Post-Brexit: your British company operating in Spain with the right structure

The real impact of Brexit for British companies in Spain

Brexit was not a one-off event: it was the start of a regulatory adaptation process that, more than four years later, continues to generate friction for many UK companies with operations in Spain. Those that resolved the transition with provisional solutions in 2021 now find themselves with suboptimal structures that generate tax, employment or compliance risk.

The impact varies considerably depending on the type of company and its business model in Spain, but there are four areas where virtually every UK company with activity in Spain has had to adapt: the legal structure of its presence, VAT and customs treatment, employee permits, and personal data management.

Structure of presence: the models that work post-Brexit

Before Brexit, many UK companies operated in Spain without a local entity, protected by the EU passport or simply by the freedom to provide services within the European internal market. This route is no longer available for the UK as a third country. The presence structures that work are:

Spanish Sociedad de Responsabilidad Limitada (SL): the most frequent option for companies with substantial activity in Spain. It allows direct employment, invoicing with a Spanish tax number (NIF), access to local bank financing and the independent development of a Spanish brand. Maintenance costs are higher (accounting, audit where required, tax and employment compliance), but visibility with Spanish clients and suppliers is greater.

Branch: an alternative to the SL when the company does not want to create a separate legal entity. The branch has no independent legal personality and the parent is liable for its debts. Incorporation is simpler than an SL, but its profile with Spanish clients and suppliers may be lower and the tax treatment less favourable.

Fiscal representative: mandatory for EU companies and advisable for third-country companies carrying out VAT-able transactions in Spain without a permanent establishment. The fiscal representative does not replace the entity but acts as jointly and severally liable before the AEAT for VAT obligations.

Independent agent: allows operations in Spain through a local distributor, agent or representative without creating a direct presence. The risk is that if the agent habitually has the authority to conclude contracts on behalf of the UK company, a permanent establishment may arise.

Trade in goods: the new customs reality

Trade in goods between the UK and Spain now requires import and export declarations involving:

• Tariff code (TARIC): each product has a code that determines the applicable duty. The UK-EU Trade and Cooperation Agreement eliminates tariffs on goods with sufficient UK or EU origin, but the origin criterion must be documented.
• VAT on importation: goods imported from the UK to Spain are subject to VAT at the Spanish border. In many cases, VAT can be deferred to the monthly tax period if the Spanish company is enrolled in the deferral regime.
• EORI number: essential for carrying out export operations from the UK and import operations into Spain.
• Customs representative: many companies choose to delegate customs procedures to a freight forwarder acting on behalf of the importing/exporting company.

British employees in Spain: the updated guide

British citizens who started working in Spain before 1 January 2021 and registered under the Withdrawal Agreement have a regularised status. The problem affects those who arrived afterwards or those who never formalised their situation.

To hire a British citizen in Spain from scratch, the usual process is:

1. The Spanish company obtains a residence and work authorisation for the worker (general regime or, for highly qualified profiles, the EU Blue Card route).
2. The worker processes the long-stay visa at the Spanish consulate in the UK.
3. Once in Spain, they register with the local municipality (padrón) and obtain the TIE (Tarjeta de Identidad de Extranjero).

For executives and highly qualified professionals, the Beckham Law can be a very relevant tax tool that makes the Spanish company’s remuneration package more competitive against market alternatives.

UK-Spain tax treaty: what remains after Brexit

One of the positive elements for British companies with interests in Spain is that the Convention for the Avoidance of Double Taxation between Spain and the United Kingdom was not affected by Brexit. Tax treaties are bilateral agreements that do not depend on EU membership. The 2013 UK-Spain CDI remains in force and governs:

• The taxation of business profits: only in the country of residence of the company unless a permanent establishment exists in the other state.
• Withholding on dividends: maximum 15% at source.
• Withholding on interest: maximum 5%.
• Withholding on royalties: 0% for certain royalties (literary, artistic and scientific copyright) and 5% for others.
• The treatment of capital gains and employment income.

A well-designed structure that takes advantage of the treaty can significantly optimise the repatriation of profits from the Spanish SL to the UK parent and reduce the overall tax burden of the group.

Data protection: the post-Brexit situation and its risks

The European Commission has recognised the UK as an adequate country for GDPR purposes, which means that transfers of personal data from Spain to the UK do not require additional measures beyond those that would apply to an intra-EU transfer. However, this Adequacy Decision can be reviewed or revoked if the UK GDPR begins to diverge significantly from the European standard.

