Spanish Subsidiary or Branch: Understanding the Difference
A Spanish subsidiary is a separate company with its own legal personality. A branch is a registered establishment of a foreign company rather than a separate legal entity. The distinction affects the allocation of liabilities, governance, accounting and the way the overseas company operates in Spain.
- Subsidiary: a separate Spanish entity, usually incorporated as an S.L., with its own directors and corporate filings.
- Branch: the foreign company operates through a Spanish establishment; the parent remains the legal entity behind the branch.
- Decision factors: commercial risk, expected operations, tax treatment, financing, staffing and reporting obligations.
Tax treatment and permanent-establishment questions require an assessment of the facts and relevant treaties; the legal form alone does not settle every tax question.
