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Foreign business taxation in Spain: tax obligations (II)

The tax obligations of foreign businesses in Spain are not as complicated or burdensome as we could think. When you come from abroad, the cultural and language barriers (so difficult to overcome) are very probably accompanied by a lack of knowledge of the Spanish taxes. That is why we have taken it upon ourselves to assist you so you can set up a business in Spain in a quick and simple way. In our first post we told you why a good diagnosis of the situation, the project and the entrepreneur’s expectations is a basic factor to reach his or her goal. Today we are going to examine the procedures closely and will explain how the tax obligations of foreign businesses in Spain must be managed.

Tax obligations of foreign businesses in Spain: power of attorney

In our first post about foreign business taxation in Spain we reviewed the different types of companies that can be set up in our land by foreign entrepreneurs. We also looked closely at the tax obligations of these companies and emphasized the relevance of being properly advised, something essential to carry out a good diagnosis of the situation. As it was stated, if you do not wish to create a Permanent Establishment (branch or subsidiary company) and have chosen the easiest option, a Non Permanent Establishment, you will need a Tax and Legal Representative or TLR (do not miss this interesting post if you want to know more about this interesting figure).

But it is not enough to choose a reliable person or consultancy in Spain that can assume the tasks of a representative. Among the different tax obligations of foreign businesses in Spain, the first one you must take care of is to leave them a power of attorney. This power can be obtained from abroad, without coming to our country; if you hire a professional and experienced consultancy in Spain, everything will be much easier.

A very simple procedure: from the power to the digital certificate

From this moment on, the procedure becomes quite simple. After setting up a business in Spain, you will be surprised of how fast you can start operating in a legal and transparent way. Differently from branches and subsidiary companies, having a Legal and Tax Representative does not require a notarized public deed and you or your representative will not have to visit the Business Register. You will not even need a NIE (Identity Number for Foreigners: you can read about this document and how to obtain in the official Foreign Office website). The only thing your Legal and Tax Representative (LTR) will have to do is to appear in person in the Spanish Tax Agency offices with the power you left him or her.

The advantages of this option are clear. First, the procedures are fast and simple and make it possible to start the commercial activity in a short time. Logically, the cost of the procedures will be much lower as you will have less tax obligations. In fact, there are not notary or inscription wages. You will only have to pay for the power of attorney (which will have to be accompanied by a sworn translation and the Hague Convention) and the wages of your advisors. More options? There is a third possibility: after getting the Non Resident NIF, you will be able to design your LTR and obtain a Digital Certificate to operate for all tax purposes.

The last step to manage the tax obligations of foreign businesses in Spain is to fix a date to start making invoices through your company. In this case, first you will have to file the form 036 in the Spanish Tax Agency: this form will enable you to include the VAT in your invoices. The tax obligations of a Non Permanent Establishment are quite simple and minimal. You will not have present the annual accounts or convert anything to public deed, except the power of attorney given to your Tax and Legal Representative.

Your consultancy in Spain, an invaluable help

As you can see, the tax obligations of foreign businesses in Spain can be easy to understand and to manage. In this case, the most intelligent option is to hire to services of a professional consultancy in Spain with proven experience in helping foreign entrepreneurs who wish to set up a business in Spain. In LEIALTA we have many content customers who run their business in Spain with all the guarantees, without worrying about tax problems or unwanted penalties.

We are sure that after reading this post you feel more confident when you think of bringing your business to Spain. If you want to know more about the tax obligations of foreign businesses in Spain, leave a comment… And do not forget that we will keep on dealing with this subject in a next (and last) post.