio social), which determines the lex societatis. If the entity is incorporated and domiciled in Spain, Spanish company law shall apply. Within the EU, freedom of establishment facilitates recognition and cross-border operations; in third countries, additional safeguards are usually required, making the process more demanding.
  Articles of Association are public, registrable rules that bind the company and third parties. Therefore, if the company is domiciled in Spain, they must comply with Spanish law; choice-of-law would not be available.
  Contrarily, shareholders’ agreements, are private contracts where parties may choose a foreign law, provided it does not displace mandatory Spanish corporate rules. If all elements are located in a country different from the chosen law, its mandatory rules will still apply as mentioned above. The more the agreement affects governance and daily operations, the less advisable it is to use a law different from the company’s lex societatis, as enforcement becomes harder.
• If the joint venture takes the form of a UTE, it must be governed by Spanish law, as UTEs are unique to Spanish legal practice. The parties cannot validly subject its formation or operation to foreign law.
  The parties may still enter side contracts (e.g., supply or service agreements) under a different law, provided those do not override mandatory UTE rules, public-procurement requirements, or Spanish tax and labour obligations. Where all elements are in Spain, mandatory Spanish law will apply despite any choice-of-law clause.
  Operating a UTE requires Spanish filings, tax compliance, labour rules, and Spanish-language documentation before Spanish authorities. Consequently, subjecting side contracts to foreign law often adds cost, delays, and complicates its enforcement.