How to Start a Business in Spain as a Foreigner

The choice of corporate structure, international tax planning, employee hiring, regulatory obligations, and relationships with the Spanish authorities are just some of the aspects that should be analyzed before launching operations.

In this context, many international companies discover that the real challenge is not signing the deed of incorporation, but rather building a solid, efficient structure that is fully prepared to operate successfully in Spain from day one.

In this guide, we analyze the key factors foreign companies should consider when establishing a business in Spain, the most common risks involved, and the best practices for approaching the process with legal certainty and a strategic vision.

Why Is Spain a Strategic Market for International Companies?

Spain continues to strengthen its position as one of Europe’s leading destinations for international expansion projects.

Its strategic location within the European Union, strong connections with Latin America, availability of qualified talent, and the size of its domestic market make Spain a particularly attractive platform for multinational corporations, scaleups, technology startups, and international business groups.

In recent years, many foreign companies have established operations in Spain to:

• Centralize European operations.
• Hire international talent.
• Manage remote teams.
• Open commercial subsidiaries.
• Outsource back-office operations.
• Establish technology hubs.
• Develop R&D activities.

However, operating in Spain also means navigating a complex regulatory environment in terms of tax, corporate, employment, immigration, accounting, and compliance matters.

For this reason, before starting the implementation process, it is essential to properly assess the most suitable legal and operational structure.

What Structure Should You Use to Operate in Spain?

One of the first decisions any foreign company must make is determining which legal vehicle it will use to operate in Spain.

This decision should not be made solely from a corporate law perspective. It is also necessary to assess:

• international taxation,
• parent company liability,
• employment obligations,
• profit repatriation,
• permanent establishment risks,
• and future growth strategy.

The most common structures are: subsidiary, branch, and representative office.

Each has significantly different implications.

 

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Subsidiary

A subsidiary is a Spanish company with its own legal personality, owned by a foreign company.

It is generally the most commonly used structure by multinational and international companies seeking to establish a stable presence in Spain.

Its main advantages include:

• Limited liability.
• Greater perception of stability among clients and suppliers.
• Full capacity to hire employees and conduct business operations.
• Better operational and tax integration.

Branch

A branch does not have a legal personality separate from the foreign parent company.

It operates directly on behalf of the parent company.

It may be useful during certain early stages of expansion, although it carries important implications regarding liability and taxation.

Representative Office

A representative office has a limited scope of activity.

It is mainly used for:

• Preparatory activities.
• Market research and business development.
• Institutional representation.
• Auxiliary functions.

Its activities must be restricted to auxiliary, preparatory, or representative functions, without carrying out its own revenue-generating business or economic activities in Spain.

Subsidiary, Branch, or Representative Office: Key Differences

The choice of corporate structure will depend on each company’s operational model.

Legal Personality

• A subsidiary has its own legal personality.
• A branch depends directly on the parent company.
• A representative office lacks independent legal personality.

Liability

In a subsidiary, liability is limited to the contributed capital. By contrast, the parent company:

• Is directly liable for the obligations of the branch.
• May also assume liabilities arising from the activities of a representative office.

Taxation

Tax treatment also differs significantly.

A subsidiary, as a Spanish tax resident entity, is subject to Corporate Income Tax on its worldwide income. A branch is taxed as a permanent establishment through the Non-Resident Income Tax regime.

In addition, certain structures may create permanent establishment risks.

Operations and Hiring

A subsidiary generally offers greater flexibility for:

• Hiring employees.
• Opening bank accounts.
• Doing business with customers.
• Managing future growth.

For this reason, it is often the most efficient structure for stable international projects.

👉 You can learn more in our article on Subsidiary vs. Branch in Spain.

Main Stages of Establishing a Company in Spain

Although each project has its own specific characteristics, the implementation process usually follows several common stages.

1. Preliminary Analysis of the International Structure

Before starting any administrative procedures, it is essential to assess:

• the optimal corporate structure,
• international taxation,
• employment obligations,
• the impact of applicable double tax treaties,
• and regulatory risks.

At this stage, it is also advisable to evaluate:

• whether employees will be relocated,
• whether international remote work will be involved,
• or whether certain activities could create a permanent establishment.

