Setting up your Japanese company in Spain

Japan and Spain in figures

What Spain requires of a Japanese company

Of the ten obligations set out on our general page, these are the ones that apply to you (staff and documents are covered further down):

What changes when you come from Japan

• ·2018 double taxation treaty, in force since 1 May 2021: Spanish withholding tax on the dividends, interest and royalties received by the parent company can be zero (see ‘Taxes’ below).
• ·Investment protection: there is no bilateral agreement between Spain and Japan, and the EU-Japan Economic Partnership Agreement was concluded without that chapter. If you enter with a Spanish partner, your protection against that partner is the shareholders' agreement.
• ·Parent company documents: the Japanese commercial registry (法務局) issues the 履歴事項全部証明書, showing current entries and those cancelled since 1 January three years earlier, and the 印鑑証明書, for the registered seal of your representative; the Ministry of Foreign Affairs of Japan apostilles them. The power of attorney, the resolutions and, for a branch, the articles of incorporation (定款) must first go before a Japanese notary; in some prefectures, such as Tokyo and Kanagawa, the notary can deliver them already apostilled. They then need a sworn translation into Spanish; the registrar checks that they are equivalent to Spanish documents.
• ·Visa: Japanese nationals do not need one for stays of up to 90 days in any 180-day period, such as a business trip; once ETIAS is in operation, they will need to obtain an online travel authorisation beforehand.
• ·Social Security: under the Spain-Japan agreement, in force since 1 December 2010, an employee posted by the parent company for no more than five years remains in the Japanese pension system, with a certificate from the Japanese liaison agency. Other contingencies fall outside the agreement.
• ·Personal data: the European Commission recognises that Japan provides an adequate level of protection; the subsidiary can send customer and employee data to the parent company without additional safeguards.
• ·Outflow of capital: the Japanese foreign exchange law (外為法) only requires prior notification in five sectors (fishing, leather, arms, equipment for manufacturing them and narcotics) and for certain designated countries. Outside those sectors, acquiring 10% or more of a foreign company is reported afterwards to the Ministry of Finance, within 20 days and through the Bank of Japan, if it reaches 1,000 million yen. Your parent company handles this.

From Japan to an operating subsidiary, step by step

1. 1

   Preliminary review

   We decide between a subsidiary and a branch, whether prior authorisation is needed and the timetable.

2. 2

   Documents in Japan

   The 履歴事項全部証明書, the 印鑑証明書 and the power of attorney before a Japanese notary in favour of whoever will sign in Spain, all apostilled.

3. 3

   Sworn translation

   Into Spanish, by a sworn translator.

4. 4

   NIF and NIE

   The parent company's NIF and the NIE or NIF of whoever signs or acts as director.

5. 5

   Incorporation or branch

   Incorporation of the SL before a Spanish notary, with a negative company name certificate, or registration of the branch with the parent company's documents. The SL does not need a bank certificate for the capital if the parent company declares in the deed that it is liable for its contribution.

6. 6

   Investment Register

   Form D-1A within the following month.

7. 7

   Tax registration

   Census registration (Form 036) and electronic power of attorney for notifications.

8. 8

   Bank account

   The bank opens it, under its own requirements, and may require the signatory to appear in person.

9. 9

   Team

   Registration with the Social Security system, employee registrations and permits.

10. 10

    Ongoing compliance

    VAT, Corporate Income Tax, withholdings, annual accounts with the beneficial owner and corporate books.

Your Japanese team in Spain

Working at the subsidiary or the branch requires a residence and work authorisation. These routes are applied for electronically to the Large Companies Unit (Unidad de Grandes Empresas), which has 20 days to decide (if it does not reply, the authorisation is deemed granted); the visa, where needed, within 10 working days.

• ·Intra-corporate transfer: managers, specialists and trainees of the group, with a higher education degree or three years' experience and three months' prior service in the group; up to three years (one for trainees).
• ·Highly qualified professional: a highly qualified position at the subsidiary; the company or the professional applies. European variant: the EU Blue Card, with a contract of six months or more and a salary threshold.
• ·Entrepreneur: an innovative project, with a report from ENISA.

A spouse or partner, minor or dependent children and dependent ascendants can apply for their authorisation together with the holder's or afterwards (family reunification). EU nationals do not need one. A transferred executive can opt for the special regime for inbound workers in the year of the transfer and the following five years, if they have not been resident in Spain in the previous five.

Taxes: the treaty and what is paid in Spain

The zero rates also require the limitation on benefits clause to be met: for example, that the parent company is listed on a recognised stock exchange or that the income derives from its business in Japan. Without the treaty, the rates would be 19% and, for royalties, 24%. The subsidiary keeps the parent company's certificate of residence for treaty purposes, which is issued by the Japanese tax administration and is valid for one year, and pays over the withholdings with Form 216.

The subsidiary pays Corporate Income Tax at 25%, like any Spanish company. The reduced rate for new companies does not apply to companies belonging to a group, even if the parent company is not resident here, and the rate for small companies is calculated on the group's turnover. It can close its financial year on the same date as the parent company, for example on 31 March. Transactions with the parent company are valued at market price and, above certain amounts, are reported on Form 232.

With a branch, profits are taxed at the same rate, and the 19% supplementary tax on amounts transferred to the parent company is not charged to residents of countries with a treaty that does not provide for it, such as Japan's, provided there is reciprocal treatment. If the two tax administrations disagree, the treaty provides for a mutual agreement procedure and, failing agreement within two years, arbitration at the company's request.

What we do for your Japanese company

We file and sign on your behalf before the Spanish Tax Agency (Agencia Tributaria), the Social Security system, the immigration authorities (Large Companies Unit, MERCURIO platform) and the Registries. A fixed-fee quote in writing before we start; notary, official fees, apostille and sworn translation are separate and payable by you.

• ·The set-up, with the subsidiary's powers of attorney and the contract for your general manager.
• ·Tax representation, where the case allows it: with a branch, the law would make us liable for your debt, so we tell you beforehand and agree the guarantees.
• ·Permits for your team, Social Security and the subsidiary's taxes.
• ·The European Union trade mark, valid in all 27 Member States.

By law, we identify the beneficial owner of each client before we start work. We do not provide a registered office or an address for notifications, nor do we act as directors, company secretaries or shareholders of your company (nominee or otherwise), or as customs representative, IOSS intermediary or the person responsible for your products in the EU; nor do we handle the Spanish trade mark in the parent company's name. We coordinate the apostille and the sworn translation.