FAQ for Spanish companies

179 Questions About Setting Up and Running a Subsidiary in India

By Abhishek Jaiin, Chartered Accountant (All India Rank 44; ICAI membership no. 544646), AU Corporate · Last updated 2 November 2026

← Back to the complete guide: How to Set Up a Subsidiary in India from Spain

How to use this page

The questions are grouped by topic, starting with the decisions before you commit and then following each guide in the series. Answers are short; the complete guide and the linked pages go deeper.

Indian tax law changed on 1 April 2026: the Income-tax Act, 2025 and the Income-tax Rules, 2026 replace the 1961 Act. Where a form has a new name, we give the new name with the earlier one in brackets. General information only; confirm current requirements before acting.

Before you start: structure, cost and approvals

1.Can a Spanish company own 100% of an Indian subsidiary?

Yes, in sectors under the Automatic Route. Spain has no land border with India, so Press Note 3 does not apply by nationality. Sector caps still apply, for example in retail, insurance and defence.

2.Does a Spanish company need Indian government approval to invest?

Not because it is Spanish. Approval is needed only in sectors or above caps that require it for any foreign investor, or if a beneficial owner is from a land-border country.

3.Does a Spanish company need Spanish permission to invest in India?

The official guide to Spanish investment abroad describes no prior authorisation for ordinary investments, but a declaration to the Registro de Inversiones Exteriores is required afterwards.

4.How long does it take to set up an Indian subsidiary from Spain?

About two to three months from board decision to a company that can bill. Incorporation itself takes two to three weeks from a complete file; Spanish documents and the bank account take longer.

5.What does it cost to set up a subsidiary in India?

AU Corporate's fee for setting up the subsidiary is USD 750 to USD 1,000 for share capital up to ₹10 lakh (₹10 lakh is about EUR 9,400 at an indicative ₹106 per euro (2 November 2026 market rate; check the live rate before remitting)). It covers the incorporation work only; the total depends on your structure, sector and plan.

6.Is there a minimum share capital?

No statutory minimum for a private limited company. Size the capital to your 12 to 18 month plan and any sector rule.

7.What is the Automatic Route?

The route under the FDI Policy that lets a foreign investor invest in a permitted sector without government approval, subject to reporting to the Reserve Bank.

8.What is a Resident Director?

A director who has stayed in India for 182 days or more in the financial year. Every Indian company needs at least one.

9.Can a Spanish citizen be a director of an Indian company?

Yes, once they hold a Director Identification Number and a Digital Signature Certificate.

10.What is SPICe+?

The integrated online incorporation form of the Ministry of Corporate Affairs, which can also apply for PAN, TAN and other registrations.

11.Does India accept Spanish documents?

Yes, with a notarial or registry document, an apostille and a sworn English translation. Spain and India are both parties to the Apostille Convention.

12.Is there a tax treaty between India and Spain?

Yes, signed in 1993 and in force since 1995, amended by a 2012 Protocol and the MLI.

13.What accounting standards does an Indian subsidiary follow?

The Companies Act, 2013 and, above the thresholds, Indian Accounting Standards (Ind AS), which are converged with IFRS. A Spanish parent reporting under Spanish GAAP or IFRS will need a bridge for consolidation.

14.What is the Indian financial year?

1 April to 31 March, which does not match the Spanish calendar year.

Compliance Calendar for a Spanish-Owned Indian Company: Indian and Spanish Deadlines Side by Side

15.When is the annual general meeting due?

Within six months of the year end, so by 30 September for a March year end.

16.When must AOC-4 and MGT-7 be filed?

AOC-4 within 30 days and MGT-7 within 60 days of the annual general meeting.

17.When is tax deducted at source due?

By the 7th of the following month, with a quarterly return.

18.When is the income tax return due?

31 October for a company that needs an audit, extended to 30 November where transfer pricing applies. Confirm the date each year.

19.What is the FLA return?

The annual Foreign Liabilities and Assets return to the Reserve Bank, due by 15 July.

20.What does the Spanish parent file each year?

The D-8 report within seven months of the Indian year end where it applies, its corporate tax return and related-party documentation.

21.Can due dates change?

Yes, by notification. Confirm each date before it falls.

22.How do I deal with the different year ends?

Prepare a management account to the Spanish year end for consolidation and agree an audit timetable that allows it.

