There are various options available to foreign companies and workers interested in establishing in Madrid, each have different advantages, as well as legal and financial commitments to consider.
Subsidiary offices are not a separate legal entity, their foreign parent is responsible for the operation. The main advantage of this structure is that a minimum capital injection is not required, it is sufficient to have a representative in Spain. In addition the administrative costs, on average, are affordable starting at € 600 which allows businesses to explore the market before making a full commitment.
This legal form enables individual entrepreneurs to operate in Spain. It’s easier and faster than creating a company and it also limits personal responsibility for debt. This is a good option to start an activity when a full company structure is not required for the business operation. Set-up procedures are free however there are costs associated with tax, etc.
The investor establishes a sociedad, a limited form of company, which requires a minimum capital injection and a legal representative who is a legal resident in Spain. The most common types are Sociedad Anónima (limited company, minimum capital injection of € 60,000), Sociedad Limitada (limited partnership requiring € 6,000) and Sociedad Limitada Nueva Empresa (New Company Limited Partnership requiring € 3,000). Administrative costs range from € 550 (sociedad limitada) to € 750 (sociedad anónima).
A joint venture is a simpler process than founding an independent entity and can be created in partnership with an established Spanish company. There are different types which include the Agrupación de Interés Económico (economic interest group, AIE), the Unión Temporal de Empresas (Temporary Business Association) and the participation account. It’s also possible to create a joint company. Each form requires its own procedures, and costs may be similar to creating a subsidiary office.
In this case, the foreign company will reach a distribution and/or representation agreement with a Madrid-based company instead of establishing its own entity.