2. Obtaining Tax Identification Numbers

Establishing a business in Spain requires obtaining several identification numbers:

• Tax Identification Number (NIF) for foreign non-resident entities.
• NIF or NIE for certain foreign individuals, depending on the specific circumstances.
• Provisional NIF for a company under incorporation.

Obtaining a NIF for non-resident entities is often one of the main bottlenecks in the implementation process.

👉 See also our article on obtaining a NIF for a foreign company.

3. Reservation of the Company Name

It is necessary to obtain a certificate of uniqueness of the company name from the Spanish Central Commercial Registry.

4. Opening a Bank Account

Opening a bank account to deposit the share capital can be particularly complex when foreign shareholders are involved.

Spanish financial institutions apply strict Anti-Money Laundering (AML) and Know Your Customer (KYC) controls.

As a result, it is usually necessary to provide:

• foreign corporate documentation,
• identification of beneficial owners,
• notarial powers of attorney,
• sworn translations,
• apostilles,
• and evidence of the source of funds.

5. Execution of the Public Deed

The incorporation must be formalized before a Spanish notary public.

6. Registration with the Commercial Registry

The company must subsequently be registered with the Commercial Registry.

7. Tax and Employment Registrations

Finally, it will be necessary to:

• register the business activity,
• obtain digital certificates,
• register tax obligations,
• and complete employment and Social Security registrations.

Incorporating Companies for Non-Residents

Foreign companies may incorporate Spanish companies whether their shareholders are individuals or legal entities.

However, when non-resident shareholders or directors are involved, additional requirements apply.

These include:

• obtaining an NIE,
• obtaining a non-resident NIF,
• document legalization,
• sworn translations,
• tax representation,
• and compliance with beneficial ownership identification requirements.

In addition, when the parent company is foreign, corporate documentation will often need to be:

• apostilled,
• officially translated,
• and adapted to Spanish registration requirements.

For this reason, it is essential to coordinate the process correctly from the outset in order to avoid administrative delays and obstacles.

Foreign Directors and Tax Representation

One of the issues that most frequently raises questions during international expansion projects is the status of foreign directors.

Can a Foreigner Be a Director of a Spanish Company?

Yes.

A company director may reside outside Spain.

However, they must comply with certain administrative and tax obligations.

Obtaining an NIE

Foreign directors who are individuals must have the tax identification required under Spanish regulations.

In many cases, this is the NIE. However, certain non-resident investors in startup companies may obtain a NIF directly from the Spanish Tax Agency without applying for an NIE, in accordance with Law 28/2022.

Tax Representation

The obligation to appoint a tax representative depends on the applicable regulations and the taxpayer’s country of residence.

It is more common in certain situations involving non-residents established outside the European Union or the European Economic Area.

This representative acts as the point of contact with the Spanish Tax Administration.

Social Security and the Self-Employed Regime (RETA)

Employment and Social Security analysis is particularly important when the director:

• holds shares in the company,
• performs management functions,
• or carries out effective activities in Spain.

In some cases, registration with the Special Regime for Self-Employed Workers (RETA) will be mandatory.

Incorrect planning in this area may result in:

• surcharges,
• penalties,
• and significant employment-related liabilities.

👉 Learn more in our article on the obligations of non-resident directors in Spain.

Tax Obligations of Foreign Companies in Spain

Establishing a business in Spain creates a number of tax obligations that should be analyzed correctly from the outset.

Corporate Income Tax

Spanish subsidiaries are subject to Corporate Income Tax.

The general tax rate is currently 25%, without prejudice to reduced rates or special tax regimes that may apply in specific cases.

VAT

Depending on the activity carried out, companies may be required to:

• charge VAT,
• submit periodic VAT returns,
• and comply with specific formal obligations.

Withholding Taxes

Companies may also be required to withhold tax on:

• salaries,
• rental payments,
• or certain professional service fees.

Double Tax Treaties

When international groups are involved, it is essential to analyze:

• tax residence,
• dividend repatriation,
• intragroup payments,
• and the application of double taxation treaties.

Transfer Pricing

Transactions between related entities must comply with transfer pricing regulations.

This is particularly important where there are:

• intragroup services,
• financing arrangements,
• employee secondments,
• or complex international structures.

 

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Tax Risks When Operating Through International Structures

Many foreign companies begin operating in Spain without properly assessing the associated tax and employment risks.

This can result in significant liabilities.