Read the full guide: Compliance Calendar for a Spanish-Owned Indian Company: Indian and Spanish Deadlines Side by Side →

Contracts, Courts and Arbitration in India for Spanish Companies

23.Should I choose arbitration or court for an Indian contract?

Arbitration is usually more reliable, because awards are enforceable under the New York Convention while foreign court judgments are hard to enforce.

24.Which seat is common for Spanish groups?

Madrid, Singapore, London and Paris.

25.Is Spain a party to the New York Convention?

Yes. India applies Part II of its Arbitration Act to awards from countries it has notified, so confirm the notification at the time.

26.Can I enforce a Spanish court judgment in India?

Directly only if Spain is a reciprocating territory under Section 44A, which to our knowledge it is not. A fresh suit may be needed.

27.Which law should govern the contract?

Indian or Spanish law, stated expressly, with the dispute clause matched to it. Indian law is practical where the assets are in India.

28.Do Indian courts support arbitration?

Generally yes, including interim measures in some cases, but delays are common.

29.Does an unstamped contract have value?

It cannot be relied on as evidence until stamped. Plan the stamping.

30.Is there a bilateral investment treaty with Spain?

A treaty was signed in 1997, but India terminated many treaties. Confirm the status from an official source.

31.How do I protect payment?

Use advance payment, bank guarantees or escrow, and clear termination rights.

Read the full guide: Contracts, Courts and Arbitration in India for Spanish Companies →

Cost of Setting Up a Subsidiary in India from Spain: Fee Framework and Budget Checklist

32.How much does it cost to set up a subsidiary in India from Spain?

AU Corporate's fee for the set-up is USD 750 to USD 1,000 for share capital up to ₹10 lakh. Government charges, stamp duty, bank charges, office, audit and compliance are separate, and the total depends on your plan.

33.Is there a minimum capital?

There is no statutory minimum for a private limited company. Size it to your 12 to 18 month plan and any sector rule.

34.What is ₹10 lakh in euros?

₹10 lakh is about EUR 9,400 at an indicative ₹106 per euro (2 November 2026 market rate; check the live rate before remitting).

35.Does the set-up fee include annual compliance?

No. The set-up fee covers incorporation only. Accounting, tax, payroll and audit are priced against your plan.

36.What recurring costs start in the first year?

Registered office, accounting, GST and TDS returns, payroll compliance, the statutory audit, annual company filings and the tax return, plus a transfer pricing report where thresholds are crossed.

37.Do I pay Indian stamp duty?

Yes, on the charter documents and on some agreements. The rate depends on the state and on the document.

38.Are bank charges included in a quote?

Usually not. Ask who bears remittance charges and the conversion spread.

39.Does Spanish notary and translation cost extra?

Yes. Notary, apostille and sworn translation in Spain are separate from the Indian fee.

40.Can I reduce the cost by choosing a branch?

A branch has its own conditions and a net worth test, and it is usually not cheaper in the long run. See the structure guide.

41.How do I get a costing for my plan?

Use the costing tool on the main guide or send us the structure, headcount, sector and shareholders.

Read the full guide: Cost of Setting Up a Subsidiary in India from Spain: Fee Framework and Budget Checklist →

GDPR and India's DPDP Act: Data Transfers Between a Spanish Parent and an Indian Subsidiary

42.Can a Spanish company send personal data to India?

Yes, using a GDPR transfer tool. India has no adequacy decision, so standard contractual clauses with a transfer impact assessment are the usual choice.

43.Is there an EU adequacy decision for India?

No, as far as we know. Check the European Commission's list before relying on this.

44.Who regulates data protection in Spain?

The Agencia Española de Protección de Datos, under the GDPR and the Spanish organic law.

45.What is the DPDP Act?

India's Digital Personal Data Protection Act, 2023, with Rules notified on 13 November 2025.

46.When do the main DPDP duties start?

On 13 May 2027, in stages under the Rules.

47.What is the DPDP penalty?

Up to INR 250 crore for the most serious breaches, as set in the Act's schedule.

48.Does DPDP block transfers to Spain?

No blanket ban. The Act permits transfers except to countries the government restricts, subject to sector laws.

49.Do standard contractual clauses cover staff data?

Yes, if the module and annexes describe the real flows. A transfer impact assessment is also needed.

50.Does GDPR apply to the Indian subsidiary?

