Advantages of Setting up a Branch in Spain and Portugal

When your business is doing well, expanding into new areas is the logical next step for any entrepreneur. Why wouldn’t other parts of the world enjoy your services and goods if your local market does? For those international investors who want to extend their company projects, Spain and Portugal are both lucrative locations.  

In this article, we will discuss the benefits of opening a branch in Spain and Portugal. It will help you decide between these two options to expand your company’s presence.  

Advantages of Setting up a Branch in Spain

1. Partnerships for Trade and Location Strategy

The location is undoubtedly among the most intriguing advantages of starting a business in Spain. The Iberian Peninsula is strategically situated to serve as the gateway to America, Europe, and Africa.

Spain has a powerful strategic position and good trading partnerships with accessibility to the marketplaces of the Europe, Middle East, and North Africa (EMEA) region, as well as relationships and economic links to Latin America. 

Spain is a member of the European Union, which provides it with special access to the 500 million-strong common market, which has a per capita income of close to $36,000. Additionally, the country has earned praise for being the top European hub for doing commerce in South and Latin America. Spain has signed 19 agreements for the mutual security and promotion of investments in addition to 17 agreements to prevent dual taxation in South and Central America.

With 21 bilateral agreements to prevent double taxation and 18 bilateral agreements for mutual investment preservation and promotion, Spain is a competitive base for conducting business in the EMEA markets. A significant hub for conducting business in Africa is the Spanish archipelago of the Canary Islands, which is located off the coastline of northwest Africa.

Additionally, there is no standard minimum share capital requirement for establishing the branch. It is not necessary to register any additional funds because the parent organization already possesses such assets as part of its structure.  However, the branch must receive a certain monetary allotment from the headquarters.

2. Outstanding Infrastructure

Spain today possesses among the best rail and metro systems in the entire world, which is a testament to how quickly its infrastructure has upgraded over the past few decades. On both of Spain’s coasts, there are 46 state-owned ports, contributing to the nation’s thriving maritime sector. Three of the best ten container ports in Europe are located in Spain, which also boasts top-notch infrastructural facilities.

With over 70 technology parks and considerable fiber optic cable installation, Spain also has a thriving tech sector that makes high-speed Internet services available. It is highly advantageous for businesses to establish branches or subsidiaries in this country as a result of all these developments.

3. Decreased Tax Rates

The tax system in Spain makes it simpler for foreign investors to think about growing their businesses. The Spanish Tax Agency has an automated system where most agreements and transactions can be done online. The average tax burden across Spanish-based companies is much lower compared to the Eurozone and UE-28. In addition, you will pay fewer taxes than in other nations.

4. Accepts FDI

Spain encourages foreign direct investment, which is essential to economic ties with other countries. The Spanish government has taken a pro-free trade and pro-investment stance by lowering corporate rules to encourage international enterprises and investment at all stages. Based on the UNCTAD World Investment Report, Spain has risen to ninth place worldwide with regard to investment thanks to these strategies.

A reorganized financial sector, a thriving tourism industry, a reliable and well-regarded transportation system, an emphasis on international research and renewable energy sources, and cultural ties to Latin America, which are strengthened by the presence of many Spanish multinational corporations, are additional factors contributing to the influx of foreign investment.

5. Focus on Research and Development 

Spain is a nation that takes pride in both its investment frameworks and its ongoing research and development. There are a number of financial and tax incentives, including non-refundable grants, soft loans, as well as a mixture of both.

Additionally, the nation places a high priority on encouraging long-term employment, profitable investments, and technical innovation. Although Spain doesn’t spend as much on Research & development activities as other EU members, there is still a strong emphasis on innovation, which undoubtedly helped the nation increase its efficiency in the open markets.

6. Getting a Visa is Easy

Expanding your business in Spain is not complicated if you are a foreigner. In fact, the government offers both a visa for highly educated individuals and a visa for business owners. In this regard, one of the benefits of expanding a business in Spain is connected to getting a residency permit that allows you to stay there for an extended amount of time while also starting a business.

