UK subsidiaries for Spanish companies

Spain sends 39 investment projects to the UK a year. A Spanish parent used to forming an SL through a notary, with a capital deposit and a tax identification number obtained before anything else can happen, finds UK incorporation startlingly quick: online, one day, one share, no notary.

What to plan for

Goods moving from Spain cross a customs border, so the UK subsidiary needs an EORI number, a customs agent and postponed import VAT accounting, which lets it declare and recover import VAT on the same return instead of paying at the border. Services bought from the Spanish parent are accounted for by the UK company under the reverse charge. Where the group sells to UK consumers rather than businesses, the VAT position needs setting up deliberately.

Money and people

Dividends to the Spanish parent leave the UK without withholding tax. Interest and royalties carry 20% UK tax at source unless the treaty reduces the rate and the claim is made in advance. Social security for posted workers is covered by the UK–EU protocol, so a Spanish employee posted here can usually stay in the Spanish system with a certificate rather than paying UK National Insurance.

Three things we set up differently for a Spanish parent

1. Nothing has to be obtained first. A Spanish parent used to obtaining a tax identification number, a notarial deed and a capital deposit before a company can exist finds UK incorporation disorienting: the company is formed online in a day and its tax registrations follow afterwards. There is no document to collect before you start.
2. The VAT position on consumer sales. Where the group sells to UK consumers rather than businesses, the treatment depends on where the goods are when they are sold and their value, and it needs deciding rather than defaulting. Getting it wrong means either charging VAT that was not due or failing to charge VAT that was.
3. Customs from the first shipment. EORI, a customs agent, commodity codes and postponed import VAT, set up with the VAT registration. Goods arriving without them sit at the port accruing storage.

What is heavier than at home

UK accounts are published and readable. Payroll reports to HMRC on every payday. A workplace pension is compulsory from the first employee with an employer contribution of at least 3% of qualifying earnings. And the corporation tax rate is 25% for most subsidiaries of established groups, because the reduced band is divided by the number of companies the group controls worldwide.

Money and people

Dividends to the Spanish parent leave the UK with no withholding tax. Interest and royalties carry 20% at source unless the treaty reduces it and the claim is made in advance. Social security for posted workers is covered by the UK–EU protocol, so a Spanish employee posted here can normally stay in the Spanish system with a certificate rather than paying UK National Insurance.