The liaison office in Spain, also known as the representative office, is a legal structure designed to represent the mother company abroad in Spain, but which does not have a separate legal entity. It is not used for business purposes and has the role of establishing the presence of the main company in Spain. This is a way to test the market and to be closer to potential business partners and clients in the country.
Our company registration agents in Spain can help you open a liaison office and make all the necessary arrangements and formalities not only to set up this type of office, but also to open a company. Our consultants for company formation in Spain can provide an in-depth presentation on the documents that have to be prepared in order to register a Spanish liaison office.
Table of Contents
Establishing a liaison office
The liaison office cannot engage in any business or economic activities. It can only perform activities known as liaison activities or communication activities. The office is a communication channel between the Spanish clients/partners and the head office abroad. International companies can use this representative office to facilitate and maintain their connections in Spain.
More details on the representative office in Spain are available in the next video:
The liaison office can engage in the following activities: promote the mother company, promote import/export to and from Spain, if the company is engaged in trade activities, promote technical or financial collaborations or maintain the connection between the mother company and Spanish companies.
The mother company bears full liability for the representative office. Because it cannot engage in economic activities, the double tax treaties between Spain and other countries are not relevant for the liaison office, but they are important if the foreign company decides to subsequently open a branch in Spain.
What are the characteristics of a Spanish liaison office?
The basic aspect regarding a Spanish liaison office is that it can’t start business activities and thus, it can’t be used for opening a company in Spain. Since it is not set up as a legal entity, being basically a sub-division of the parent company abroad, the representative office in Spain is not required to comply with the regulations prescribed by the commercial law. The following are also available for a liaison office:
- it does not need a formal managing body established in Spain;
- the management responsibilities of a Spanish liaison office fall under the supervision of the person who was appointed as a representative;
- in the case in which the liaison office has any debts during its activity in Spain, the parent company abroad will be fully responsible for their payment;
- although it is not bound by the provisions of the Spanish commercial law, the liaison office must register for tax and employment and social security purposes;
- this is done as the office will be represented by at least one employee, who needs to be registered for employment matters in this country.
What are the registration steps for Spanish liaison offices?
As a general rule, the procedure of company formation in Spain involves the registration with the Mercantile Registry, this being one of the several institutions where new businesses have to register. However, in the case of a Spanish representative office, this step is not required.
The establishment of a liaison office in Spain is done through a public deed, that has to be signed in front of a Spanish public notary. The liaison office may also be set up in the presence of a foreign notary and legalized by the Hague Apostille system or another legalization method that is recognized in Spain; our team of specialists in company registration in Spain can offer more information on the types of documents that can be used for the establishment of a representative office.
What are the advantages of a liaison office in Spain?
As we presented above, the liaison office in Spain can be used as means of testing the local market, but also for the purpose of establishing a better communication between the Spanish clients, partners and others, and the parent company abroad.
However, the liaison office can provide other advantages and it can be used by those businesses that want to have a value added tax (VAT) number in Spain or local employees. This type of office can also be selected for businesses that want to have a warehouse in this country, but which can only be used for distribution purposes.
What are the employment requirements in Spain?
As specified above, the liaison office in Spain needs to register for employment and social security, since it will hire employees in this country. This is available for any type of entity operating in Spain that hires local or foreign workforce which develops its activity on the Spanish territory.
Thus, the liaison office is legally required to register with the Spanish Social Security General Treasury prior to the commencement of the local activities. The representative of a liaison office needs to register with the institution by submitting specific forms and by notifying the institution on the number of employees the entity has. The notification can be sent in an electronic format.
Further on, any employer in Spain is legally required to allow labor inspectors within the premises of the office, to verify the conditions of the respective workplace. After these formalities are completed, the liaison office must also provide a notification on the commencement of work activities. This has to be done in a period of maximum 30 days since the day in which the liaison office became officially operational.
According to the Spanish employment law, any employer in Spain must also guarantee the safety and health of their employees during their work activities. Thus, any party registering for social security purposes must also include an occupational risk prevention plan when applying with the Spanish institution.
This is done depending on the nature of the work activities, but in all of the cases, Spanish employers must show an evidence on the fact that various measures were taken in order to protect the employees in certain emergency cases. It is necessary to know that employers who are not able to provide the minimum legal requirements for the protection of their employees can face various types of penalties, imposed by the local institutions.
Specific services in Spain
The set-up process for a liaison office is simple because of the limited and non-economic activities of this office. Our company registration agents in Spain can help you handle the formalities and get your representative office running as soon as possible. Themother companywill need to duly sign a public deed and notarize it in order to record the opening of the liaison office.
The distribution of funds from the mother company to the representative office will need to be declared and the liaison office will also need to have a designated individual to act as the representative of the company. For more information about investing and how to open a company in Spain you can contact us.