Accounting obligations in Spain for foreign companies

Setting up a company in Spain is one thing. Keeping it compliant year after year is another. Foreign companies with Spanish subsidiaries or branches are often surprised to discover how specific — and how strictly enforced — Spain’s accounting and financial reporting obligations are. Missing a filing deadline does not just result in a fine; it can block the company from registering any corporate changes at all. Here is what you need to know.

Which companies have accounting obligations in Spain?

Any entity incorporated under Spanish law — an SL, SA, or branch (sucursal) — has mandatory accounting and reporting obligations, regardless of size, activity level, or whether it generated any revenue during the year. This includes:

• Spanish subsidiaries of foreign companies (wholly or partially owned)
• Branches (sucursales) of foreign companies registered in Spain
• Dormant companies with no activity — the obligation to maintain accounts and file annual accounts does not cease simply because the company is inactive
• Companies that are in the process of being wound up — until the liquidation is formally closed and the company is struck off the register

The accounting framework: Spanish GAAP (Plan General de Contabilidad)

Spanish companies prepare their accounts under the Plan General de Contabilidad (PGC) — Spain’s national accounting standard, which is broadly based on EU Accounting Directives and converges with IFRS in many areas but is not identical. For foreign groups whose parent reports under IFRS, the Spanish subsidiary must maintain two sets of records: the statutory PGC accounts required under Spanish law, and the IFRS-based reporting package required by the group.

Simplified accounting rules (PGC PYMES) apply to companies that do not exceed two of the following three thresholds for two consecutive years: total assets below €4 million, net turnover below €8 million, or fewer than 50 employees on average. The simplified framework reduces disclosure requirements and simplifies some measurement rules.

What must be prepared: the annual accounts

Every Spanish company must prepare annual accounts (cuentas anuales) covering the financial year. The annual accounts consist of:

• Balance sheet (balance de situación)
• Profit and loss account (cuenta de pérdidas y ganancias)
• Statement of changes in equity (estado de cambios en el patrimonio neto)
• Cash flow statement (estado de flujos de efectivo) — required for non-simplified accounts
• Notes (memoria) — disclosures accompanying the financial statements
• Directors’ report (informe de gestión) — for companies above the simplified thresholds

All components must be consistent with each other and prepared in euros, in the Spanish language, following the PGC format. Companies using the simplified format may omit the cash flow statement and produce a shorter notes section.

Key filing deadlines

Companies with a non-December financial year end follow the same relative deadlines (3 months / 6 months / 7 months from year end). The Registro Mercantil does not accept partial or draft accounts — the complete package, signed and with any required audit report, must be filed together.

Tax returns that run alongside accounting obligations

The accounting calendar in Spain runs in parallel with the tax calendar. The main annual obligations for a Spanish company are:

• Modelo 200 (corporate income tax return): filed within 25 days following the 6 months after the financial year end — i.e., by 25 July for December year ends
• Modelo 303 (VAT return): quarterly, with the last quarter filed in January
• Modelo 390 (annual VAT summary): filed in January
• Modelo 111 / 216 (IRPF withholding returns): quarterly for salary and professional fee withholdings
• Modelo 180 / 190 (annual withholding summaries): filed in January
• Modelo 349 (intra-EU transactions): monthly or quarterly depending on volume

The corporate income tax return must be consistent with the approved annual accounts. Discrepancies between the accounts filed with the Registro Mercantil and the tax return filed with the AEAT are an audit trigger.

Accounting books and record-keeping

Spanish companies must maintain the following mandatory accounting books, which must be legalised (diligenciados) with the Registro Mercantil:

• Journal (libro diario): records all transactions chronologically
• General ledger (libro mayor): groups transactions by account
• Shareholders’ minutes book (libro de actas): records all resolutions of the board and shareholders’ meetings
• Shareholders’ register (libro registro de socios): for SLs, records share ownership and transfers

Since 2015, accounting books must be legalised electronically through the Registro Mercantil’s online platform within 4 months of the financial year end. The legalisation is not a filing of the accounts themselves — it is a separate procedural requirement.

All accounting records, supporting documents, contracts, invoices, and correspondence must be retained for a minimum of 6 years under Spanish commercial law. For tax purposes, the AEAT can inspect the last 4 years of tax records (the general statute of limitations) — but certain documents (capital contributions, property deeds, founding documents) must be kept indefinitely.

Penalties for accounting non-compliance

Spain enforces accounting and filing obligations strictly. The main penalty exposure areas:

• Late filing of annual accounts with the Registro Mercantil: automatic fine of €1,200 to €60,000 depending on turnover — plus a block on registering any corporate actions (capital increases, director changes, statutory amendments) until the filing is regularised
• Failure to prepare accounts or maintain accounting books: classified as a serious infraction under the Ley de Sociedades de Capital — sanctions can include personal liability for directors
• Tax return penalties: late corporate income tax returns attract surcharges of 5–20% plus late payment interest at 7.25% per annum

Accounting for branches (sucursales) in Spain

A branch of a foreign company has a different accounting regime from a subsidiary. The branch does not prepare standalone annual accounts for filing with the Registro Mercantil — instead, it must file the annual accounts of the foreign parent company (translated into Spanish and, where required, adapted to Spanish GAAP format). The branch must maintain internal accounting records sufficient to support its Spanish tax returns and to calculate the profits attributable to its Spanish permanent establishment.

Frequently asked questions

Can a foreign company use IFRS for its Spanish subsidiary’s statutory accounts?

Individual statutory accounts of Spanish companies must be prepared under Spanish GAAP (PGC), with one exception: companies whose securities are admitted to trading on an EU regulated market must prepare their consolidated accounts under IFRS as adopted by the EU. For unlisted subsidiaries — which covers the vast majority of foreign companies’ Spanish entities — PGC applies to the statutory accounts, and any IFRS reporting is done separately for group purposes only.

What language must the accounts be in?

Spanish. All statutory accounts filed with the Registro Mercantil must be in Spanish. Supporting documents in other languages must be accompanied by a certified Spanish translation where required by the registry or by the auditor.

Do we need a local accountant or can our group finance team handle Spanish accounting?

Spanish accounting, payroll, and tax compliance have significant local-specific requirements — mandatory formats, specific form references, Registro Mercantil filing procedures, and deadlines that differ from most other jurisdictions. In practice, virtually all foreign companies with Spanish subsidiaries use a local Spanish accountant (gestor or asesoría fiscal) or a specialist accounting firm for at least the compliance-side work. Whether the group finance team prepares the underlying records or whether they are fully outsourced depends on the size and complexity of the Spanish entity.

Staying on top of accounting and financial reporting obligations in Spain requires local expertise and a well-managed calendar. At Capital Auditors & Consultants, we provide full accounting, bookkeeping, and annual accounts preparation services for foreign companies operating in Spain — with full coordination with your group finance and audit teams. Contact us to discuss your requirements.