Guide to business in Spain Guía de negocios en España

INVEST IN SPAIN

9. Branches


9. BRANCHES

9.1. Creation of a branch

In addition to the forms of business enterprise created under Spanish law with separate legal personality, a foreign investor may operate in Spain through a branch.

The opening of a branch requires the execution of a public deed, which must be registered at the Commercial Registry, together with the formalities indicated in section 5 of Chapter 2.

From a foreign investment legislation viewpoint, the branch must have an allocated capital, which is not subject to any minimum amount requirement.

The branch must have a legal representative who is empowered by the head office to administer the affairs of the branch. Apart from this requirement, there are no formal governing or management bodies.

Aside from the obvious differences in terms of internal structure and organization, a branch operates much like a company in its dealings with third parties.

The choice between forming a branch or a legal entity in Spain may be affected by commercial reasons; for example, a company may be deemed to provide a more “solid” presence than a branch.

There are also other differences which are addressed in different chapters of this publication.

9.2. Branch vs. subsidiary (whether S.A. o S.L.)

From a legal standpoint, the main differences between a branch and a subsidiary are as follows:

Table 11

Branch vs. subsidiary

Corporation

Limited liability company

Branch

Concept

Company of a commercial nature engaging in the pursuit of an economic activity, with a capital stock divided into shares and consisting of contributions by the shareholders, who, as a general rule, will be personally liable for company debts only up to the limit of the contribution made or promised.

Secondary establishment with a permanent representation and certain management independence, through which the activities of the head office are totally or partially pursued, and with no legal personality independent of that of the head office.

Guide to business in Spain

Annex I. Company and commercial law

28

ICEX - Gobierno de España - Ministerio de Economía y competitividad
Elaborado por Garrigues - Abogados y Asesores Tributarios
INVEST IN SPAIN. Paseo de la Castellana, 278. 28046 Madrid
T: (+34) 91 503 58 00
investinspain@investinspain.org | www.investinspain.org