Many international investors ask whether it is possible to purchase real estate in Spain through an existing foreign company. The answer is yes: you can buy property in Spain using a foreign company, without the need to set up a Spanish company—provided that the necessary conditions are met.
This article explains how a foreign company can acquire real estate in Spain, either with or without a permanent establishment (PE), and outlines the legal, tax, and procedural steps required.
1. Preliminary Concepts
What Is a Foreign Company?
A foreign company is any legal entity established outside Spain that wishes to operate in the Spanish market. If the company intends to purchase property or carry out real estate activities (e.g., renting, construction, brokerage), its corporate bylaws must explicitly allow for such activities. If not, it must amend them in its country of origin before proceeding.
Permanent Establishment (PE) vs. No PE
Whether the foreign company will operate with or without a permanent establishment in Spain is crucial, as this will determine the tax regime and legal responsibilities.
Without PE (Non-PE Company):
If the activity (e.g. property rental) does not involve having physical assets (offices, vehicles, etc.) or employees in Spain, the company is considered to operate without a permanent establishment. These companies are taxed under the Non-Resident Income Tax (IRNR), at:19% for EU-resident companies
24% for non-EU-resident companies
With PE (PE Company):
If the company uses material or human resources in Spain (staff, local offices, etc.), it is considered to have a permanent establishment. In this case, the company is taxed under the Spanish Corporate Income Tax, at a rate of 25%.
If you’re unsure about your status, it may be necessary to review the Double Taxation Agreement between your country and Spain.
2. Step-by-Step Procedures
In the Country of Origin
To operate in Spain, the foreign company must obtain and legalize the following documentation:
Certificate of incorporation
Tax identification certificate
Corporate bylaws
Certificate of good standing from the commercial registry
Identification of directors and shareholders
All documents must be:
Original or notarized copies
Officially translated into Spanish by a sworn translator
Legalized with the Apostille of The Hague (or by the Ministry of Foreign Affairs if the country is not a signatory)
In Spain
a) Obtain NIE for the Director
The NIE (Número de Identificación de Extranjero) is a tax ID number required for any foreigner conducting business in Spain. It can be obtained:
Through Spanish consulates abroad
In Spain, directly or via a legal representative with power of attorney
b) Obtain the Company’s NIF
The NIF (Número de Identificación Fiscal) is the Spanish tax number assigned to the foreign company. It is issued after presenting the legalized and translated company documents to the Spanish Tax Authority.
c) Appoint a Tax Representative
For Non-PE companies: A fiscal representative is mandatory. This is often the lawyer or tax advisor managing the property in Spain. However, they are not personally liable for tax debts of the company.
For PE companies: A fiscal representative is also required, but in this case, they share full liability for the company’s tax obligations. For this reason, many legal professionals decline to act as tax representatives for PE companies unless specific conditions are met.
Important:
Recent changes now allow EU companies to appoint their own directors (even if non-resident in Spain) as tax representatives. This is not allowed for companies from non-EU countries, which still require a tax-resident representative in Spain.
d) Open a Spanish Bank Account
To operate, the company must open a bank account in Spain. To do so, the bank will request:
Company documents
NIF and NIE
Financial information and proof of fund origin
Corporate tax returns or accounting documents from the country of origin
This is necessary to comply with Spain’s anti-money laundering regulations.
e) Declaration of Beneficial Owners
The company must disclose the real (beneficial) owners, defined as individuals holding more than 25% of the company’s shares. This is a legal requirement to comply with Spanish anti-money laundering laws and is mandatory for the notary to complete the transaction.
3. Power of Attorney
Due to the complexity of the procedures involved, it is strongly recommended to grant Power of Attorney to a Spanish lawyer or legal representative. This allows them to carry out all steps on your behalf, without requiring your physical presence in Spain.
4. Conclusion
Buying property in Spain through a foreign company is a viable and legally supported option. However, it is essential to understand whether your company will operate with or without a permanent establishment, and to comply with all legal, tax, and administrative obligations involved in the process.