Open a Foundation in Spain

Foreign investors who are seeking to open a foundation in Spain are advised to know the legislation applicable in this field. According to the Spanish legislation, a foundation can be set up for general purposes, under the Art. 34 of the Constitution. If you want to open a foundation, you may request for assistance from our company formation agents in Spain, who can provide you with information related to legal and fiscal obligations that must be met for this type of legal entity.

Quick Facts
How is a foundation known in Spain?	Non-profit organization, charity
Who can open a foundation in Spain?	Natural persons and legal entities in Spain
Registration	With the Registry of Foundations based in Madrid
Legislation	– Foundation Act 50/2002, – Article 26.1.26 of the Statute of Autonomy, – Royal Decree 776 / 1998 etc.
Purposes of an NGO in Spain	– philanthropy, – social projects, – public benefits, – donations, etc.
Documents for opening a foundation in Spain	The founding documents which can be a will or a notary deed
Notarization of documents	Required
Capital requirement	EUR 30,000
Can a foundation have assets? (YES/NO)	YES
Address required for a foundation in Spain (YES/NO)	YES
The management board of a foundation in Spain	Founding members who can also be directors, the president of the foundation, etc.
Content of the notary deed of a foundation in Spain	– details about the objectives of the foundation, – the rights of founding members, – instructions, – advertising, etc.
Tax ID for a foundation in Spain	Required
Is the annual financial report required when owning an NGO in Spain? (YES/NO)	YES
Assistance in opening a charity in Spain	Provided by our Spanish agents. We offer assistance in cities like Madrid, Malaga, Barcelona, Sevilla, Bilbao for foreigners interested in opening foundations in Spain.

What is the legislation on Spanish foundations? 

One of the main rules of law available for Spanish foundations is the Constitution of Spain. However, other regulations are also applicable. For example, the latest rule of law specifically addressed to Spanish foundations is the Foundation Act 50/2002, which replaced the previous legislation on the matter, the Foundation Act 30/1994. 

Those who want to open a company in Spain operating as a foundation must know that there are specific rules of law that are created by the regional authorities operating in this country. Thus, additional regulations on foundations can be found in regions such as Navarra, Galicia, or Cataluña. 

Regardless of where the Spanish foundation is incorporated, the central government of Spain has full authority in creating regulations concerning the taxation of this type of structure. Upon request, our team of consultants in company registration in Spain can provide an extensive presentation on the taxation system available for a Spanish foundation.  

If you want to set up a foundation here, the Spanish legislation requires that at least 70% of the income obtained throughout the year by the foundation has to be used for the purpose stated in the statutory documents. When opening a foundation in Spain, a businessman is required to invest EUR 30,000. The foundation can establish economic activities related to the field of interest for which the entity was set up.

Foundations in Spain can be opened by individuals or by companies and, according to Article 10 of the Foundation Act, the founding document must contain the name and the address of the founder, as well as the purpose of the foundation and the board members.

The main purposes of a foundation in Spain 

Foundations are defined under the Act 50/2002 as non-profit organizations set up to serve a “general interest purpose”. The Act also covers the legislation under which foreign foundations can function in Spain, such as:

1. The investors must prove that the foundations are incorporated under the law of the country of origin.
2. Foreign foundations fall under the supervision of the local authorities, by respecting the same legal procedures applicable to Spanish foundations.
3. The assets of the foundation will be allocated in such a way that they will serve the purpose for which the entity has been incorporated. 

The following video offers a short presentation on the Spanish foundation:

According to the Spanish legislation, the general purposes for which a foundation can function are related to any public benefits, such as:

• social issues,
• education,
• culture,
• sports,
• healthcare,
• cooperation for development,
• environment, scientific work,
• volunteer work.

Our team of specialists in company formation in Spain can provide more information on the purposes of a Spanish foundation.

An important obligation regarding charities in Spain refers to the declaration of donations received. An accounting book will be kept, and donations will be registered at the Mercantile Registry in Spain. You can choose our accounting services to ensure that you are in compliance with this requirement.

How can one incorporate a Spanish foundation? 

There are specific legal procedures that must be followed when starting the company formation in Spain for a local foundation. Since the entity is not incorporated for commercial purposes, its registration requirements differ from those available in the case of a commercial entity.

A foundation in Spain can be incorporated by natural and legal persons, private or public. Natural persons who open a foundation can freely dispose of the assets and rights while private legal entities require the express consent of their management board to be able to dispose of their assets.

