When a non-resident company carries out economic activities in Spain, it is essential to determine whether it operates through a permanent establishment or through occasional operations without a fixed base. According to the law, a permanent establishment involves a physical infrastructure such as offices or branches from which activities are regularly carried out. On the other hand, occasional operations refer to services or activities that do not require a workplace in the country. In this article, we analyze how this difference impacts legal and fiscal obligations. We will then compare the operational modalities in Spain for foreign companies, focusing on the differences between: a non-resident company applying for an NIF in Spain, a subsidiary, and a branch.

 

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Legal and operational nature of the options

It is important to define the legal relationship the company has with other entities and its ability to assume obligations. It is also crucial to understand how the company carries out its activities, the type of operations it conducts, and its administrative structure.

  • Non-resident company applying for an NIF: This option allows foreign companies to operate in Spain without establishing a fixed local structure. Its activity may be occasional or ongoing, but it does not imply the creation of a separate legal entity in Spain. From an operational perspective, these companies typically manage their activities remotely and must comply with corresponding fiscal obligations according to the type of income.
  • Subsidiary: A subsidiary is an independent legal entity established under Spanish law, although its ownership may be fully or partially held by a foreign company. It has full operational autonomy and legal responsibility. This implies greater administrative complexity but also allows for a stronger structure for long-term activities.
  • Branch: A branch is an extension of the parent company that operates in Spain. It lacks its own legal personality, meaning the parent company is directly responsible for the branch’s operations. Operationally, it must register with the Mercantile Registry, and its management is linked to the foreign company. Its presence implies ongoing activities from a physical location.

 

Legal and fiscal responsibility of the options

Who assumes the legal obligations arising from the company’s operations?

  • Non-resident company applying for an NIF: The parent company assumes all legal and fiscal responsibility for activities conducted in Spain. It is subject to the Non-Residents Income Tax (IRNR), among other tax obligations. It is not required to submit the Corporate Tax, unless it operates with a permanent establishment.
  • Subsidiary: The foreign company’s responsibility is limited to the capital contributed to the subsidiary. The subsidiary is autonomously liable to third parties. It is fully taxed in Spain under the Corporate Tax and can benefit from fiscal deductions and specific regimes, such as tax consolidation.
  • Branch: Although the branch is an extension of the parent company, it must comply with Spanish labor, fiscal, and commercial regulations. Debts or penalties of the branch fall directly on the parent company. It is also taxed under the Corporate Tax in Spain, but only on the profits generated within Spanish territory. It is exempt from certain specific obligations of an independent company, such as the property transfer tax on capital contributions.

 

Administrative formalities of the options

The required procedures to operate with each option are also crucial in choosing the most favorable alternative.

  • Non-resident company applying for an NIF: This is a quick process to obtain the NIF through the Tax Agency. It requires appointing a fiscal representative in Spain if the company is not based in the European Union. The figure of the jointly liable representative is also considered.
  • Subsidiary: This process is similar to the creation of any Spanish company, including the notarization of the public deed, registration with the Mercantile Registry, and obtaining the NIF. It requires an initial investment (such as the minimum share capital of €3,000 for an SL).
  • Branch: Registration is more complex. It needs to be registered with the Mercantile Registry and obtain the NIF. The company must provide documentation of the parent company, translated and apostilled.

 

✅​ Do you want to ensure the right choice and comply with all regulations?

The purpose of this comparison is to analyze the legal, fiscal, and operational implications to help businesses determine which modality best fits their needs and business plans in Spain. The choice between obtaining an NIF for a non-resident company in Spain, opening a branch, or creating a subsidiary depends on the operational, fiscal, and strategic needs of the foreign company.

While the NIF is a practical solution for specific activities, a branch or subsidiary may be more suitable for ongoing or larger operations.

If you need specialized advice on choosing the most appropriate modality to operate in Spain, Adlanter is here to assist you. We guide you through the entire process, ensuring your company complies with all legal and fiscal obligations. Our team of experts provides a personalized approach, ensuring that your business adapts efficiently to the country’s labor environment.

📲​ Contact our professionals and discover how we can help you meet your fiscal obligations as a non-resident company with a Tax Identification Number in Spain.

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