The Ultimate Guide to Establishing and Operating a Subsidiary in Spain for International Companies

1. Introduction

Spain has established itself as an attractive destination for international companies looking to expand their presence in Europe. Its strategic location, solid economic environment and tax advantages make the country a key gateway to the European market.

However, opening and managing a subsidiary in Spain goes far beyond a simple administrative procedure: it involves adapting to a demanding tax framework, complying with strict accounting obligations, and effectively managing the local labor landscape.

This guide has been designed as an essential resource for foreign companies wishing to establish themselves in Spain with confidence. Throughout the content, you will find links to other key articles such as:

You will also discover how Euroaccounts has helped multinationals such as Essence Group establish their operations in Spain, maintaining control, compliance, and efficiency without overextending their structure.

Are you considering opening a subsidiary in Spain? This guide is the starting point to do so with confidence, clear information, and the support of a partner with international experience.

2. Why establish a subsidiary in Spain?

Spain offers an attractive business environment for international companies thanks to its geographical position, EU membership, and a legal framework that favors foreign investment. Beyond the headlines, these are the most relevant reasons why many multinationals choose our country as an operational base:

• Direct access to the European market: as part of the Schengen Area, setting up a subsidiary in Spain allows unrestricted commercial operation throughout the EU.
• Strategic tax benefits: there are deductions for R&D, special regimes for corporate groups, and double taxation agreements with over 90 countries.
• Competitive labor costs: compared to neighboring countries, Spain offers qualified talent at a more efficient cost.
• Advanced infrastructure: transportation, telecommunications, and logistics hubs connected with Europe, America, and Africa.
• Regional support and incentives: different autonomous communities offer grants and administrative facilities to attract foreign investment.

In addition, Spain has specialized professionals who can help you meet all accounting, tax, and labor requirements from day one. If you’re interested in exploring this process, also check out our complementary guide: Step-by-step guide to opening a company in Spain as a foreigner.

Are you considering Spain as a base for your European expansion?

3. Legal requirements and steps to establish a subsidiary in Spain

Establishing a subsidiary in Spain requires following a series of legal and administrative steps which, when properly executed, allow secure and smooth operations. Below is the usual process and key requirements:

Most common legal structures

• Subsidiary (Limited or Public Company): independent entity with its own legal personality, controlled by the parent company.
• Branch: direct extension of the foreign company, without its own legal personality.
• Representative office: does not carry out direct economic activity; used for market research or preparatory operations.

Key steps to establish a subsidiary

1. Incorporation agreement by the parent company.
2. Obtaining the Spanish NIF for directors and partners.
3. Drafting of the corporate bylaws.
4. Obtaining the negative name certificate from the Mercantile Registry.
5. Opening a bank account and depositing share capital.
6. Signing the deed of incorporation before a notary.
7. Registration in the Mercantile Registry.
8. Final tax registration with the Tax Agency.

Note: if the parent company is outside the EU, at least one of the partners or directors must legally reside in Spain.

Common required documentation

• Passports and powers of attorney of partners/directors.
• Parent company documents translated by a sworn translator.
• Bank certificate of capital deposit.
• Form 036 for tax registration.

This whole process can take between 2 and 6 weeks, depending on the origin of the parent company and the volume of documents. Having a local partner like Euroaccounts can shorten timelines and prevent common mistakes.

Also check out our article on What types of companies can you set up in Spain? to choose the best legal structure for your project.

4. Taxation for international companies in Spain

Spain has a complex tax system but also offers numerous optimization opportunities for well-advised international companies. Below we explain the most relevant taxes and key aspects of local tax compliance:

Main taxes affecting subsidiaries

• Corporate Income Tax (IS): general rate of 25%. There are bonuses for R&D, deductions for job creation, and benefits for consolidated groups.
• VAT (Value Added Tax): general rate of 21%. Monthly or quarterly filings are mandatory, as well as SII reporting if a certain threshold is exceeded.
• Withholdings and Personal Income Tax (IRPF): applicable to employees and professionals. Monthly management is required.
• INTRASTAT and intra-community operations: mandatory reporting if established thresholds are exceeded.