Directly, only if it offers goods or services to people in the EU or monitors their behaviour. Otherwise the clauses carry the obligations.

Read the full guide: GDPR and India's DPDP Act: Data Transfers Between a Spanish Parent and an Indian Subsidiary →

Spanish Documents for India: Notary, Apostille and Sworn Translation

51.Does India accept a Spanish apostille?

Spain and India are both parties to the Apostille Convention, so an apostille from the competent Spanish authority is the normal route and consular legalisation is not usually needed.

52.Which Spanish authority issues the apostille?

It depends on the document: notarial documents are generally apostilled through the notarial college, and other documents by the competent judicial or administrative body. Ask the notary.

53.Do I need a sworn translation?

Yes for Spanish-language documents. A sworn translator appointed by the Spanish Ministry of Foreign Affairs is the usual choice.

54.Do I need a notary for a board resolution?

Usually for the signatures, so that the document can be apostilled. The notary also helps with the power of attorney.

55.How recent must a Mercantile Registry certificate be?

Indian banks and the Registrar commonly accept certificates issued within three to six months. Ask each recipient.

56.Do the directors need Indian credentials?

Yes. Each proposed director needs a DIN and a Digital Signature Certificate before the incorporation form is filed.

57.What if the Indian recipient refuses an apostille?

Ask it to state the requirement in writing and approach the Indian Embassy in Madrid or the Consulate General in Barcelona.

58.Can a lawyer in India sign for my company?

Only under a power of attorney that has been notarised, apostilled, translated and stamped in India.

Read the full guide: Spanish Documents for India: Notary, Apostille and Sworn Translation →

EU-India Trade Agreement and Spanish Exporters: What Is Concluded, What Is Pending

59.Has the EU-India trade agreement been concluded?

Negotiations were concluded on 27 January 2026 at the 16th India-EU Summit, according to reports. Signature and ratification are still to come.

60.When will it be signed?

Reported as expected in December 2026, after the Commission asked the Council on 11 September 2026 to authorise signing.

61.When will it enter into force?

Reported as early 2027, subject to European Parliament consent and Indian ratification. The date can move.

62.What does it cover?

Reported coverage includes goods, services, temporary movement of professionals, financial services and telecoms.

63.Is investment protection included?

A separate investment protection agreement is being negotiated alongside it.

64.Do I wait for the agreement before setting up?

No. Plan on current rules and treat the agreement as upside.

65.Will duties on Spanish goods fall immediately?

Not necessarily. Tariff cuts are usually phased in by product line and need the rules of origin to be met.

66.Does the agreement replace FDI rules?

No. A Spanish investor still follows the FDI route, FEMA filings and company law.

67.Where can I check the latest status?

On the European Commission trade pages and the Indian Ministry of Commerce, which publish the signing and ratification steps.

Read the full guide: EU-India Trade Agreement and Spanish Exporters: What Is Concluded, What Is Pending →

Exit and Restructuring from India for Spanish Groups: Share Sale, Buyback, Liquidation and Merger

68.How can a Spanish parent exit an Indian subsidiary?

By selling the shares, a buyback, voluntary liquidation or strike-off, or a merger or conversion.

69.How is a gain on shares taxed in India?

Long-term gains on unlisted shares held more than 24 months are taxed at 12.5%, and the treaty lets India tax a Spanish seller who holds at least 10%.

70.Is the gain taxed again in Spain?

Usually largely exempt for a qualifying holding. Where not, Spain gives a credit for Indian tax. Confirm with a Spanish adviser.

71.What is the FEMA pricing rule on a sale?

A sale by a non-resident to a resident cannot be above fair value, and a valuation certificate is needed.

72.Which forms are needed?

FC-TRS within 60 days of the transfer, and Forms 145 and 146 for the remittance. In Spain, D-5B within one month.

73.How long does a liquidation take?

Often a year or more, depending on creditors, tax clearance and approvals.

74.What is strike-off?

A quicker closure for a dormant company with no liabilities and no business for two years.

75.Can I merge the Indian company into another group company?

Yes, with approvals. It can be tax-neutral if the conditions are met.

76.Can I stop filing for a dormant company?

No. A company that stops filing faces penalties and its directors can be disqualified. Close it properly.

