+

Different ways of doing business in Spain

Various alternatives are open to the foreign investor once the decision to invest in Spain has been taken (Table 1).

Each of these forms of doing business in Spain offer different advantages that must be balanced against the potential setbacks from a tax and legal standpoint.

Table 1

WAYS OF DOING BUSINESS IN SPAIN

Creation of a Spanish company with its own legal personality Spanish law provides for a variety of vehicles that can be used by foreign companies or individuals for investing in Spain. The most common forms used are the corporation (S.A.) and, principally, the limited liability company (S.L.)
Limited Liability Entrepreneur Pursuit of the activity directly by the individual where certain requirements are met.
Branch or permanent establishment Neither alternative has its own legal personality, meaning that their activity and legal liability will at all times be directly related to the parent company of the foreign investor.
Joint venture Association with other businesses already established in Spain. it allows the parties to share risks and combine resources and expertise. A joint venture can be set up under Spanish law in a number of ways:

  • A Temporary Business Association (“Unión Temporal de Empresas” or UTE).
  • An Economic Interest Grouping (EIG) and a European EIG (EEIG).
  • Under a type of silent partnership arrangement peculiar to Spanish law (“cuenta en participación”) with one or more Spanish entrepreneurs.
  • Participating loans.
  • Joint ventures through Spanish corporations or limited liability companies.
Without setting up a business or entering into an association with existing business or establishing a physical center of operations in Spain The alternatives include:

  • Signing a distribution agreement.
  • Operating through an agent.
  • Operating through commission agents.
  • Franchising.
Acquisitions Acquisition of shares, real estate located in Spain or businesses.
Venture capital Investment in venture capital entities.