Spanish law for businesses

If you are considering setting up a business or establishing a branch of your existing UK company in Spain, or if your company has trading links with Spain, our team can advise you on the legal aspects.

Our service offer includes guidance on commercial status and tax regimes, purchasing commercial property and litigation.

If you are considering setting up a business or establishing a branch of your existing UK company in Spain, or if your company has trading links with Spain, our team can advise you on the legal aspects.

If you are a business owner seeking to establish a foothold in the UK or Spanish market, our International team can help you deal with any legal issues as they arise and plan ahead.

The advantage of instructing a lawyer who has expertise in both UK law and Spanish law cannot be under-estimated. Our team comprises bilingual and dual-qualified lawyers based in our UK offices who can advise you on how the laws relate to each other and their implications.

Commercial services for international clients 

Acting regularly for UK based businesses in France, Spain, Italy and Germany, as well as for European and worldwide businesses and families dealing with unfamiliar situations in the UK, we have a comprehensive understanding of international legal issues.

Our dual qualified French, Spanish and Italian lawyers in the UK and award-winning European lawyers based in our associated offices in Paris, Milan, Munich and Regensburg are ready to help with a wide range of legal issues. Our international team are bilingual and often trilingual, and so we can talk to you in your own language.

Through a strategic partnership going back over 20 years, Buckles CastaldiPartners delivers seamless legal services direct to you from across five countries and, in collaboration with our wider network of trusted lawyers, notaries, accountants, tax advisers and property professionals, we can assist throughout the rest of Europe and beyond.

The rise of the global economy and international trade is changing the face of business. Increasingly, firms across various sectors are looking to explore new markets beyond the country in which they have been established. Whether you are an overseas business with ambitions to expand into the UK, or a UK business wishing to expand into France, Italy, Spain or Germany, we are able to help by assembling a professional team of lawyers, accountants, bankers, tax and immigration professionals to deliver your project.

If you are an international company looking to establish or expand your business in the UK through a subsidiary or acquisition, then it’s important to be fully aware of the legal requirements involved, commercial expectations and the practical implications involved. Alternatively, you may be considering doing business with a UK-based company, and need guidance with UK legal or regulatory issues, or contract negotiations with your UK agent or distributor. The same issues affect UK business seeking to establish a trading presence overseas. In these situations, we can deliver solutions.

You may be an established and experienced business trading internationally for many years, in need of specialist advice for the first time. You may be involved in an international dispute. You may have one-off employment issues or need to acquire or dispose of property. We can help.

Our experienced specialist commercial and international teams can provide all the advice and practical solutions you will need to succeed in your venture. We have particular experience in international retail, construction and manufacturing.

We can also provide invaluable advice on preparing for Brexit. Whether you need to gain an understanding of how it will affect your recruitment policy or ability to trade across borders, or you’re concerned about the impact on assets situated within the EU, we can help. To sign up to follow our regular Brexit updates, please click through to our dedicated LinkedIn showcase page from the icon on the left or here.

  • Commercial law – Our experienced team advises on commercial agreements, trading arrangements, shareholder agreements, franchising, distributorship and agency contracts. We continually act for European companies across a range of sectors in establishing a business in the UK, either through acquisition of an existing company or as a new start-up.
  • Corporate law – We can advise on the appropriate corporate structure, company formations, restructuring, and cross border restructuring, as well as assisting with the acquisition or disposal of businesses simultaneously in multiple jurisdictions, with an almost unique capability as a result of our ability to assemble a multi-lingual team of dual qualified lawyers acting on your behalf across multiple countries, with a single point of control.
  • Employment – Although the UK currently operates under the umbrella of EU labour regulations, there are a number of significant differences between employment laws in the UK and those implemented across Europe. Our Employment team is ready to explain these differences and help ensure that your business complies with its legal obligations. We offer a single point of advice for employee issues across multiple countries, harmonising contractual arrangements for mobile workers and dealing with employee terminations and disputes involving employees and confidential information. If you are setting up a subsidiary in the UK, we can assist in drafting the necessary contractual documents and staff handbook that are legally required. Equally, if you are reorganising or restructuring an existing subsidiary, we can help with issues such as redundancy procedure and consultation obligations. BUCKLESprotect is a tailored package designed for businesses to provide you with peace of mind and all the employment law support you need for UK operations.
  • Dispute Resolution and litigation – We can represent your interests in dispute situations, including domestic and international arbitration, mediation, adjudication and other formal and informal processes, with the ability to host and undertake mediations in English, French, Spanish, Italian and Russian at our London, Paris or Milan offices.
  • Real estate – We offer advice on acquiring, disposing or financing property assets including planning regulations.
  • Intellectual property – Our specialists can assist with UK and European issues relating to domestic and international IPR as well as licencing and infringement.
  • Immigration – We offer advice and assistance for professionals seeking to relocate, and employee migration issues.

