Before you can open a branch of your company or a subsidiary in Spain, you need to decide what legal form your business will take. There are several options available to foreign businesses, each with its own advantages and disadvantages.

In this article, we will outline some of the key legal considerations you need to be aware of before opening a branch of your company in this country. However, we strongly advise you seek professional counselling before doing it.

Are branch and subsidiary the same thing?

First of all, we have to make this clear: no, a branch and a subsidiary company are not the same. It is true that both of them are ways of setting up your business in Spain, but they are very distinct. Both, legally and logistically speaking. So, we will see the differences and try to find the perfect option for your case.

Setting up a branch in Spain

The branch office is a dependent establishment of you existing company, know as “parent company”. So, it will be a permanent installation with limited autonomy in the Spanish territory dependent from the main company. This means that the branch is not a legal entity itself and cannot take its own decisions. The parent company is always going to be responsible for everything and the branch do not have company responsibilities in Spain. So, this option does not have limited liability protection, but it is the easiest and cheapest way of establishing your business in this country.

How to open a branch in Spain

The process starts in your company’s board of directors. You need to take the decision there and writing an authorization to open a branch in Spain. You will also need to name a representative, giving that person the authority through a power of attorney to make the constitution procedure.

The branch owner will need an identification number. After getting one, opening a bank account in Spain is needed. Once that is done, the next step is signing the public deed before the notary. All the documents required must be deposited at the Mercantile Registry. And, once you are given the Tax Identification Number (NIF), you have to register the company in the business census and notify the city hall.

Opening a subsidiary company in Spain

This is the other main option you have to set up your business in Spain: establishing a subsidiary. This is a separate legal entity from your company abroad. This means it has all the company responsibilities required in Spain. But, this also means it has limited liability protection, so your personal assets will not be at risk. Nor the main company assets.

So, the subsidiary is owned by your foreign company, but it is a separate legal entity with limited liability. 

How to open a subsidiary in Spain?

Opening a subsidiary in Spain is not complicated, specially if you have the ideal lawyers by your side.

You will need to obtain a certification of your proposed company’s name from the Mercantile Register (it will prove the name is not already taken in the country). You also need to apply for an identification number and open a bank account in Spain. You will have to deposit a minimum of 3.000 euros as the initial capital for the subsidiary.

You will have to sign a declaration you are not laundering money or financing terrorism, execute a public deed of the constitution of the subsidiary before the notary and register the company in the Commercial Registry.

Before all of this, you will also have to write the company bylaws in accordance with the Spanish Law. And there are other forms you may need to fill in order to make your subsidiary a reality, depending on the case.

Which one is better: branch or subsidiary?

The answer for this question is: it depends on the specific case. As we said before, both options have advantages and disadvantages. You should take all of them into account and make a decision helped by your lawyer.

If the business is going to be really dependent on the parent company, it may be better to create a branch. Easier to control everything from the main company and cheaper to have, without any initial capital needed. 

However, if you need a more autonomous office with liability responsibility, a subsidiary is the way to go. And it may have other additional benefits from operating as a company with legal status in the country.

How can we help you?

We have the lawyers that have the answer of the question above. Which is the best option for your company? A branch or a subsidiary? We will study your case and give you the best advise for you to have a good experience expanding your company to Spain. We will make the process really easy, taking every step you need to settle you company in our country. Do not hesitate to contact us to make your Spanish branch or subsidiary a reality!