7. Social Position

One major benefit of starting a business in Spain has to do with the favourable image you project in the business community. You will be able to contact numerous investors, supporters, and professionals by building a track record and incorporating Spain into your potential customer base. In other words, establishing a firm in one of the autonomous regions might pave the way for future opportunities to expand your assets and continue fulfilling your business objectives.

Advantages of Setting up a Branch in Portugal 

1. Cost Effective

Portugal is one of the few countries in Europe where you can be certain to obtain the greatest value for money alternatives for your business subsidiary, from competent personnel to central office premises. The labor force is more educated, competent, and reasonably priced than in the majority of western European nations.

In the 2019 EF English Proficiency Index, Portugal came in at number 12, higher than any other Latin-speaking nation in Europe. Therefore, your company’s subsidiary or branch will indeed be able to operate and communicate with ease throughout the majority of Portuguese cities.

2. Programs for Foreign Benefits

The 2008 financial crisis has made tax incentives for investment more important in Portugal. The fundamental goal of many incentives is to promote investment, particularly foreign investment, which supports sustained development, job creation, and firm investment. Portugal has concentrated on establishing specific reporting periods for tax losses, increasing legislative measures to prevent international double taxation, and establishing favourable nominal rates in order to accomplish this.

Some of these tax advantages are really included in the various tax rules as exemptions, rate decreases, discounts from taxable income, offsets to the collection, and accelerated depreciation and reintegration. The Seed program, which encourages investment in small or medium-sized creative businesses, is one of the strongest investment incentive programs for single investors.

Capital gains from the sale of shares in micro and small businesses, the tax code for ex-residents, and the tax code for non-habitual residents are other programs. The following investment incentive programs, however, provide tax advantages for businesses: Investment Support Tax Program, Contractual Benefits to Productive Investment, Installation of Businesses in Inland Territories, and Deduction for Retained and Reinvested Profits.

3. Golden Visa

The establishment of the Golden Visa is another benefit that makes Portugal desirable. Any non-European national can apply for this visa if they wish to invest in or start a firm in Portugal’s financial sector, small and medium-sized businesses, scientific research, or creative industries. The Golden Visa gives the opportunity to acquire permanent residency in Portugal and can be extended as well. 

4. A Young and Competent Workforce

The number of students attending Portuguese colleges has reached a record high in recent decades, and several graduates with advanced degrees are anticipated. The top ten colleges in the nation are predicted to produce about 90,000 graduates in the near future.

Despite salary inflation in the tech sector, Portugal’s expertise is still much more affordable than in other well-known talent hotspots like Dublin, Paris, London, and Berlin. As a result, your business branch can quickly profit from hiring competent personnel and growing sales.

5. Work-Life Compatibility

On the Human Development Index, a common indicator of happiness, living standards, and human development, Portugal has attained a very high ranking. It is also one of the five safest nations in the world. The country is presently one of the top locations for company expansions because of the safe environment and the agreeable personality of the Portuguese people.

The low cost of housing and rent in Portugal is another benefit for workers, as many can simply live inside their resources. Lisbon remains cheaper to rent or purchase than London, despite recent demand-driven increases in rent prices.

Looking to Expand Business in Spain and Portugal? Check out Start Company Formations!

Start Company Formations is your one-stop destination for all your business formation requirements, banking and accounting. Our team can help, whether you’re trying to break into growing sectors or just want some piece of mind when starting a company from anywhere in the world. We provide reliable advice to assist with company creation in Spain and Portugal. 

With the support of our team of professionals, we offer business consulting services that will benefit your firm in its current state and maybe aid in its expansion. Over the decades, we have collaborated with numerous businesses in a variety of industries to create solutions specifically for them. Learn more about establishing a business abroad by contacting us today!