Faq about business in Spain. Find answers and general information about how to set up your business in Spain
Frequently Asked Questions
FAQ ABOUT BUSINESS IN SPAIN: Setting up a business
Setting up your business in Spain
Can directors of the Spanish subsidiary be non-residents?
Directors can be non-residents. In such case an identification number NIE must be requested at the Spanish Consulate where the director is resident. Or in Spain if director grant a propoer POA. Such number does not mean any tax obligation. It is just a control number.
How long can it take the formation of a subsidiary, Branch or Rep. Office?
It will highly depend on how quick the shareholders and directors may act. Depending on the country of origin of Shareholders, it could take around 3 weeks.
Do non-resident Shareholders or Directors need to personally go to Spain to set up the subsidiary?
No, there are legal procedures to avoid personal appearance of directors and/or shareholders.
Will I need a Spanish Bank account for my subsidiary or Rep. Office?
Although most of transactions can be run through foreign bank accounts, some transactions as payment of taxes and social security will need to be done through a bank account at a Spanish bank branch.
When can a Rep. Office be used?
When a company will only have in Spain an office to run auxiliary or accessory services, without strong structure, able to independently run an economic activity. The possibility to run activities through a Rep. Office, needs to be individually checked, to find out legal and tax availability of this kind of entity.
Can a Rep. Office have employees and/or be registered for VAT?
Yes. These circumstances as such are not a CONDITION that may exclude the availability of such entity.
What are Rep. Office obligations?
Depending on the structure of the Rep. Office, it may be obliged to register for withholding tax and social security, in case it will have employees or VAT, in case it is going to do deliveries of goods or services subject to VAT.
FAQ ABOUT BUSINESS IN SPAIN: Taxes
Tax services
Is it compulsory to follow the Spanish Accounting Codification Plan? Can the subsidiary follow the codification plan of the parent company?
Spanish Accounting Codification Plan is not compulsory. Codification of Parent company can be used although this would need a study of implications when preparing other documents as annual accounts.
What invoices are eligible to recover VAT?
The invoices, as a general rule, should contain the following data:
- Number (sequential numbering) and, if appropriate, series.
- Date of issue.
- Full name of the entity issuing the invoice and the recipient of this invoice.
- Tax identification number for both parties as assigned by the Spanish administration or, if necessary, by another member state of the European Union, within which the issuer/receiver of the invoice performed the operation.
- Address of the sender and recipient.
- Description of operations, including all data necessary for determining the tax base and amount, including the unit price without tax.
- The tax rate, if any, applied to operations.
- VAT charged, when appropriate, entered separately.
- The date of the transaction that is documented or in which, when appropriate, has received the advance payment, if it is different from when the invoice was issued.
What is the relationship threshold for transfer pricing rules to apply between parties?
The invoices, as a general rule, should contain the following data:
- Companies that belong to the same group; and
- At least 25% direct or indirect participation in another related entity.
Also, considered related parties in Spain:
- Partners, shareholders, board members, directors, and their immediate, collateral, third-degree consanguinity or affinity spouses or relatives, and the company and their cross relations with other companies of the group.
What is the statute of limitations on assessment of transfer pricing adjustments?
Same as general tax regime, i.e. 4 years from the due date of the tax return.
Are disclosures related to transfer pricing required to be submitted to the revenue authority on an annual basis (e.g. with the tax return)?
Yes. Taxpayers are required to disclose, in their corporate income tax returns, information regarding the intra-group transactions performed during the fiscal year.
Also, Taxpayers that have to prepare the CbC reporting and submit it together with their corporate income tax returns.
Can documentation be filed in a language other than the local language? If yes, which ones?
Documentation must be prepared in Spanish in principle. In an ordinary tax audit, the tax auditor may accept the transfer pricing documentation in other languages (e.g. English), but a translation into Spanish may still be requested. It depends on the Tax Audit team involved in the Audit.
When the tax authority requests a taxpayer’s transfer pricing documentation, are there timing requirements for a taxpayer to submit its documentation? And if so, how many days?
Yes, 10 days.
When the tax authority requests a taxpayer’s transfer pricing documentation, are there timing requirements for a taxpayer to submit its documentation? Please explain.
Upon tax audit, the tax inspector will determine the submission deadline on a case-by-case basis with a minimum period of 10 business days counting from the business day subsequent to the request.
What trends are being observed currently?
An increasing number of audits and a more aggressive approach is being observed, especially regarding:
- Financial expenses
- Leveraged acquisitions
- Reorganizations
- Management services (reality and benefit test)
- Loss-making companies