A Spanish foundation can be set up via two types of acts:

1. The “inter vivos”: drawn up as a public deed and includes mandatory information about the foundation;
2. The “mortis cause”: carried out by testamentary means, with the fulfilment of particular requirements. In this situation, the testator has the possibility to create the foundation and dispose of his assets. At the same time, a public deed is used by a testamentary executor who oversees the wishes of the testator. In the absence of a public deed, the execution is carried out by the Protectorate, subject to judicial authorization.

A public deed or deed of execution for a foundation in Spain includes the following information:

• The full name of the founder(s), their nationality, address, and tax identification number;
• The intention to set up a foundation in Spain;
• The nature and value of the contribution to the foundation;
• The Bylaws of the foundation (see below for more details);
• Information on the members of the Board, and their appointment upon the setup of the foundation.

The Bylaws of the foundation are essential for the incorporation of this type of structure. Our team which can help you open a company in Spain, summarizes the key details that are included in the foundation’s constitutive documents:

• the name and purpose;
• the domicile and the territorial scope (the area in which it will carry out its activities).

Our team of specialists in company formation in Spain can provide legal assistance on the following procedures: 

• Register the Spanish foundation by a natural person or a legal entity;
• Draw up the founding document of a Spanish foundation in the form of a notary deed or a will;
• ensure that the founding documents includes important incorporation details, such as the purpose of the foundation, the type of assets owned by the foundation and the structure of the board; regardless of the type of founding document selected, it must include important incorporation details;
• Register the foundation with the Register of Foundations in Spain in order to have it legally recognized.

Principles for the management and control of a Spanish foundation

Once it is duly set up, a foundation must maintain a governing and representative body called the Board of Trustees. This board makes decisions under a majority vote, as per the foundation’s Statutes.

The Board of Trustees is composed of at least three members. One of these will be elected President, unless otherwise provided for in the Statutes. The Board must also appoint a Secretary. In the situation in which one of the three members is also a secretary, he or she will not be able to vote (but will be able to provide input on important decisions).

A trustee may commence their activities after expressly accepting the position. This is done via a public acceptance document or a private document with a notarized signature. Trustees who are natural persons exercise their duties personally, however, in some cases, they may appoint a representative.

The main activities undertaken by Spanish foundations

As we mentioned above, Spanish foundations can start their operations in a wide range of activities that have as a main purpose the development of a given region and which are addressed to specific categories of persons. As a general rule, most of the foundations are set up with the purpose of assisting the needs of groups of individuals; some of the main data on Spanish foundations is presented below: 

• 74.6% of the Spanish foundations prefer creating their own projects and programs;
• 18.6% of the Spanish foundations are created with the purpose of raising awareness regarding a specific social issue;
• 46.5% of them develop activities that are related to culture and recreation;
• 25.7% are involved in education activities,
• 36.6% are related to research;
• 21% of the Spanish foundations are involved in health-related activities. 

Can one register a foreign foundation in Spain? 

Yes, this procedure can be done by setting up an office of the foreign foundation. In order to do so, the foreign foundation must apply for an authorization that will be issued by the Spanish Register of Foundations. It is necessary to know that a foreign foundation wishing to expand its activities in Spain must conduct other types of operations besides fundraising. Provided that the foreign foundation has as a sole purpose fundraising in Spain, its incorporation will not be possible, as stated by the regulations of the Spanish civil legislation. 

How are foreign foundations taxed in Spain?

The taxation of a foreign foundation in Spain follows the same tax system that is applicable to a foundation incorporated in this country. The tax regulations are stipulated under the Tax Act and our team of specialists in company registration in Spain can provide a full presentation on the main tax obligations and benefits available for this structure. 

When we refer to the Spanish office of a foreign foundation, it will be taxed following the regulations available for permanent establishments and this means that the taxes will apply only on the income obtained through the respective permanent establishment. However, since the foundation is entitled to be registered as a non-profit institution, it can obtain a set of tax deductions. 

Thus, a foundation can benefit from the exemption on the corporate income tax, but this will apply for specific types of income. For example, it can qualify for the exemption as long as the income is obtained from: inheritance, gifts, public grants, dividends and others, which can be presented by our team of consultants in Spanish company formation. 

Frequently asked questions about foundations in Spain

To better understand the concept of foundation in Spain, we have prepared some questions and answers. You will be able to find out the conditions for registering and setting up a foundation, with the mention that you can benefit from the support of our local agents.

Setting up a foundation in Spain is subject to certain requirements and the observance of the regime for these types of establishments, as well as the accounting and tax principles, as applicable. If you are interested in foundation creation in addition to company incorporation in Spain, you can reach out to our local specialists.

If you need further information on the legislation applicable to foundations in Spain, please contact our firm.