Most Spanish groups enter India through a private limited company owned wholly by the parent or in a joint venture, because it limits liability, gives a clear tax position and allows the full range of commercial activity. A branch office is possible for a company with a net worth of USD 100,000 and a five-year profit record, and a liaison office for one with USD 50,000 and a three-year record, but both are limited in what they can do and a branch is taxed at the higher foreign company rate. A limited liability partnership suits services in sectors with no FDI conditions. A project office serves a contract. For a Spanish company, the sector often decides the answer, because caps and conditions apply to retail, insurance, defence and some media regardless of nationality.
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Key facts
| Wholly owned subsidiary | Private limited company with 100% Spanish ownership in sectors under the Automatic Route |
|---|---|
| Joint venture | Private limited company with an Indian partner; shareholder agreement; sector caps apply |
| LLP | Allowed for sectors under the Automatic Route with no FDI-linked conditions; partners instead of shareholders |
| Branch office | Net worth USD 100,000 and a five-year profit record; limited activities; taxed as a foreign company |
| Liaison office | Net worth USD 50,000 and a three-year profit record; no income-earning activity |
| Project office | For a specific contract; conditions on funding and the contract |
| Press Note 3 | Does not apply by nationality to a Spanish investor; Spain has no land border with India |
| Sector caps | Retail, insurance, defence, media and some others have conditions for any foreign investor |
The options side by side
| Option | What it is | Best for | Main limit |
|---|---|---|---|
| Wholly owned private limited company | A separate Indian legal person owned by the Spanish parent | Manufacturing, services, trading and long-term operations | Full compliance, audit and filings; dividend tax of 15% under the treaty |
| Joint venture company | A private limited company with an Indian partner | Sectors where local distribution or licensing matters | Partner conflicts; sector caps; exit |
| LLP | A partnership with limited liability | Consulting and professional services | Not allowed where FDI conditions exist; less familiar to banks and investors |
| Branch office | An extension of the Spanish company | Spanish companies with a long track record that need to trade as themselves | Limited activity; foreign company tax rate; net worth and profit tests; permanent establishment |
| Liaison office | A communication office with no income | Market research and liaison | Cannot trade or earn; three-year renewable approval |
| Project office | A temporary office for a contract | Construction, power and engineering projects | Needs a contract and funding conditions; taxed as a permanent establishment |
The wholly owned subsidiary
For most Spanish groups the subsidiary is the default. It has its own legal personality, protects the parent from the subsidiary's liabilities, and can raise local finance, hold licences and employ people. Under the India-Spain treaty its dividends bear a flat 15% withholding tax and the Spanish parent usually benefits from the participation exemption at home. A subsidiary is not by itself a permanent establishment of the parent, though the parent should avoid managing it as a department. See the treaty guide.
A subsidiary needs at least two directors, a Resident Director, a registered office, an auditor and an annual cycle of filings. The cost of this is small beside the protection, but it is not zero. See the cost guide.
Joint ventures
A joint venture company is the usual way into sectors where local partners bring licences, land, distribution or customers. The shareholders' agreement should say how the board is formed, which decisions need both partners, how deadlock is resolved, how shares may be transferred, what happens on a change of control and how the venture ends. Because foreign investment must be priced at or above fair value on entry and at or below it on exit, the agreement should avoid guaranteed returns, which Indian rules treat with caution for foreign investors. See contracts and arbitration.
Branch, liaison and project offices
A Spanish company can open a branch office in India only for specified activities, such as export and import, professional or consultancy services, research, technical or financial collaborations and acting as a buying or selling agent, and it must show a net worth of USD 100,000 and a profit-making record for the five preceding years. A liaison office requires USD 50,000 and three years of profit, cannot earn income and may only promote the company and gather information. A project office is for a specific contract with the conditions the Reserve Bank sets. All three are extensions of the Spanish company, so Spanish and Indian tax both apply and the profits of a branch or project office are taxed in India at the higher foreign company rate. For most operating businesses a subsidiary is simpler.
Sector notes for Spanish investors
| Sector | Typical Spanish angle | What to check |
|---|---|---|
| Renewable energy and infrastructure | Developers, EPC contractors and equipment makers | Project-level special purpose companies; the six-month site rule for permanent establishment; licences from state and central bodies |
| Auto components and industrial engineering | Tier-one and tier-two suppliers following customers to India | Land and factory approvals; import duties on machinery; production-linked incentives |
| Ceramics and building products | Manufacturers and exporters | Raw material sourcing; state incentives; competition from local clusters |
| Fashion and retail | Single-brand retailers and franchise partners | FDI conditions on single-brand retail, including local sourcing rules above a threshold; lease and store model |
| Information technology and services | Software, systems and support centres | Transfer pricing; data protection; the visa route for staff |
| Financial services and insurance | Banks, insurers and advisers | Caps and licences from the sector regulator; not a normal Automatic Route case |
A short way to decide
- If you want to trade, hire and own assets in India for years, choose a private limited company.
- If a local partner brings licences or customers, choose a joint venture company and negotiate the agreement carefully.
- If you only provide services and the sector has no FDI conditions, consider an LLP, but check the bank and investor view.
- If you need to test the market without income, a liaison office may work, but a small subsidiary often costs little more.
- If you have a single contract, consider a project office or a project company.
- In every case confirm the sector route and caps before you file.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Agencia Tributaria (Spain), Spanish Ministry of Economy, Trade and Business and the Ministry of External Affairs (India).
Frequently asked questions
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.
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.
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.
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.
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.
Is an LLP better than a company?
Only for services in sectors with no FDI conditions. Many banks and investors prefer a company.
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.
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.
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.
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Last updated 2 November 2026. General information only, not legal or tax advice. Indian and Spanish rules change often; confirm current requirements before acting.