Following Brexit, commercial transactions between the EU and UK are now subject to taxation. For the Basque Country, this means (1) goods imported from the UK will be subject to import VAT, while services provided to UK companies may be taxed in Spain; (2) companies have options to set up a branch or subsidiary, with branches having lighter regulations but subsidiaries providing more legal protections. The document outlines documentation, formalities, and timelines for setting up each business structure after Brexit.

1. BREXIT: TAXATION ON
COMMERCIAL
TRANSACTIONS AND
OPTIONS FOR
IMPLEMENTATION IN THE
BASQUE COUNTRY

2. Following the United Kingdom's exit from the European Union
at the end of the transitional period (January 1st, 2021), the
way in which business transactions are carried out between EU
countries and the United Kingdom has changed, which in turn
has led to a change in the taxation of such transactions.
BREXIT: TAXATION ON COMMERCIAL TRANSACTIONS AND OPTIONS FOR IMPLEMENTATION IN THE BASQUE COUNTRY
1. NEW TAX STATUS OF COMMERCIAL OPERATIONS
2. IMPLEMENTATION OPTIONS IN THE BASQUE COUNTRY
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3. 1. NEW TAX STATUS OF COMMERCIAL OPERATIONS
VAT on supplies of goods and services after BREXIT
SUPPLIES OF GOODS
• From January 1st, 2021, the entry of goods into VAT territory from the United Kingdom will be considered as IMPORTS OF
GOODS. Obligation to pay VAT Financial cost.
• To mitigate this impact: analysis of the possibility of opting for the SPECIAL REGIME FOR IMPORT VAT DEFERRALS.
• Companies or entrepreneurs that export or import between the two countries must be identified with an EORI NUMBER.
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BREXIT: TAXATION ON COMMERCIAL TRANSACTIONS AND OPTIONS FOR IMPLEMENTATION IN THE BASQUE COUNTRY

4. 1. NEW TAX STATUS OF COMMERCIAL OPERATIONS
VAT on supplies of goods and services after BREXIT
SERVICES PROVIDED
• The localization rules set forth in Articles 69 and 70 of the Spanish VAT Law shall apply, and in particular the rule of effective
use set forth in Article 70.Two of the Spanish VAT Law.
• Certain services such as advertising, marketing or management fees provided to UK companies may be subject to VAT in
Spain provided they are deemed to have been used or enjoyed in Spain.
IVA
VAT REFUNDS TO ENTREPRENEURS ESTABLISHED IN THE UNITED KINGDOM
• Entrepreneurs established in the United Kingdom and not established in Spain or in the Community who purchase goods
and services in the territory of application of VAT and wish to apply for a refund of input VAT, will no longer be able to
submit their application electronically, but it will be necessary for the applicant to appoint a representative resident in the
territory of application of Spanish VAT.
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BREXIT: TAXATION ON COMMERCIAL TRANSACTIONS AND OPTIONS FOR IMPLEMENTATION IN THE BASQUE COUNTRY

5. 2. OPTIONS FOR SETTING UP A BUSINESS IN THE BASQUE COUNTRY
Branch or Subsidiary?
BRANCH SUBSIDIARY
LEGAL PERSONALITY NO YES
MINIMUM SHARE CAPITAL NO
YES
Limited Partnership: 3.000€
Public Limited Company: 60.000€
REPRESENTATION AND
GOVERNANCE
Parent company's proxy
Partners or shareholders
Management body
RESPONSIBILITY
Limited and assumed by the parent
company
Unlimited to the capital contributed. Does
not affect the parent company
TAXATION
Double Taxation or Non-Resident
Income Tax Convention
Corporate income tax
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BREXIT: TAXATION ON COMMERCIAL TRANSACTIONS AND OPTIONS FOR IMPLEMENTATION IN THE BASQUE COUNTRY

6. 2. OPTIONS FOR SETTING UP A BUSINESS IN THE BASQUE COUNTRY
Start-up of a branch office (between 1-2 months)
Documentation
• Spanish VAT number
• Sworn translation of the parent company's official
documents
• Apostille of the Hague
• Form 036 with the Regional Tax Authorities
• Digital certificate of the company to be able to carry
out procedures with the administration.
Formalities
• Agreement to open a branch office by the
shareholders' meeting of the parent company
• Obtaining the VAT number and appointment of the
representative of the parent company before the tax
authorities.
• Formalization of the opening deed in the presence of a
notary public
• Registration in the Mercantile Registry
• Registration with the Tax Administration
• Social Security registration
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BREXIT: TAXATION ON COMMERCIAL TRANSACTIONS AND OPTIONS FOR IMPLEMENTATION IN THE BASQUE COUNTRY

7. 2. OPTIONS FOR SETTING UP A BUSINESS IN THE BASQUE COUNTRY
Start-up of a SUBSIDIARY (between 1-3 months)
Documentation
• Spanish VAT number
• Members must have a NIE (ID card for non-residents)
• Sworn translation of the parent company's official
documents
• Apostille of the Hague
• Form 036 with the Regional Tax Authorities
• Digital certificate of the company to be able to carry
out procedures with the administration.
Formalities
• Creation of the Company
• Request for certification of the negative denomination
to the Commercial Registry.
• Deposit of the share capital
• Drafting of bylaws
• Drafting of the notarial deed of incorporation of the
company
• Signing of the public deed of incorporation of the
company in the presence of a notary public
• Application for provisional VAT number
• Registration in the Economic Activities Tax
• Presentation of Form 036
• Registration of the articles of incorporation in the
Mercantile Registry.
• Application for the definitive Tax Identification Number
• Social Security registration
• Application for a Digital certificate of the company
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BREXIT: TAXATION ON COMMERCIAL TRANSACTIONS AND OPTIONS FOR IMPLEMENTATION IN THE BASQUE COUNTRY

8. www.ategrupo.com
MARCOS OLAIZOLA
molaizola@ate.es
+34 946 005 441