Why Tenerife

Setting up

Tenerife is subject to the Spanish legal system, which obliges investors who decide to operate on the island to opt for any of the different regulated corporate forms, each of which has different advantages and adapts to the characteristics of the investor and his needs.

Types of Corporate Entity

The most commonly used types of corporate entities are Limited Liability Company and Corporation: They offer a further step in limiting the liability of the partners, who only risk the assets they invest, but are not personally liable for the company’s debts.

Incorporation of a Spanish company with its own legal personality

The foreign investor can choose among different types of mercantile entities foreseen by the Spanish legislation. The most commonly used types of corporate entities are Limited Liability Companies (S.L. in Spain) and Corporations (S.A. in Spain).

Limited Liability Entrepreneur

Development of the activity directly by natural person in case of meeting certain requirements.

Branch or permanent establishment

Both figures do not have their own legal personality, so their activity and legal responsibility will always be directly linked to the investor’s parent company.

Joint venture

Associations with other businessmen already established in Spain, which allow to share the risks and to combine resources and experience. Different forms of joint ventures can be distinguished in Spanish law:
·Economic Interest Grouping and European Economic Interest Grouping (EEIG)
·Temporary Joint Venture
·Association with one or more Spanish businessmen in a form of collaboration typical of the Spanish legal system (“Cuenta en Participación,” in Spanish)
·Joint venture through corporations (S.A.) or limited liability companies

Without establishing a centre of operations in Spain

Other alternatives include the following:
· Entering into a distribution agreement
· Carrying out operations through an agent
· Carrying out operations through a commission agent
· Establishment of a franchise

For more information on the necessary steps as regards incorporation, as well as on other relevant issues such as Intellectual Property, Audit and Financial Reporting or Securities Market, you can consult our Guide for Doing Business in Tenerife