This document provides a summary of the key steps and considerations for establishing a business in Spain from China, including: - The most common corporate structures are public and private limited companies, which have minimum capital requirements of €60,000 and €3,000 respectively. - The process to establish a subsidiary involves requesting a company name, drafting statutes, obtaining tax IDs, signing documents before a notary, and registering with commercial and tax authorities. - Spain has a favorable tax regime and double taxation agreements with China and Hong Kong to avoid double taxation. Main taxes are corporate tax of 15-30% and VAT of 21%. - Requirements for a residence permit include proof of funds, health insurance,

1. Practical guide for a
successful establishment in Spain
from China
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2. Index
Major Corporate Structures.
Example of a Process Type.
Regulation regarding Subsidiaries.
Main Taxes: Direct and Indirect.
Double Taxation. Differences between Mainland China and Hong Kong.
Workplace.
Helps to attract investments.
Residence in Spain: cost and requirements.
Other aspects to consider.
Obtaining NIE (Foreigner Identity Number).
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3. Major Corporate Structures
Public Limited Company (PLC): minimum capital of 60.000€, limited
responsibility to the capital contributed. It is the most common form
for large and / or listed companies. Shareholders can be natural or
legal persons, national or international.
Private Limited Company (Ltd.): minimum capital of 3.000€, limited
responsibility. Most commonly chosen form, having lower costs and
greater flexibility. It cannot go public. Can be created by natural or
legal persons, international or national.
There are other Options (Cooperative, JV,…), but do not offer
advantages for foreign investment concerning Limited Liability
Companies or Limited Companies, so it is recommended to go for
these.
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4. Example of a Process Type (I)
a) Request of the Company´s name in the Central Mercantile Register.
b) Prepare the draft of the Statutes which will rule the company.
c) Where appropriate, appoint a representative of investors, which should be
mandated by the power of the Hague Apostille.
d) Obtaining the Spanish Tax Identification Number (NIF) for individual investors,
or to the Trustee if it is a non-resident.
e) Bank Certificate according that Funds are available in account.
f) Document of constitution of society, which must be signed before a Spanish
Notary, by all partners, local and foreign (or agent).
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5. Example of a Process Type (II)
g) Statement to the General Direction of Transactions abroad in Spain.
h) If the investor is a society not a resident, obtaining the Fiscal Identification
Number for the investment company.
i) Procurement of the Fiscal Identification Number (NIF) for the Spanish society
(already constituted) allowing it to operate financially. High tax obligations for
Direct and Indirect Taxes.
j) Self-assessments and presentation to the competent regional administration.
k) Registration to the Commercial Register.
l) Obtaining definite Tax Identification Number for the Spanish society.
m) Legalization of the owners and the company's bylaws. Obtaining the Book of
Acts and the Registration of Members, both certified by the Registry.
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6. Regulation regarding Subsidiaries
They do not have legal personality, are not independent of the matrix.
Therefore, the matrix responds in an unlimited form to its debts and
contingencies.
Its advantages are:
a) Fiscal benefits: deduction of the negative results of the branch by the
matrix.
b) No minimum capital required.
Must appoint a legal representative in Spain.
The steps to follow for its establishment are very similar to those already
explained.
At tax level: identical responsibilities as a subsidiary regarding taxes to pay.
On an annual basis, must be deposited in the Spanish Registry a copy of the
financial statements of the parent company, properly translated and
apostilled.
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7. Taxation (I)
Spain has a favorable tax regime for foreign investment, given the large
number of Double Taxation Agreements signed. Main Tools:
Exemption on capital gains and dividends to foreigners (ETVE regime).
Special regime for holding companies (ETVE regime).
Double taxation treaties with numerous countries, and especially with almost
all of South America. Platform to attack those markets.
Very advantageous treatment for R&D.
In some cases, good tax treatment for individuals (regime moved to
Spain/Beckam Law).
The EU membership unifies the rules for the 27 member states and avoids
double taxation in all partner countries (Directive parent company/subsidiary).
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8. Taxation (II)
There are 3 types of duties: Taxes, Fees and Special Contributions.
Incise on Taxes. These fall into 2 broad categories:
a) Direct Taxes: associated with concrete facts: reside, benefits…
b) Indirect Taxes: associated with consumption.
The main Direct Taxes and its types are:
For the company:
Profit Tax (Corporate Tax). Different tax rates:
a) New entity creation: 15%-20% subject to certain requirements.
b) SMEs: 25%-30%
c) General: 30%, exempt if no Double Taxation Agreement.
Dividend tax for partners: according to DTA (Double Taxation Agreements). If
applicable ETVE regime = 0%
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9. Taxation (III)
For the individual/personal income tax on earned income:
Income tax: if resident. From 24% to 56%, depending on his/hers income and
place of residence. Deductible to what he/she paid in his/her country.
If the person is a resident, and results applicable to the special scheme
(Beckam Law) the 24.75% the first six years up to 600,000€/year.
If non-resident, under the Double Taxation Convention.
Indirect Taxation
The most important is the VAT, which general rate is 21%.
Transaction Tax: 7% to 10% for housing in terms of the CCAA (Autonomous
Region), and a low of 4% for others.
