{"id":4589,"date":"2015-09-21T08:00:13","date_gmt":"2015-09-21T08:00:13","guid":{"rendered":"http:\/\/www.asociacion-eurojuris.es\/en\/?p=4589"},"modified":"2020-04-11T07:16:20","modified_gmt":"2020-04-11T07:16:20","slug":"setting-up-a-branch-vs-subsidiary-in-spain","status":"publish","type":"post","link":"https:\/\/www.asociacion-eurojuris.es\/en\/setting-up-a-branch-vs-subsidiary-in-spain\/","title":{"rendered":"Setting-up a branch vs. subsidiary in Spain"},"content":{"rendered":"<p style=\"text-align: justify;\">A branch and a subsidiary are the two main legal forms through which a foreign investor can develop their activity in Spain. While a subsidiary is an independent and autonomous legal entity, different from its parent Company, for which it participates in the market on its own account and risk, a branch is a secondary establishment completely dependent on its parent Company, being a mere extension of the latter on Spanish territory.<!--moreSetting-up a branch vs. subsidiary in Spain--><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000080;\"><strong>Branch vs. Subsidiary<\/strong><\/span><\/h2>\n<p style=\"text-align: justify;\">Even though establishing a branch and a subsidiary generally follow a very similar process \u2013 the granting of a Public deed of incorporation before a Notary and registration in the corresponding Spanish Commercial Registry requirements are the same- both entities have a number of differences which one should necessary consider when making the decision between one and the other. The most significant differences are the ones summarized in the table below:<\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"201\"><\/td>\n<td width=\"205\"><strong>Branch<\/strong><\/td>\n<td width=\"196\"><strong>Subsidiary<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"201\"><strong>Legal personality<\/strong><\/td>\n<td width=\"205\"><span style=\"text-decoration: underline;\">Does not have its own legal personality<\/span> (it is the same legal entity as its foreign parent Company).<\/td>\n<td width=\"196\"><span style=\"text-decoration: underline;\">A subsidiary does have its own legal personality<\/span>. It is for all legal purposes a legal entity, independent from its foreign parent Company.\u00a0It is subject to the rights and obligations it contracts independently from the ones undertaken by its parent Company.<\/td>\n<\/tr>\n<tr>\n<td width=\"201\"><strong>Minimum share capital<\/strong><\/td>\n<td width=\"205\"><span style=\"text-decoration: underline;\">Does not require a minimum share capital or economic allocation<\/span> at the time of its establishment. Nonetheless, this does not prevent the parent Company from deciding on the attribution of the capital it considers appropriate for its branch.<\/td>\n<td width=\"196\"><span style=\"text-decoration: underline;\">3.000 \u20ac or 60.000 \u20ac<\/span>, depending on whether it is established as a Limited Liability Company (LLC) or a Public Limited Company (PLC) respectively.<\/td>\n<\/tr>\n<tr>\n<td width=\"201\"><strong>Board of administration and governing body<\/strong><\/td>\n<td width=\"205\">The <span style=\"text-decoration: underline;\">representative of a branch<\/span> (acts as an agent within the limit of the powers granted to him by the parent Company).<\/td>\n<td width=\"196\"><span style=\"text-decoration: underline;\">General meeting of Partners\/Shareholders and a corresponding governing body <\/span>(sole director, joint or solidary directors or Board of directors).<\/td>\n<\/tr>\n<tr>\n<td width=\"201\"><strong>Liability of the parent Company<\/strong><\/td>\n<td width=\"205\"><span style=\"text-decoration: underline;\">Unlimited liability<\/span>: a foreign parent Company must assume, without limitation, the responsibilities contracted by its branch.<\/td>\n<td width=\"196\"><span style=\"text-decoration: underline;\">Liability is limited<\/span> to the contributions made: a subsidiary itself is liable with all of its assets for the debts it has contracted without affecting, in principle, its foreign parent Company.<\/td>\n<\/tr>\n<tr>\n<td width=\"201\"><strong>Taxation<\/strong><\/td>\n<td width=\"205\"><span style=\"text-decoration: underline;\">First, the rules of the corresponding Double-Taxation Agreement apply. In its absence<\/span>, a branch is subject to the<span style=\"text-decoration: underline;\"> Income of Non-Residents<\/span> for all the income obtained in Spain, the applicable general tax rate being 25%. As a distinctive feature, a branch may fiscally deduct the corresponding general administration and management expenses.<\/td>\n<td width=\"196\"><span style=\"text-decoration: underline;\">The subsidiary is always subject to the tax on Spanish Companies<\/span> whose general tax rate is 25%. Unlike a branch, a subsidiary can deduct the payments made to its foreign parent Company in the form of royalties, interests or commissions.<\/td>\n<\/tr>\n<tr>\n<td width=\"201\"><\/td>\n<td width=\"205\"><\/td>\n<td width=\"196\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p style=\"text-align: justify;\">To be advised on the decision to invest in Spain through a branch or a subsidiary, do not hesitate to contact Mariscal Abogados, your legal advisers in Spain.<\/p>\n<p style=\"text-align: justify;\"><strong>Jos\u00e9 Mar\u00eda Mesa<\/strong><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This article briefly analyses the main differences between setting up a branch or a subsidiary; these differences should be kept in mind when choosing one or the other as a way of investing in Spain.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1064],"tags":[],"class_list":["post-4589","post","type-post","status-publish","format-standard","hentry","category-pubications"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Setting-up a branch or a subsidiary in Spain?<\/title>\n<meta name=\"description\" content=\"Setting up a branch or setting up a subsidiary are the two main legal forms through which foreign investors can set up their activity in Spain.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/www.mariscal-abogados.com\/setting-up-a-branch-vs-subsidiary-in-spain\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Setting-up a branch or a subsidiary in Spain?\" \/>\n<meta property=\"og:description\" content=\"Setting up a branch or setting up a subsidiary are the two main legal forms through which foreign investors can set up their activity in Spain.\" \/>\n<meta property=\"og:url\" content=\"http:\/\/www.mariscal-abogados.com\/setting-up-a-branch-vs-subsidiary-in-spain\/\" \/>\n<meta property=\"og:site_name\" content=\"Eurojuris Espa\u00f1a\" \/>\n<meta property=\"article:published_time\" content=\"2015-09-21T08:00:13+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-04-11T07:16:20+00:00\" \/>\n<meta name=\"author\" content=\"Mariscal &amp; 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