Due diligence checklist for buying a company in Spain

You’ve agreed on a price and the seller seems trustworthy. So why bother with due diligence? Because in Spain — as in any country — what the seller tells you and what the company’s records actually show are often two very different things. Hidden tax debts, undisclosed employment disputes, and licences that don’t transfer are among the most common surprises that appear after a deal closes. By then, it’s too late.

This guide provides a practical due diligence checklist for foreign buyers acquiring a Spanish company — covering the legal, financial, tax, and operational areas that matter most in a Spanish acquisition.

What is due diligence in a Spanish acquisition?

Due diligence (diligencia debida) is the investigation process that a buyer conducts before finalising the purchase of a business or company. In Spain, it serves two purposes: identifying risks that may affect the price or the decision to proceed, and building the factual basis for the representations and warranties in the purchase agreement.

For foreign buyers unfamiliar with the Spanish legal and tax system, due diligence is even more critical — local rules on employment, social security liability, municipal licences, and tax compliance have specific features that can catch non-resident buyers off guard.

1. Corporate and legal due diligence

Start with the company’s legal identity and governance:

• Certificate from the Registro Mercantil (Companies Registry) confirming the company’s legal existence, registered capital, and shareholding structure
• Articles of association (estatutos sociales) and any shareholder agreements
• Shareholder register — confirm who actually owns the shares being sold
• Minutes of board meetings and shareholders’ meetings for the last 3–5 years
• Any existing pledges, encumbrances, or pre-emption rights over the shares
• Powers of attorney granted by the company — confirm they will be revoked at closing
• Any ongoing or threatened litigation involving the company
• Regulatory licences and permits — including whether they are transferable to a new owner

2. Financial due diligence

Review the company’s financial health independently:

• Audited financial statements for the last 3–5 years (if available)
• Management accounts for the current year
• Bank statements and reconciliation to the accounts
• Accounts receivable: age analysis, concentration risk, recoverability
• Accounts payable: any overdue amounts, informal payment arrangements
• Off-balance sheet liabilities: guarantees, contingent obligations, lease commitments
• Working capital trends and normalised EBITDA analysis
• Capital expenditure history and upcoming investment needs

3. Tax due diligence

This is the area with the most hidden risk in Spanish acquisitions:

Corporate income tax

• Tax returns filed for the last 4 years (the standard Spanish statute of limitations)
• Any open tax inspections or pending assessments
• Tax loss carryforwards — confirm their recoverability and any restrictions after a change of control
• Transfer pricing: does the company have related-party transactions? Is there documentation?
• Treatment of deferred tax assets and liabilities

VAT and indirect taxes

• VAT returns for the last 4 years
• Any VAT adjustments, disputed credits, or ongoing VAT inspections
• Property transfer tax (ITP) and stamp duty (AJD) on any past real estate transactions

Employment-related taxes and social security

• Obtain a certificate from the AEAT confirming no outstanding tax debts — this is a formal document (certificado de estar al corriente de obligaciones tributarias)
• Obtain the equivalent certificate from the Social Security authority (Tesorería General de la Seguridad Social)

These two certificates are essential. Under Spanish law, if a business is sold without them, the buyer can be held jointly liable for the seller’s tax and social security debts — regardless of what the purchase agreement says.

4. Labour and employment due diligence

Spain has some of Europe’s most employee-protective labour laws. Scrutinise:

• List of all employees: contracts, seniority, salaries, and benefit entitlements
• Collective bargaining agreements (convenios colectivos) applicable to the sector
• Pending or threatened employment claims or disciplinary procedures
• Employees on long-term sick leave, maternity leave, or reduced working hours
• Freelancers or contractors who may be reclassified as employees (falsos autónomos)
• Senior management contracts and any golden parachute provisions
• ERTE (temporary layoff) schemes and any outstanding reimbursement obligations to Social Security

5. Contracts and commercial due diligence

• Key customer contracts: terms, duration, renewal and termination rights, change-of-control clauses
• Key supplier agreements: any exclusivity, minimum purchase obligations, or change-of-control triggers
• Lease agreements for premises: duration, rent review, assignment rights
• Intellectual property: ownership confirmed, registrations in force, any licences granted to third parties
• Insurance policies: coverage, validity, and whether they transfer

6. Real estate and environmental due diligence

If the company owns or occupies property:

• Land Registry (Registro de la Propiedad) certificates confirming ownership and any encumbrances
• Urban planning status: confirm the property’s use is legally authorised
• Environmental permits and any history of contamination or enforcement action
• IBI (local property tax) payments are up to date

Frequently asked questions

How long does due diligence take for a Spanish acquisition?

A standard due diligence process for a mid-sized Spanish company takes 4–8 weeks from the opening of a data room. Complex transactions involving regulated businesses, multiple locations, or significant real estate portfolios can take longer. Rushing this process is one of the most common and costly mistakes foreign buyers make.

What is a data room and do Spanish sellers use them?

A data room is a secure (usually digital) repository where the seller provides documents for review. The use of formal data rooms is standard in mid-market and larger Spanish transactions. For smaller deals, documents are often shared less formally — which makes it even more important for the buyer to request a structured list of information and track what has and has not been provided.

What happens if problems are found during due diligence?

Findings from due diligence feed directly into the negotiation. Common outcomes include a reduction in the purchase price, an escrow arrangement to cover identified risks, specific indemnities from the seller for known liabilities, or — in serious cases — withdrawal from the transaction.

A thorough due diligence process is the difference between a good acquisition and an expensive mistake. At Capital Auditors & Consultants, we conduct financial, tax and accounting due diligence for foreign buyers in Spain — giving you the facts you need before you commit. Contact our team to discuss your acquisition.