Capital Tax: 0% for capital increases, mergers, ...
Property Tax: between 0.9% and 1.1% of the cadastral value.
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10. Taxation (IV)
There is a Double Taxation Agreement with China since 1992. Following
the agreement, the guys taxes levied are most significant as follows:
10% for dividends
10% for the interests
10% for fees and royalties.
The sale of an investee owned is taxed if the percentage possessed is
equivalent to at least 25% of its capital.
The double taxation treaty allows taxes paid by residents in their home
country are deducted from what they should pay in the country of
residence for income.
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11. Taxation (V)
As for HK, the agreement was signed in 2011. In this case, the types are:
Between 0% (if you own more than 25% of the company) and 10% for
dividends.
5% for interests.
5% for Royalties.
0% for capital gains (except in the case of a real estate company).
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12. Helps to attract investment
GOLDEN VISA (Residence in exchange for investment).
There are numerous programs to help businesses in the interests sought by
the developer of the help: creating jobs, strengthening the R & D,...
Aid can come from the Central Government, regional governments and even
of the same cities.
Belonging to the EU, you can also go to the EU aids.
The main objectives of the aids are:
Generate employment.
Development of R & D and ICT.
Development of a particular geographic region or sector of activity.
Matching with European policies: youth employment, environment,...
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13. Labor issues
The working week is of 40 hours.
The working conditions are regulated by sectorial agreements.
Paid holidays are usually 30 days per completed worked year.
Workers must have a Social Insurance, which typically have an average cost
of 28% of the salary, 23% is paid by the company and 5% by the employee.
The dismissed workers should be compensated, but the amounts and
conditions depend on the reasons for the company to fire.
The directors or expats can have specific contracts to regulate their
responsibilities and rights/duties, denominated Contracts of Top
Management.
A person can become self-employed and develop an independent economic
activity.
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14. How to get a NIE?
1. Initial authorization for nonprofit temporary residence
Description: Authorization a foreigner may request from its country of origin
and which authorizes him/her to reside in Spain without performing any type
of work activity during 1 year.
Requirements:
Not to be a citizen of any EU state.
Not to be found irregularly in Spanish territory.
No criminal record and not be prohibited from entry into Spain and to
accredit it.
Have sufficient financial means to cover living expenses and return and
to accredit it.
To have public or private health insurance and not have any illness that
can affect the health of the residents and to accredit it.
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15. How to get a NIE?
Procedure:
Presentation of relevant documentation from the foreigner to the
Spanish consular office.
Payment of administrative fees.
Resolution time: 3 months from registration of the application.
Delivery visa: Once given the visa, you should move to Spain within three
months.
Once in Spain, you must apply for Foreigner Identity Card in the foreign
office or commissioner of the province where authorization has been
processed.
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16. How to get a NIE?
2. Initial authorization for temporary residence and self-employment
Description: Temporary residence and work to a nonresident alien in Spain for
carrying out a lucrative activity for their own.
Requirements:
Not to have a EU citizenship or to be irregularly found in Spanish territory, or have a
criminal record in Spain, and not to have prohibited the entry into Spanish territory.
Not found within any period of commitment of no return.
Comply with the legal requirements for the opening and performance of the
planned activity.
Have sufficient qualifications and experience to carry out the activity (and to
accredit it).
Have sufficient financial capacity to develop the activity (and to accredit it).
Having made ​the appropriate prior notices, responsible statements , authorizations
or licenses for activities or services dealt with the competent bodies.
Having a facility or project activity to do with an indication of the planned
investment.
Be able to prove the payment of administrative fees.
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17. How to get a NIE?
Procedure:
Document submission by the interested person to the Spanish diplomatic
office or consular.
Deadlines: Resolution in 3months, once resolved, the person will have
one month to apply for the visa in person once granted, it must be
collected within 1 month. After collecting the visa the person must enter
Spanish territory, having 3 months to make its corresponding
membership to the Spanish social security system (as self-employed) and
then have one month to apply for foreigner identity card in the
appropriate commissioner or police station.
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18. Cost of living in Spain
The acquisition of visa requires acquiring one / several real estate properties
with a minimum value (excluding taxes) of 500,000€ and 2,000,000€ if the
purchased is one (or more) companies or public debt.
An apartment for a family in a central area of ​Barcelona or Madrid can be
rented for an amount close to 1,200€/monthly.
A good family health insurance can be achieved for 150€/month.
A family of 4 people may have some feeding monthly costs between 600€
and 1,000€.
The renting of a car can cost between 300€ (Skoda) and 700€ per month
(Audi).
A private school can cost between 250€ and 750€ per month, per person.
The monthly costs of a housing can be between 300€ and 600€.
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19. Obtaining a NIE
The NIE should be requested from the Police or consular offices
located in the respective country of residence of the applicant.
The required documents are:
Official form, completed and signed.
Original and copy of passport or valid ID.
Argument of the reasons justifying the request.
If the requester is an attorney, proof of that empowerment.
All those documents written in an unofficial language from Spain,
must be accordingly translated and annotated, for their understanding
and demonstration of truth.
When all filled in, the decision should take place within 2 months.
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20. China Desk
chinadesk@agmabogados.com
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