Spanish commercial taxes

A corporate entity is the main vehicle for structuring an investment in Spain. Limited liability companies and joint stock companies have their own legal and tax status. Taxation and the applicable regime are determined by the existence of a tax residence in Spain.

For tax residents, either as individuals or business entities, worldwide income is taken into account whilst, for non-residents, taxation is determined by income earned, operations performed or assets owned and disposed of in Spain alone.

Business income tax rates are more favourable for new businesses in Spain than for established businesses. Three rates of VAT are applicable, depending on the product, with staple goods charged at the lowest rate. Transfer tax is also applicable to property, movable goods, and pensions, loans and deposits, each at their own rate which may be subject to regional variation.

Stamp duty is subject to a general rate which, again, may have regional variations and an increased rate may apply to some VAT chargeable operations.

Capital tax is also charged at a general rate and is mainly applicable to company liquidation or capital reduction operations. Incorporation, capital increase and other corporate restructuring operations, such as mergers and acquisitions, are not taxable.

Taxation on dividends and gains realised in Spain by a non-resident depends on whether a double taxation treaty exists between Spain and the country of residence of the transferor or shareholder. Spanish law provides exemption, at source, for income gained through the distribution of dividends and the payment of interest and royalties, if the relevant requirements are met.

A number of tax incentives and schemes exist to encourage inward investment into Spain. The expatriates tax regime permits workers who take up Spanish residency under an employment contract to choose to be taxed under the rules applicable to non-residents for a period of five years. The advantage of this option is that only Spanish source income is taxed as opposed to worldwide income, and slightly lower tax rates on ordinary and investment income.

A special tax regime exists for Spanish holding companies which is particularly attractive to foreign investors. This exempts income obtained from foreign shares, dividends and capital gains from tax, subject to conditions.

Under the ‘carry forward losses’ regime, losses registered in previous tax years can be used to compensate taxable bases of future periods with no time limit. This is confined to 60% taxable income prior to compensation, with a minimum amount of 1 million Euros and eligibility subject to conditions.

The ‘patent box’ incentive provides a reduction of 60% on net income deriving from the grant of use and transfer of intangibles, subject to eligibility.

The Corporate Income Tax Law allows an advantageous regime for listed entities whose business is the acquisition and development of real estate assets for rental purposes. The main advantage is that the entity is taxed at 0% and tax on its profits is levied at the shareholders’ level on the effective distribution of dividends, providing that a minimum yearly distribution is made.

Newly created companies can apply for a reduced tax rate of 15% for the first year in which they obtain taxable profits and the following year, subject to conditions.

Exemption from double taxation on dividends and capital gains can be granted if a parent company holds at least 5% equity in the subsidiary company for at least one year and the subsidiary company was subject to a minimum tax rate of 10%.

Purchasing commercial property in Spain

Depending on the type of investment being undertaken, different structures may be used but generally it is made through a permanent establishment or a Spanish company. Special real estate investment methods can be used, including regimes providing corporate income tax benefits and beneficial tax treatment of dividend distributions, entities providing residential lettings, and funds associated with SAREB – the government-owned company that holds the shares of nationalised banks.

Generally, there are no restrictions on foreign ownership of real estate whether by an individual or company. However, the buyer must fill out a Declaration to the Foreign Investment Register form, which expires after six months, before buying the property if the purchase fund comes from a tax haven.

The buyer must provide bank account details for the source of their funds and obtain an identity card if entering into a transaction with economic or financial implications. Foreign investors will also require an ID card.

Other than money laundering regulations, no special restrictions or limitations apply to foreign mortgage guarantees and loans.

The Land Register provides evidence of title and legal certainty to all parties involved in a transaction. A right or title recorded in the registry prevails over any other. The transfer of real estate or the grant of rights over property should be executed by public deed in front of a Notary before being registered with the Land Registry.

The Notary checks that the rights against the land will be constituted, amended or extinguished in the public deed in accordance with legal requirements. The tax authorities then review the public deed to check that all relevant takes have been paid. The public deed recording the transaction is then sent to the Land Register and is reflected in the index card for the relevant property.

A registered property can subsequently be divided into several separately registered properties. The division needs to be registered by public deed.

The Land Registry registers or annotates contracts and legal or administrative resolutions that affect a property and other real estate rights. It also registers legal decisions that may affect the capacity of the owner and notes changes of use, enjoyment and other rights that affect a property.

The register contains details of the owner, surface area of the property, and a description of the estate, including soil type, and adjoining properties.

Access to information contained in the register must be accredited by the person requesting it and they must show an ownership (legal, financial or personal) interest in obtaining this information.

The main categories of ownership are full property ownership (similar to freehold in the UK), and partial rights of ownership.  An example of the latter is ‘usufruct’, where the owner of the title owns the property but its benefit and use are assigned to a third party.

Spanish law distinguishes between categories of ownership and rights of guarantee that concern property, such as pledges and mortgages. There are an unlimited number of different rights that can be created over real estate but not all are entered onto the register.