Permanent Establishment

One of the main risks is the potential existence of a permanent establishment.

This may occur when a foreign company carries out economic activities in Spain on a continuous basis without properly structuring its local presence.

For example:

• Permanent sales teams.
• Individuals operating from Spain who habitually conclude contracts or perform functions essential to the foreign company’s business.
• Operational offices.
• Poorly structured international remote working arrangements.

The existence of a permanent establishment may lead to:

• additional tax obligations,
• tax reassessments,
• penalties,
• and tax inspections.

You may also be interested in our article on working remotely from Spain for a foreign company.

Employment and Social Security Risks

International hiring also requires careful analysis of:

• employee assignments,
• international mobility,
• Social Security obligations,
• work permits,
• and expatriate taxation.

Compliance and Anti-Money Laundering Requirements

Anti-money laundering regulations require companies to properly identify:

• beneficial owners,
• the source of funds,
• and international corporate structures.

This is particularly important in cross-border transactions.

If you would like to learn more about this topic, we recommend reading our full article on tax risks when operating in Spain through international structures.

Foreign Investments in Spain: Reporting Obligations and Prior Authorization

Foreign investment in Spanish companies may trigger certain reporting obligations and, in some cases, require prior administrative authorization.

According to Royal Decree 571/2023, a foreign investment includes, among other situations, the acquisition by a non-resident of an interest equal to or greater than 10% of the share capital or voting rights of a Spanish company.

As a general rule, these transactions must be reported to the Spanish Foreign Investment Registry once completed. However, certain investments originating from non-cooperative jurisdictions may be subject to additional requirements.

Likewise, some investments in strategic sectors or made by investors linked to foreign governments may require prior authorization under the foreign investment control regime established by Law 19/2003.

For this reason, before carrying out an investment in Spain, it is advisable to analyze both reporting obligations and the possible need for prior authorization in order to avoid regulatory risks and penalties.

Hiring Employees and International Mobility

Many foreign companies establish operations in Spain with the objective of:

• hiring talent,
• relocating employees,
• or managing international teams.

In these cases, proper employment and immigration planning is essential.

Key aspects to consider include:

• residence and work permits,
• international assignments,
• international payroll management,
• social security contributions,
• cross-border remote work,
• and expatriate taxation.

A lack of planning can result in:

• employment liabilities,
• inspections,
• and significant additional costs.

For this reason, many international companies choose to outsource their employment and global mobility management.

👉 Learn more about our international mobility services for companies.

The Importance of Post-Incorporation Support

One of the most common mistakes is to assume that the process ends once the company has been incorporated.

In reality, the real challenge begins afterwards.

A foreign company established in Spain will need to manage:

• local accounting,
• tax compliance,
• financial reporting,
• payroll,
• employment compliance,
• audits,
• and ongoing regulatory obligations.

In addition, many international parent companies need to integrate Spanish operations into their global reporting systems.

For this reason, it is particularly important to work with a partner capable of providing:

• corporate secretarial support,
• international tax advice,
• employment management,
• international payroll services,
• global mobility support,
• and accounting coordination.

We recommend visiting our dedicated page for international companies looking to establish and grow their business in Spain.

How Adlanter Helps Foreign Companies

At Adlanter, we support international companies throughout the entire process of establishing and growing their operations in Spain.

Our multidisciplinary approach combines:

• corporate advisory services,
• international taxation,
• global mobility,
• employment management,
• payroll services,
• compliance,
• and ongoing operational support.

We work with multinational corporations, scaleups, international startups, investment funds, and foreign companies across a wide range of industries.

We also coordinate complex implementation projects involving:

• international hiring,
• corporate structuring,
• financial reporting,
• and operational expansion.

You can also explore some of our success stories and international projects.

Establishing a Company in Spain Requires Much More Than Incorporation

International expansion requires a thorough analysis of:

• the legal structure,
• tax implications,
• employment obligations,
• regulatory risks,
• and the operational model.

For this reason, adopting a preventive and multidisciplinary approach is essential to avoid contingencies and ensure sustainable growth in Spain.

At Adlanter, we help international companies establish and expand their operations in Spain with legal certainty, international coordination, and a strategic vision.

If you are considering establishing a company in Spain or expanding your international structure, our team can help you identify the most suitable solution for your project. Contact us with no obligation.