Read the full guide: Exit and Restructuring from India for Spanish Groups: Share Sale, Buyback, Liquidation and Merger →

Funding an Indian Subsidiary from Spain: Equity, Loans, FEMA Pricing and Filings

77.How should a Spanish parent fund an Indian subsidiary?

Usually with equity shares under the Automatic Route, issued at or above fair value, with the money sent through an authorised dealer bank.

78.By when must shares be allotted after the money arrives?

Within 60 days. After that the money may have to be refunded or regularised.

79.What is Form FC-GPR?

The filing that reports the allotment of shares to a foreign investor, due within 30 days of allotment.

80.What is Form FC-TRS?

The filing for a transfer of shares between a resident and a non-resident, due within 60 days.

81.What is the pricing rule?

A non-resident cannot buy or subscribe below fair value, and cannot sell above it. Fair value is supported by a valuation.

82.Can the parent lend instead of investing?

Yes, under the external commercial borrowing rules, with limits on lender, cost, maturity and use. Interest bears 15% withholding under the treaty.

83.Are convertible instruments equity?

Only if fully and mandatorily convertible. Optionally convertible or redeemable instruments are treated as debt.

84.Does Spain need to be told?

Yes. A Spanish investor declares an acquisition of 10% or more within one month on form D-5A, and intra-group loans above EUR 1 million over a year.

85.What if the filing is late?

A late submission fee applies and, for larger delays, compounding with the Reserve Bank. Avoid it by diarising each date.

Read the full guide: Funding an Indian Subsidiary from Spain: Equity, Loans, FEMA Pricing and Filings →

Hiring in India for Spanish Companies: Contracts, Payroll, Labour Codes and Employer of Record

86.Can a Spanish company hire in India without a subsidiary?

Yes, through an employer of record or as contractors, but the employer-of-record fee and the permanent establishment risk need to be managed.

87.What deductions does an Indian employer make?

Tax on salary, provident fund, state insurance for lower wages and professional tax in some states.

88.When are the labour codes in force?

They were reported in force from 21 November 2025, with rules and state implementation still developing. Confirm the current position.

89.When is payroll tax due?

By the 7th of the next month. Provident fund and state insurance are due by the 15th.

90.Is a non-compete enforceable in India?

Post-employment non-competes are narrowly enforced. Confidentiality and intellectual property clauses are enforceable.

91.Do I need an employee handbook?

Policies on conduct, anti-bribery and harassment are required or advisable, and an internal committee is needed above a size threshold.

92.How long is a typical notice period?

It depends on the contract and the role. One to three months is common for professionals.

93.Are share awards from the parent taxable in India?

Yes, as a perquisite when they vest or are exercised, and the Indian company must withhold tax.

94.Is gratuity compulsory?

It is payable after five years of service where the law applies, and the employer should provide for it.

Read the full guide: Hiring in India for Spanish Companies: Contracts, Payroll, Labour Codes and Employer of Record →

How Long It Takes to Set Up an Indian Subsidiary from Spain: Week-by-Week Timeline

95.What is the slowest step?

Usually the bank account and the first remittance, followed by the Spanish apostille and translation.

96.By when must shares be allotted?

Within 60 days of receiving the money from the Spanish parent.

97.By when must the foreign investment be reported?

Form FC-GPR within 30 days of allotting the shares.

98.When must the company file the commencement declaration?

Form INC-20A within 180 days of incorporation.

99.When must the first auditor be appointed?

Within 30 days of incorporation, by board resolution, with Form ADT-1 filed.

100.Can the Spanish and Indian steps run in parallel?

Yes. The Spanish documents, the Indian director and name steps and the bank conversation can all start in week one.

101.What if I need the company by a fixed date?

Tell us on day one. We can sequence the steps and tell you if the date is realistic, and discuss interim options.

102.Do the directors need to travel to India?

Not for the incorporation filing, which is online, but some banks ask for a director to attend or to verify identity.

Read the full guide: How Long It Takes to Set Up an Indian Subsidiary from Spain: Week-by-Week Timeline →

Incorporation Steps for a Spanish Company in India: SPICe+, DIN, PAN and the Bank

103.How many directors and shareholders does a private company need?

Two shareholders and two directors, with at least one Resident Director.

104.Can a Spanish company be the shareholder?

Yes. A foreign company may subscribe to shares, provided the sector allows foreign investment. Documents are apostilled and translated.

105.Do the directors need to be in India to incorporate?

