Royal Decree-Law 5/2023, transposed in Spain various European Union Directives on corporate restructuring, that include the transfer of the domicile of a foreign company to Spain as well as the transfer of the domicile of a Spanish company abroad.

The transfer of the company domicile into to Spain constitutes a cross-border corporate restructuring since it implies that a foreign company modifies its national law, or that which is applicable to it, maintaining its legal existence and capacity, adapting to the Spanish corporate commercial law regime with the implications that this may entail in rights and obligations of the company with directors and shareholders and of these among themselves.  

Law 3/2009, of 3 April, on corporate restructuring which the current Royal Decree-Law 5/2023 replaces, lacked complete regulation on international transfer of domicile of foreign companies to Spain, although it briefly declared it to be permitted though requiring to compliance with Spanish regulations on the share capital as guarantee ratio, and obliging them to incorporate as Spanish companies. Although Royal Decree-Law 5/2023 does not offer detailed regulation either, it establishes additional requirements for this cross-border structural change.

As regards taxation, this operation is also contemplated in the tax neutrality regime applicable to corporate restructuring – logically provided that the requirements established therein are met. In this line, in Judgment C-106/2016 of 25 October 2017, the Court of Justice of the European Union (CJEU) declares that it is possible to change a company domicile to another EU Member State without changing the place of business and without moving the effective seat.

Elements to take into account.

Firstly , the law of origin applicable to the company must be determined and whether it allows the transfer of domicile to another country without causing the loss of its company legal identity and capacity. Some of the key elements to take into account are:

a) In the case of companies outside the European Economic Area (EEA), prior to the transfer of domicile, a certificate from the foreign Registrar or competent agency is required so that the Spanish Commercial Registry can confirm that the formalities of the country of origin are complied with – the Spanish Commercial Registrar must also check the legality of the operation if identifies indications of fraudulent or abusive purposes.

b) The Company must obtain a Spanish id. Number, NIF for its shareholders and directors, a company name, an address in Spain, minimum share capital and present bylaws according to Spanish law, the Spanish Companies Act.

c) Companies outside the EEA must submit an independent expert report certifying that their net assets are at least equal to the share capital according to their new by-laws, and file annual accounts of the last financial year.

d) The Company must prove having adopted the required measures for the participation of employees as applicable, and register its employees in compliance with tax and labor regulations.  

e) Company's creditors right have a specific protection regime whereby during the 2 years immediately subsequent to the execution and effectiveness of the operation, and for their receivables accrued prior to the publication of the reorganization project, they may sue the company before the courts of the domicile in the State of origin (Without prejudice to other rules of international jurisdiction -e.g. Regulation 1215/2012 Brussels I a).

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