Companies with significant personal data flows between their Spanish operations and their UK headquarters should:

• Document the data flow in the records of processing activities.
• Verify that the legal basis for processing is appropriate in both jurisdictions.
• Have Standard Contractual Clauses ready as a contingency plan in case the Adequacy Decision ceases to be in force.
• Check whether a Data Protection Officer (DPO) or EU representative is required for the Spanish entity.

Why act now rather than wait

Many UK companies operating in Spain have adopted a wait-and-see approach since Brexit, assuming that the situation will resolve itself or that the risk is not immediate. This approach has an increasing cost: the AEAT has intensified its action on undeclared permanent establishments, the Labour Inspectorate has increased controls on foreign workers without permits, and GDPR fines are becoming increasingly significant. Regularising the situation proactively is always cheaper and less disruptive than doing so under the pressure of an inspection or administrative requirement.

UK-Spain regulatory divergence since Brexit: what has actually changed

Four years after Brexit, the UK and Spanish regulatory frameworks have begun to diverge in ways that create ongoing operational friction for UK companies in Spain. The most significant areas of divergence for businesses are:

Financial services. UK financial firms lost their EU passport on 1 January 2021. A UK-authorised investment firm, insurance undertaking, or payment institution can no longer provide services to Spanish clients under UK authorisation alone. Options include: establishing a Spanish branch authorised by the CNMV or DGSFP; setting up a Spanish subsidiary with full authorisation; accessing the market through third-country rules (which Spain applies within an ESMA framework for certain activities); or using a local partner with EU authorisation. BMC advises on the regulatory pathway for each type of financial activity.

Professional qualifications. UK professionals (lawyers, engineers, architects, auditors) who relied on automatic mutual recognition of EU qualifications for practice in Spain must now have their qualifications individually assessed and recognised under Spain’s third-country recognition procedures. Solicitors seeking to advise on Spanish law must pass the Spanish bar qualification (reválida) or register as a foreign lawyer under Spain’s rules for third-country professionals. This is particularly relevant for UK law firms with Spanish desks or Spanish client bases.

Regulatory compliance benchmarks. UK companies with Spain-based operations that previously referenced UK technical standards, CE marking procedures, or UK statutory compliance frameworks must ensure they have separately demonstrated compliance with equivalent Spanish or EU standards. Post-Brexit, UK Conformity Assessed (UKCA) marking is not recognised for products placed on the Spanish market; CE marking remains the requirement.

VAT One Stop Shop (OSS). UK e-commerce businesses that previously used the EU Mini One Stop Shop (MOSS) to account for VAT on digital services across the EU lost access to that system after Brexit. UK businesses selling digital services or goods directly to Spanish consumers (B2C) above the €10,000 EU-wide threshold must now either register for VAT in Spain (and each EU member state where they sell) or access the EU OSS through an EU-registered entity. BMC manages OSS registration and compliance for UK businesses with significant EU B2C sales through their Spanish SL.

Beckham Law: the specific opportunity for British executives relocating to Spain

For British executives, entrepreneurs, and remote workers relocating to Spain, the Beckham Law (régimen especial de trabajadores desplazados, Art. 93 LIRPF as amended by Ley 28/2022 de Startups) is the most significant tax planning tool available. The 2023 reform expanded eligibility substantially — British nationals who work remotely for UK employers, entrepreneurs founding a Spanish company, and researchers now qualify alongside traditionally employed executives.

The Beckham Law’s practical benefit for a British national is significant: instead of paying Spanish progressive IRPF (19% to 47% depending on income level, plus regional tranche) on worldwide income, the regime applies a flat 24% rate on Spanish-source income (and 47% above €600,000) for six years. Crucially, foreign-source income — including a UK salary paid from a UK employer, UK rental income, or UK investment returns — is generally excluded from the Spanish tax base entirely, subject to the applicable treaty provisions.

The application window is strictly six months from the date of Spanish Social Security registration (or, for non-employed individuals, from the date of registration with the AEAT’s census). BMC manages the Modelo 149 application for British clients from the preparatory phase — including coordinating the documentation required to demonstrate the prior non-residency condition — through to AEAT approval.