Foreign investors who are seeking to open a foundation in Spain are advised to know the legislation applicable in this field. According to the Spanish legislation, a foundation can be set up for general purposes, under the Art. 34 of the Constitution. If you want to open a foundation, you may request for assistance from our company formation agents in Spain, who can provide you with information related to legal and fiscal obligations that must be met for this type of legal entity.
What is the legislation on Spanish foundations?
As presented above, one of the main rules of law available for Spanish foundations is the Constitution of Spain. However, also other regulations are applicable. For example, the latest rule of law specifically addressed to Spanish foundations is the Foundation Act 50/2002, which replaced the previous legislation on the matter, the Foundation Act 30/1994.
Those who want to open a company in Spain operating as a foundation must know that there are specific rules of law that are created by the regional authorities operating in this country. Thus, additional regulations on foundations can be found in regions such as Navarra, Galicia or Cataluña.
Investors must know that, regardless of the incorporation place of the Spanish foundation, the central government of Spain has full authority in creating regulations concerning the taxation of this type of structure;our team of consultants in company registration in Spain can provide an extensive presentation on the taxation system available for a Spanish foundation.
The main purposes of a foundation in Spain
Foundations are defined under the Act 50/2002 as non-profit organizations set up to serve a “general interest purpose”. The Act also covers the legislation under which foreign foundations can function in Spain; the investors must prove that the foundations are incorporated under the law of the origin country. Foreign foundations fall under the supervision of the local authorities by respecting the same legal procedures applicable to Spanish foundations. The assets of the foundation will be allocated in such way that will serve to the purpose for which the entity has been incorporated.
The following video offers a short presentation on the Spanish foundation:
According to the Spanish legislation, the general purposes for which a foundation can function are related to any public benefits, such as: social issues, education, culture, sports, healthcare, cooperation for development, environment, scientific work and volunteer work. Our team of specialists in company formation in Spain can provide more information on the purposes a Spanish foundation can have.
How can one incorporate a Spanish foundation?
There are specific legal procedures that must be followed when starting the company formation in Spainfor a local foundation. Since the entity is not incorporated for commercial purposes, its registration requirements differ from the ones available in the case of a commercial entity; our team of specialists in company formation in Spain can provide legal assistance on the following procedures:
•the Spanish foundation can be registered by both natural persons and legal entities;
•the founding document of a Spanish foundation can be a notary deed or a will;
•regardless of the type of founding document selected, it must include important incorporation details;
•for example, it is necessary to stipulate the purpose of the foundation, the type of assets owned by the foundation and the structure of the board;
•in order to be legally recognized, the foundation must be registered with the Register of Foundations in Spain.
Can one register a foreign foundation in Spain?
Yes, this procedure can be done by setting up an office of the foreign foundation. In order to do so, the foreign foundation must apply for an authorization that will be issued by the Spanish Register of Foundations. However, it is necessary to know that a foreign foundation wishing to expand its activities in Spain must conduct other types of operations besides fundraising. Provided that the foreign foundation has as a sole purpose fundraising in Spain, its incorporation will not be possible, as stated by the regulations of the Spanish civil legislation.
What is the tax system available for foreign foundations in Spain?
The taxation of a foreign foundation in Spain follows the same tax system that is applicable to a foundation incorporated in this country. The tax regulations are stipulated under the Tax Act and our team of specialists in company registration in Spain can provide a full presentation on the main tax obligations and benefits available for this structure.
When we refer to the Spanish office of a foreign foundation, it will be taxed following the regulations available for permanent establishments and this means that the taxes will apply only on the income obtained through the respective permanent establishment. However, since the foundation is entitled to be registered as a non-profit institution, it can obtain a set of tax deductions.
Thus, a foundation can benefit on the exemption on the corporate income tax, but this will apply for specific types of income. For example, it can qualify for the exemption as long as the income is obtained from inheritance, gifts, public grants, dividends and others, which can be presented by our team of consultants in Spanish company formation.
What are the main activities developed by Spanish foundations?
As we mentioned above, Spanish foundations can start their operations in a wide range of activities that have as a main purpose the development of a given region and which are addressed to specific categories of persons. As a general rule, most of the foundations are set up with the purpose of assisting the needs of groups of individuals; some of the main data on Spanish foundations is presented below:
•74.6% of the Spanish foundations prefer creating their own projects and programs;
•18.6% of the Spanish foundations are created with the purpose of raising the awareness regarding a specific social issue;
•46.5% of them develop activities that are related to culture and recreation;
•25.7% are involved in education activities, while 36.6% are related to research;
•21% of the Spanish foundations are involved in health related activities.
Incorporation of a Spanish foundation – legal aspects
If you want to set up a foundation here, the Spanish legislation requires that at least 70% of the income obtained throughout the year by the foundation has to be used for the purpose stated in the statutory documents. When opening a foundation in Spain, a businessman is required to invest EUR 30,000; the foundation can establish economic activities related to the field of interest for which the entity was set up.
Foundations in Spain can be set up by individuals or by companies and, according to the Art. 10 of the Foundation Act, the founding document must contain the name and the address of the founder, as well as the purpose of the foundation and the board members. If you need further information on the legislation applicable to foundations in Spain, please contact our company formation agents, who can offer you assistance on this matter.
Call us now at +34 915 36 78 06 or +34 938 074 056 to set up an appointment with Federico Richardson, one of our specialists in company formation in Madrid and Barcelona. Alternatively you can incorporate your company without traveling to Spain.
As a Lexidy Law Boutique SLP client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Spain.