Activities of a representative office
Many American companies have doubts on whether a Representative office would be a good corporate legal form to start business in Spain. And how to establish it. A representative office is a fixed place of business set up by a foreign company. The Rep Office only pursues marketing or informational activities related to commercial matters but doesn’t do any actual business in Spain. Of course there are alternatives to the Rep Office and all have their pros and cons.
Requisites for a Rep Office:
- Representative offices do not have separate legal personality from their parent;
- The nonresident company is liable for all debts assumed by the representative office;
- Representative offices are considered permanent establishments for tax purposes.
- Representative offices cannot themselves conduct commercial transactions;
- In general, no commercial requirements need to be met for a representative office to be opened, although mainly for tax, employment and social security purposes a public deed (or document executed before a foreign notary public, duly legalized with the Hague Apostille or any other applicable form of legalization) may have to be executed, recording the opening of the representative office, the allocation of funds, the identity of the tax representative (an individual or legal entity resident in Spain) and its powers.
- Representative offices need not be recorded at the Commercial Registry;
- Representative offices have no formal directors or managing bodies; the representative of each office performs the activities of the representative office by virtue of the powers granted to that representative.
It is a simple form, set up quickly without having to comply with too many legal formalities and allows investors to obtain all kinds of information on which they can base their investment decision.
A representative office serves the purpose for conducting market and competition research before investing or for example negotiating the acquisition of a local company.
Do contact us if you would like more information on the subject. Business Advice Spain is highly experienced in overseas Corporate matters. It has helped American companies for the last 15 years establish themselves in Europe.