No. The filing is online, with Digital Signature Certificates. Some banks ask a director to attend.

106.What is AGILE-PRO-S?

An attached form to SPICe+ that applies for PAN, TAN, provident fund, state insurance and other registrations, and for the bank account.

107.How soon must the first auditor be appointed?

Within 30 days of incorporation, by the board, with Form ADT-1.

108.What is Form INC-20A?

The declaration of commencement of business, to be filed within 180 days of incorporation.

109.Can I change the name later?

Yes, with a special resolution and Registrar approval, but choosing a good name at the start avoids the delay and cost.

Read the full guide: Incorporation Steps for a Spanish Company in India: SPICe+, DIN, PAN and the Bank →

India-Spain DTAA: Article-by-Article Guide with Tax Rates, PE, Share Gains and Anti-Abuse Rules

110.What is the Indian withholding tax on dividends paid to a Spanish parent?

15% of the gross amount under the treaty, flat, if the Spanish company is the beneficial owner and holds the paperwork on the payment date. The domestic rate is about 20% plus surcharge and cess.

111.Why is the royalty and technical fee rate 10% when the treaty text says otherwise?

The 10% comes through the most-favoured-nation clause, which imports the lower India-Germany rate. India gave effect to it by Notification 33/2024, applying from assessment year 2024-25. Keep a copy of the notification.

112.When does a building or installation site become a permanent establishment?

After more than six months. The treaty has no separate clause that turns services by employees into a permanent establishment after a set number of days.

113.Are gains on Indian shares taxable in India for a Spanish seller?

If the seller held at least 10%, India may tax the gain, at 12.5% for unlisted shares held more than 24 months. For holdings below 10% the residual rule leaves the gain taxable only in Spain.

114.Does Spain tax the dividend again?

Usually not for a qualifying holding, because the Spanish participation exemption removes most of the dividend from Spanish tax. Where it does not apply, Spain gives a credit for Indian tax up to the Spanish tax on that income.

115.What documents prove treaty eligibility?

A tax residency certificate from the Agencia Tributaria, Form 41, a beneficial ownership declaration and a no-PE declaration, plus a note on the MFN clause where the 10% rate is claimed.

116.Does the principal purpose test affect Spanish groups?

Yes. It has applied to Spain since 1 January 2022. A Spanish company with real people and decisions is at low risk; a pass-through company with no substance is exposed.

117.Does the treaty remove the need for any Indian approval?

No. It deals only with tax. India's foreign investment rules, RBI reporting and sector caps apply separately.

118.Can I get relief if the wrong rate was deducted?

You can claim a refund through the Indian return, but it is slow. It is far easier to hold the documents before the payment date.

Read the full guide: India-Spain DTAA: Article-by-Article Guide with Tax Rates, PE, Share Gains and Anti-Abuse Rules →

Relocating Spanish Staff to India: Visa, FRRO Registration, Tax Residency and Family Practicalities

119.What visa does a Spanish employee need to work in India?

An employment visa, applied for with an offer or employment letter and documents about the Indian company. Productive work on a business visa is not permitted.

120.Is there a salary floor?

A minimum annual salary of USD 25,000 applies to the main employment category. Confirm exceptions.

121.Do I need to register after arrival?

Yes, with the Foreigners Regional Registration Office within 14 days if the stay will exceed 180 days.

122.When does a Spanish employee become an Indian tax resident?

At 182 days or more in a financial year, or 60 days plus 365 days in the previous four years. Special categories may differ.

123.Is there a social security agreement?

None found between India and Spain. Confirm with an adviser.

124.Can family members come?

Yes on dependant visas, which the main applicant should request at the same time.

125.Where do I apply?

Online, with attendance where needed at the Embassy of India in Madrid or the Consulate General in Barcelona.

126.How early should I start?

Eight to twelve weeks before the planned move.

127.Does the Spanish exemption for work abroad apply?

Possibly, up to EUR 60,100 a year if the conditions are met. A Spanish adviser must confirm.

Read the full guide: Relocating Spanish Staff to India: Visa, FRRO Registration, Tax Residency and Family Practicalities →

Repatriating Profits from India to Spain: Dividends, Fees, Royalties, Loans and Tax Cost

128.How can a Spanish parent take money out of an Indian subsidiary?

Through dividends, service fees, royalties, loan interest and repayment, or a buyback or capital reduction. Each has a different tax and documentation profile.