Key aspects to consider

• Transfer pricing: if your subsidiary operates with the parent company or other related parties, you must justify your pricing with proper technical documentation.
• Double taxation: Spain has treaties with over 90 countries to avoid it. Proper planning helps avoid paying taxes twice on the same income.
• Non-resident taxation: if the parent company or partners are not tax residents in Spain, specific withholdings or adjustments may apply.

At Euroaccounts, our team specializes in international taxation and supports clients in tax planning and compliance from the beginning of their activity in Spain. We also handle the full tax compliance each period: tax filings, electronic notifications, inspections, etc.

5. Accounting obligations: adapting accounting to Spanish regulations

One of the keys to operating correctly in Spain is to adapt your subsidiary’s accounting to the requirements of the Spanish General Accounting Plan (PGC). This not only ensures legal compliance but also facilitates smooth reporting to the parent company and strategic decision-making.

Essential accounting aspects

• Application of the Spanish PGC: adapt your accounting to local commercial and tax regulations.
• Preparation of Annual Accounts: Balance Sheet, Profit and Loss Account, Notes, Statement of Changes in Equity, and Cash Flow Statement.
• Submission of official books: Journal and Ledger, in electronic format to the Mercantile Registry.
• Monthly closing supervision: bank reconciliations, provisions, amortizations, accruals, etc.
• Recurring financial reports: reporting adapted to IFRS, US GAAP or other group standards.

Financial reporting adapted to the parent company

At Euroaccounts, we specialize in converting Spanish accounting information into formats required by international parent companies. Our services include:

• Preparation of monthly multi-format reporting.
• Support with annual budgets and Rolling Forecasts.
• Generation of Cash Flow, KPIs, dashboards.
• Financial consolidation across group subsidiaries.

We also work directly with the most used ERPs like SAP, NAV, AX or X3, integrating accounting into the parent company’s environment for a smoother transition.

Want to see how we apply it in real cases? Read how we structured the accounting area of Essence Group from scratch at their Spanish subsidiary, including analytical accounting by business line and transfer pricing.

6. Payroll management and labor obligations for subsidiaries

Proper labor and payroll management is essential for the successful operation of a subsidiary in Spain. Local regulations may differ significantly from those in other countries, especially regarding hiring, contributions, and employee rights.

Basic labor obligations for foreign companies

• Registering the company with Social Security and obtaining a contribution account code.
• Drafting and registering employment contracts with SEPE.
• Monthly payroll management: salary calculation, withholdings, bonuses, etc.
• Submission of social security reports (TC1/TC2) and contributions via the RED system.
• Management of sick leaves, absences, accidents, and maternity leaves.

International mobility and expatriates

• Processing of residence and work permits.
• Optimization of executive contracts and flexible compensation.
• Application of tax benefits for foreign assignments.

Ongoing labor law advisory

At Euroaccounts, we offer a full service that includes:

• Support with dismissals and severance processes, including SMAC assistance.
• Updating applicable collective agreements.
• Labor Due Diligence prior to acquisitions or integrations.
• Consulting on employee benefits: health insurance, per diems, stock options, etc.

Our team works in Spanish, English, and French, and is used to coordinating directly with HR departments in the parent company to ensure a smooth integration.

Want to outsource your payroll management and avoid legal mistakes? Check out our Payroll Management Service.

7. External financial management and strategic consulting

Many subsidiaries in Spain do not need a full in-house finance department but do require expert, reliable, and strategic financial management. In such cases, outsourcing financial direction is an efficient and cost-effective solution.

What does having an external CFO imply?

• Comprehensive accounting and tax supervision, aligned with local and international regulations.
• Coordination with the parent company for data consolidation, reporting, and compliance with financial KPIs.
• Profitability analysis, cash flow, forecasts, and annual budgets.
• Attendance at board and key meetings with reports tailored to the business reality.
• Support for strategic decisions, investments, financial structure, and negotiations with banks or suppliers.

Advantages over an in-house team

• Reduction of fixed costs through a flexible structure.
• Access to professionals with multinational experience.
• Process improvement through the implementation of financial best practices.
• Multilingual availability for smooth communication with other countries.

At Euroaccounts, we offer outsourced financial management services tailored to each subsidiary’s size and complexity. Our goal is to help you grow without overextending.

8. Regulatory compliance and risk management

One of the biggest challenges international companies face in Spain is ensuring regulatory compliance in tax, labor, accounting, and legal matters. Mistakes in this area not only lead to fines but also reputational risks or operational blockages.

