Overview

Although clearly violating European Law (Directive of the council 69/335/CEE), Spanish authorities have traditionally taxed the opening of branches or permanent establishments (PEs) of European companies in Spain.

Companies are charged, or were charged, 1% capital tax (capital duty in the Directive), based on the part of the business carried out in Spain, multiplied by the equity of the company opening the branch. Although the tax is not high, it is one more burden when starting a business.

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