Steps to establish a delegation of a foreign foundation in Spain

1. ENTRY IN THE COMPETENT REGISTER

 

1.1 Determine the competent Register of Foundations:

• If the foreign foundation is going to carry out its activity throughout the Spanish territory or in several Autonomous Communities: registration must be applied for in the State Register of Foundations.
• If the foreign foundation is going to carry out its activity mainly in a single Autonomous Community: it must apply for registration in the Register of Foundations of the corresponding Autonomous Community.

1.2 Gather the necessary documentation:

• Proof of valid incorporation of the foreign foundation: according to its law of origin.
• Current statutes of the foundation.
• Identity of the heads of its governing bodies.
• Document establishing the delegation.

1.3 Submitting the application for registration:

• The application for registration must be submitted together with the required documentation to the competent Register of Foundations.
• The documents must be legalised or apostilled, as appropriate.

1.4 Entry in the Register of Foundations:

• If the application is accepted, the delegation of the foreign foundation will be entered in the relevant Register of Foundations.
• The registration will be published in the Official State Gazette (BOE) or in the Official Gazette of the corresponding Autonomous Community.

2. PROTECTORATE

The Protectorate is a body of the Administration that ensures that foundations operate legally and correctly. Foreign foundations operating in Spain must follow the rules of the Protectorate corresponding to the region in which they operate. If a foreign foundation operates throughout the country or in several autonomous regions, then it must be subject to the Protectorate at the national level.

If a foundation plans to operate mainly within a specific autonomous region, it must adhere to the corresponding autonomous foundation Protectorate. Furthermore, delegations of foreign foundations in Spain will be subject to the same legal rules that apply to Spanish foundations.

 

3. HOW TO REGISTER THE DELEGATION IN THE REGISTER OF FOUNDATIONS?

A foreign foundation wishing to register must prove to the Register of Foundations that it has been validly constituted under its national legislation. If this condition is not proven, or if its objectives are not of general interest according to Spanish law, registration may be rejected.

In addition, foreign foundations that do not meet these requirements may not use the term “Fundación” in their name.

The information that must be included in the public deed according to Article 4 of the Regulation on Foundations of State Competence is as follows:

• The aims of the foreign foundation
• The details or documents proving the establishment of the foreign foundation in accordance with its personal law.
• A certification of the resolution of its governing body approving the establishment of a delegation of the foundation in Spain.
• The name of the delegation, which must include the expression “Delegation of the foundation”.
• The address and territorial scope of action of the delegation in Spain.
• The activities which, in fulfilment of the aims, the delegation intends to carry out on a stable basis in Spain.
• Identification of the person or persons who will represent the delegation or who will form part of its governing bodies.
• The delegation’s first plan of action in Spain.

4. WHAT IS THE TAX REGIME APPLICABLE TO DELEGATIONS OF FOREIGN FOUNDATIONS?

The delegations of foreign foundations in Spain, as they obtain income in the territory, will be taxed as taxpayers of Non-Resident Income Tax, being considered as permanent establishments in accordance with Royal Legislative Decree 5/2004. Furthermore, if these delegations are registered in the Register of Foundations and comply with the requirements of Law 49/2002, they will be treated as non-profit entities, which allows them to benefit from a special tax regime similar to that of Spanish foundations.

This special regime includes exemption from corporate income tax for certain income such as donations, grants, and other income directly related to their specific purpose. They are also taxed at a reduced rate of 10% and are considered beneficiaries of patronage, which means that donations and contributions they receive will enjoy tax incentives.

The delegations registered under this special regime will enjoy exemptions from several local taxes, such as the Tax on Economic Activities, the Real Estate Tax and the Tax on the Increase in Value of Urban Land, under the same conditions as local foundations.