Spain has become a strategic gateway to the EU and Latin America for Chinese companies. This guide compares the branch and the S.L. subsidiary, walks through the incorporation process step by step, and covers taxes, timelines and practical pitfalls.
A growing number of Chinese companies are choosing Spain as their gateway to the European Union and Latin America. Spain is the fourth-largest economy in the eurozone, shares language and legal ties with Latin American markets, and has a double taxation treaty in force with China. For any Chinese investor, the first legal decision is how to structure the local presence.
The two main options are a branch (sucursal) and a subsidiary, most commonly a Spanish limited liability company (S.L.). The decisive difference is legal personality: a branch has none, so the Chinese parent company is directly liable for all of its debts and obligations, whereas an S.L. is a separate Spanish legal entity and the parent's exposure is, as a rule, limited to its capital contribution. For this reason, the vast majority of Chinese groups incorporate an S.L. subsidiary to ring-fence their European operations.
Incorporating an S.L. involves the following steps: obtaining a name clearance certificate from the Central Commercial Registry, valid for three months; securing an NIE (foreigner identification number) for foreign shareholders and directors, plus a Spanish tax number (NIF) for the Chinese parent if it will be a shareholder; opening a bank account and paying in the share capital — legally as little as 1 euro under the Crea y Crece Act, though at least 3,000 euros is recommended in practice; and finally executing the deed of incorporation before a notary and registering it with the Commercial Registry. Since China joined the Hague Apostille Convention in November 2023, Chinese corporate documents only need an apostille and a sworn Spanish translation, with no consular legalisation. With complete documentation the whole process typically takes four to eight weeks, the NIE usually being the slowest step.
On the tax side, the standard corporate income tax rate is 25%, while newly created companies enjoy a reduced 15% rate in their first profitable year and the following one; a branch is taxed as a permanent establishment at 25% and does not qualify for that incentive. The standard VAT rate is 21%, and import-export activity additionally requires an EORI number. Foreign investments must be reported after completion via form D-1A to the Investment Registry, and certain strategic sectors may fall under Spain's FDI screening regime.
Our practical advice for Chinese companies: start the NIE applications for directors and shareholders as early as possible; prepare the parent company's apostilled documents in advance; and allow generous lead time for bank account opening, as Spanish banks apply strict anti-money-laundering checks to capital arriving from abroad and will ask for clear evidence of the source of funds. Iberex Spain provides end-to-end support in Chinese, Spanish and English — from choosing the right structure and legalising documents to NIE applications, notarisation, registration, bank account opening and tax registration.