To open a branch, a public deed must be signed and registered at the Mercantile Registry. Under Spanish foreign investment legislation, the branch must be allocated capital, although there is no minimum capital requirement.
The branch must have a legal representative with authority to manage its affairs. It does not have any formal managing or administrative bodies as such, and it largely operates as if it were a company in its commercial dealings with third parties.
The choice between forming a branch or a subsidiary in Spain may be influenced by commercial considerations (e.g., a company might provide a more “stable” presence than a branch) or by considerations of legal certainty (a subsidiary limits the shareholder's liability).
Broadly speaking, the requirements, formalities and costs related to opening a branch are very similar to those for forming a subsidiary.
From a legal standpoint, the most important differences between a branch and a subsidiary are as follows:
|Concept||Company of a commercial nature engaging in a business with its own capital||Permanent establishment, enjoying certain degree of management independence. Vehicle for parent company's activities. Lacks separate legal personality from its parent company.|
|Stock capital||Minimum of €60,000||Minimum of €3.000||Not required|
|Cash and non-cash contributions||Cash contributions in euros. In the case of an S.A., non-cash contributions require a report from an independent expert appointed by the Mercantile Registrar.|
|Registration||Public deed must be registered at the Mercantile Registry.||Together with the public deed creating the branch, the documents attesting the existence of the parent company, its by-laws in force, its Directors and the decision of opening the branch, duly legalized, must be registered at the Mercantile registry.|
30% Corporate Income Tax rate is applicable to both, the branch and the subsidiary, on their net income. However, certain aspects must be taken into account:
For further information, visit the extended version of our online Guide to Business:
Last updated: 16|09|2015