A foreign investor may find it suitable to its interests to start their operation in Spain establishing a branch ("sucursal") instead of incorporating a subsidiary in Spain.

The formation of a branch requires the execution of a public deed (thus going to the notary) hat must be recorded at the Commercial Registry ("Registro Mercantil"). From the foreign investment legislation viewpoint, the branch must have an assigned capital, which is not subject to any minimum amount requirement.

The branch must have a legal representative who is empowered by the home office to manage the affairs of the branch. Apart from this requirement, there are no formal administration or management bodies. A branch operates much like a corporation in its dealings with third parties.

The choice between operating a branch or incorporating a subsidiary in Spain may be affected by commercial reasons; for example, a company may be deemed to provide a more “solid” presence than a branch. Also, a corporation will shield the parent company from liabilites as a company generaly does respect of its shareholders. A branch is part of your company, thus making your company fully liable.