How do you set up a subsidiary when you want to establish in Spain? This article answers your questions and invites you to see the steps to follow to set up a subsidiary.
A tax advantage with the “mother-daughter” system
When you are a successful and growing company, the desire to go international is not only a desire, it is also and above all a necessity. If the company wants to become sustainable and gain influence and scale, it is obliged to expand abroad. That is why this article will guide you in the way to proceed to create a subsidiary when you want to establish yourself in Spain. The principle of no double taxation.
The regime of “mother daughter” company allows to reduce the tax bill of the activity. Since the two entities are legally separate, the parent company is only liable for the Spanish subsidiary to the extent of the capital subscribed by the latter.
Thanks to the tax agreement between France and Spain, your parent company will not be subject to double taxation. Indeed, the latter will receive dividends from your Spanish subsidiary, so there will be double taxation. As it has its own tax personality, it is subject to taxation in the country where it is located. Then, the profits are transferred to the parent company in France and are therefore taxed a second time.
Thus, for one and the same activity, the same profits are taxed twice. To avoid this, the “mother-daughter” tax regime was created to eliminate double taxation.
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How to set up a subsidiary in Spain?
Parent company agreement
In order to create a subsidiary in Spain, the parent company, recognized by the legislation of the country of origin, must adopt the corresponding agreement for the creation of this subsidiary and request from the Spanish Consulate the certificate indicating that the parent company is constituted in accordance with the laws of its country and that it carries out activity in a legal way.
The agreement must be translated into Spanish by a sworn translator in order to be presented, together with the public deed of incorporation and the consular certificate, at the time of registration in the Commercial Registry.
Subsidiary name request
The application must be made to the central trade register by requesting the negative certificate of the name of the subsidiary.
Constitution in any credit institution of the bank deposit
Depending on the status of the company, the amount of the deposit will be different. For a limited liability company, the minimum amount is €3,006, while for a corporation, it is 25% of the capital.
Signature of the public deed of incorporation
The articles of association of the company will be drafted mentioning its status as a subsidiary of a parent company, the capital subscribed by the parent company, the administrative body, etc. The articles of association will be attached to the public deed of incorporation which will be formalized before the notary.
Obtaining a provisional Tax Identification Number (TIN)
Its application will allow to open the liquidation of the registration rights. It is necessary to present the specific document to the Delegation of the National Tax Agency.
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Liquidation of registration fees
The liquidation will be presented to the General Directorate of Taxes of the region where the subsidiary’s registered office is located. In order to carry out the liquidation, a copy of the incorporation deed, a photocopy of the NIF, and the corresponding completed official form must be presented. The amount of this tax is 1% of the share capital.
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