129.What is the withholding tax on dividends to Spain?

15% under the treaty, if the documents are in place on the payment date.

130.What is the rate on technical fees and royalties?

10%, through the most-favoured-nation clause and Notification 33/2024.

131.Is a dividend taxed again in Spain?

Usually not for a qualifying holding, because of the participation exemption. Confirm the conditions with a Spanish adviser.

132.Can the subsidiary pay a management fee from day one?

Yes if there is a contract and real services at an arm's length price. Indian officers will test it.

133.Why are shareholder costs disallowed?

Services that only protect the parent's investment are the parent's own cost, not a service to the subsidiary.

134.Does the fee attract goods and services tax?

Often yes, under reverse charge for services received from abroad. The Indian company pays it and may claim credit.

135.How is interest taxed?

15% withholding under the treaty, with deductibility subject to the interest limitation rule and transfer pricing.

136.What documents does the bank need?

Forms 145 and 146, the contract, invoices, the residency certificate and sometimes proof of tax paid.

Read the full guide: Repatriating Profits from India to Spain: Dividends, Fees, Royalties, Loans and Tax Cost →

Resident Director in India for Spanish Companies: Rules, Options and Liability

137.Who is a Resident Director in India?

A director who has stayed in India for 182 days or more in the financial year. Every Indian company must have at least one.

138.Can a Spanish citizen be the Resident Director?

Yes, if the person stays in India long enough and holds a DIN and a Digital Signature Certificate, and has the right visa. A Spanish citizen resident in India for 182 days qualifies.

139.How many directors does a private company need?

At least two, one of whom must be a Resident Director.

140.Can an adviser supply a Resident Director?

Yes, as a professional director on a written scope. The director must have a real role and the ability to decide. AU Corporate can discuss what arrangement fits your plan.

141.Is a Resident Director personally liable?

Yes. Directors are personally liable for statutory defaults and for fraud, and a formal seat does not remove it.

142.What if the Resident Director leaves India?

The company may default on the requirement if no director meets the 182-day test. Track the days and appoint a replacement in good time.

143.Does the director need annual KYC?

Yes, each director with a DIN completes an annual KYC. Late KYC can lead to deactivation of the DIN.

144.How often must the board meet?

At least four times a year with no more than 120 days between meetings, subject to relaxations for small companies.

145.Should the Spanish parent insure its directors?

It is worth pricing directors' and officers' cover for the Indian company, especially with a professional or relocated director.

Read the full guide: Resident Director in India for Spanish Companies: Rules, Options and Liability →

Spanish Employees in India: Income Tax, the Spanish Foreign-Work Exemption and Provident Fund

146.Is there a social security agreement between India and Spain?

Not in the 2022 list of operating Indian agreements, so a certificate of coverage is not available. Spanish staff in India are generally covered by the Indian provident fund rules for international workers from the first day.

147.Is a Spanish employee's salary for work in India taxable in India?

Yes, unless the treaty's employment article conditions are met, which a secondee whose cost is borne by the Indian subsidiary normally does not meet.

148.What is the Spanish exemption for work abroad?

Spanish personal income tax law exempts income from work effectively performed abroad for a non-resident entity, up to EUR 60,100 a year, if the conditions are met. A Spanish adviser must confirm eligibility for each person.

149.Does a secondee pay Spanish social security as well as Indian provident fund?

Possibly. Without an agreement both systems can apply, depending on the posting terms and Spanish rules. Decide and write it into the contract.

150.Who deducts Indian tax on the salary?

The Indian employer, under Section 392 of the Income-tax Act, 2025, by the 7th of the following month.

151.Do share awards from the Spanish parent create Indian tax?

Yes for the portion earned while working in India. The Indian employer should be told about the awards so that it can withhold tax.

152.Can a short business trip avoid Indian tax?

Only if the employee stays below the treaty day count, the employer is Spanish and bears the cost, and no productive work is done for the Indian company. Keep a travel record.

153.How do I avoid paying twice?

Not through an agreement. Use the Spanish exemption where it applies, structure the posting carefully and budget for both systems where they overlap.

Read the full guide: Spanish Employees in India: Income Tax, the Spanish Foreign-Work Exemption and Provident Fund →

Spanish Parent Obligations: Foreign Investment Declarations, Tax Treatment and Reporting

154.Does a Spanish company need permission to invest in India?