Tax compliance

• Periodic supervision of tax obligations (VAT, Corporate Tax, Personal Income Tax, etc.).
• Management of the DEHú (official electronic mailbox) to avoid unattended notifications.
• Assistance with tax inspections and review procedures.
• Transfer pricing documentation in accordance with Spanish and international regulations.

Labor compliance

• Internal audits to detect labor or contractual risks.
• Verification of compliance with collective agreements, contributions, contracts, and terminations.
• Labor due diligence in acquisition or integration processes.

Legal and corporate support

• Drafting and custody of board and shareholder meeting minutes.
• Updating official books and submission to the Mercantile Registry.
• Bylaw amendments, director or address changes.

Benefits of an active compliance strategy

• Avoids fines and blockages from the Tax Agency or Social Security.
• Facilitates audits, due diligence, or public tenders.
• Strengthens the company’s image before clients, suppliers, and investors.

At Euroaccounts, we work with a methodology based on prevention, continuous control, and regulatory updates. This minimizes risks for your subsidiary.

9. Internationalization and coordination with the parent company

One of the keys to a successful subsidiary in Spain is its ability to integrate smoothly with the group’s international structure. This means coordinating information flows, accounting criteria, tax policies, and strategic decisions accurately and efficiently.

Effective coordination between subsidiary and parent company

• Multi-format financial reporting: IFRS, US GAAP, local GAAP.
• Synchronized tax and accounting calendars between countries.
• Direct communication in English, French, or Spanish, with teams experienced in multinational environments.
• Application of transfer pricing with consistent and auditable criteria.
• Centralization of administrative processes without losing local control.

Support for expansion within the EU

Spain is a gateway to the rest of the continent. That’s why at Euroaccounts, we don’t just help open the subsidiary, but also:

• Advise on the opening of new subsidiaries in countries such as Portugal, France, Germany, or Ireland.
• Coordinate with our IGAL partners, an international network with presence in over 45 countries.
• Facilitate multi-jurisdictional tax and labor compliance.

Do you need a local partner with an international vision? Discover how we can help you coordinate your European expansion.

10. FAQs for international companies opening in Spain

Here are some of the most common questions we receive from foreign companies interested in setting up a subsidiary in Spain.

• How long does it take to set up a company in Spain?
  The process can take between 2 and 6 weeks, depending on whether the partners are in the EU and if the documents are ready and translated.
• What taxes does a subsidiary in Spain pay?
  Mainly Corporate Income Tax (25%), VAT (21%), and withholdings for Personal Income Tax. There are also local taxes and other reporting obligations.
• Is it mandatory to have employees on payroll?
  Not necessarily. It is possible to operate without direct employees if functions such as administration, management or accounting are outsourced.
• What documents do I need to open the subsidiary?
  Parent company agreement, passports or NIEs of directors, bylaws, bank certificate of capital deposit, and tax registration forms. Some documents must be apostilled and translated.
• What if the parent company is outside the EU?
  At least one director will be required to legally reside in Spain with a valid work permit.
• What is the approximate cost of outsourcing accounting and payroll?
  It depends on the volume of operations, number of employees, and type of reporting required. Request a quote with no obligation here.
• Can Euroaccounts coordinate with our advisors in other countries?
  Yes. We are part of IGAL, an international network of advisors, and we regularly work in multi-jurisdictional environments with listed companies and multinational groups.

Do you have other specific questions? Our team is ready to help you with clear answers tailored to your particular case.

11. Next steps

Setting up and operating a subsidiary in Spain can be a smooth, safe, and cost-effective process with the right support. Throughout this guide, we’ve covered the key legal, tax, accounting, and labor aspects you need to consider as an international company.

Spain not only offers strategic advantages for European expansion, but also a solid environment to consolidate your global operations. However, mistakes in key phases like incorporation, financial reporting, or compliance can be costly.

At Euroaccounts, we’ve been helping companies from all over the world for over 25 years to establish themselves in Spain, act with confidence, and grow without complications. Our multilingual teams work with listed groups, international SMEs, and globally ambitious scaleups.

Ready to take the next step?

Schedule a meeting with our specialists and discover how we can help you establish and consolidate your subsidiary in Spain.