The official guide to Spanish investment abroad describes no prior authorisation for ordinary investments. A declaration to the Registro de Inversiones Exteriores is required after the investment.

155.When must the Spanish investment be declared?

Within one month of the transaction for acquisitions of 10% or more, on form D-5A, and disposals on D-5B.

156.What is the annual D-8 report?

A report on the foreign company filed within seven months of its year end, where the Spanish holder has at least 10% and the foreign capital or net equity exceeds EUR 1.5 million, or the company is a holding.

157.Do intra-group loans need a declaration?

Loans from a Spanish company above EUR 1 million with a term over one year are declared, and so are repayments.

158.Are Indian dividends taxed in Spain?

Generally largely exempt for a qualifying holding under the participation exemption. Confirm the current percentage and conditions with a Spanish adviser.

159.Do CFC rules apply to an Indian operating company?

Rarely, because an operating company that pays normal Indian tax is not the usual target, but passive income and holding entities should be reviewed.

160.What Spanish records does India ask for?

Mercantile Registry extracts, the bylaws, a board resolution, beneficial ownership information and recent accounts.

161.Who prepares the Spanish declarations?

Your Spanish adviser or the bank handling the transfer. The Indian adviser supplies the Indian evidence.

Read the full guide: Spanish Parent Obligations: Foreign Investment Declarations, Tax Treatment and Reporting →

Structure Options for Spanish Companies in India: Subsidiary, LLP, Branch, Liaison or JV

162.Which structure do most Spanish companies use in India?

A private limited company, wholly owned or in a joint venture. It limits liability and allows the full range of activity.

163.Can a Spanish company own 100% of an Indian company?

Yes in sectors under the Automatic Route. Caps and conditions apply in retail, insurance, defence, media and some other sectors.

164.Does Press Note 3 apply to Spanish investors?

Not by nationality. Spain has no land border with India, so the approval requirement for land-border countries does not apply unless a beneficial owner is from such a country.

165.What are the conditions for a branch office?

A net worth of USD 100,000 and profits in the five preceding years, with a limited list of permitted activities.

166.What are the conditions for a liaison office?

A net worth of USD 50,000 and profits in the three preceding years; it cannot earn income.

167.Is an LLP better than a company?

Only for services in sectors with no FDI conditions. Many banks and investors prefer a company.

168.Is a subsidiary a permanent establishment of the parent?

Not by itself. The risk arises if the parent runs it as a department or if its people conclude contracts in India for the parent.

169.What tax does a branch pay?

Indian tax at the higher foreign company rate on its profits, plus remittance of the profits without dividend withholding tax.

170.Can I change structure later?

Yes, by converting, transferring the business or merging, but each route has tax and FEMA consequences. Plan the end state at the start.

Read the full guide: Structure Options for Spanish Companies in India: Subsidiary, LLP, Branch, Liaison or JV →

Transfer Pricing for Spanish Groups in India: Documentation, Form 3CEB and Benchmarking

171.What is transfer pricing?

The rules that require prices between related companies to be what independent parties would agree. India and Spain both apply them.

172.What is Form 3CEB?

An accountant's report on international transactions with associated enterprises, filed with the Indian tax return.

173.Does a subsidiary with no revenue need documentation?

Yes, if it has international transactions such as service fees or loans from the parent.

174.Which transactions are the highest risk?

Management fees, royalties, intra-group loans, guarantees and cost allocations.

175.What is the benefit test for services?

Whether an independent party would have paid for the service. Duplicate and shareholder services fail it.

176.Does Spain also require documentation?

Yes. Larger groups prepare a master file, a local file and country-by-country reporting.

177.Can I agree the method in advance?

Yes, through an advance pricing agreement, which takes time and cost but fixes the method for several years.

178.What if Spain and India disagree?

The treaty's mutual agreement procedure lets the competent authorities try to resolve double taxation from an adjustment.

179.What is a safe harbour?

A rule that accepts a stated margin for certain transactions. It gives certainty at the cost of flexibility.

Read the full guide: Transfer Pricing for Spanish Groups in India: Documentation, Form 3CEB and Benchmarking →

← Back to the complete guide: How to Set Up a Subsidiary in India from Spain

Last updated 2 November 2026. General information only, not legal or tax advice. Indian and Spanish rules change often; confirm current requirements before acting.

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