Despite Brexit, commercial ties between the United Kingdom and Spain continue to be strong across sectors such as real estate, technology, tourism, financial services, retail, manufacturing and professional services. However, the legal framework for UK businesses operating in Spain has changed significantly since the UK left the European Union.
For many UK companies, the main risk is assuming that business can continue under the same legal conditions that applied before Brexit. While Spain remains open to foreign investment, UK companies are now treated as non-EU entities in several important areas. This can affect corporate structuring, regulatory compliance, employment arrangements, contractual enforcement and the way commercial disputes are managed.
One of the first issues UK companies must consider is how to structure their activity in Spain. Some businesses operate through local subsidiaries, while others use branches, distributors, agents or commercial partners. Each option has different legal, tax and liability implications. A structure that may appear simple at the beginning can create difficulties later if the company needs to hire staff, sign long-term contracts, acquire assets or resolve disputes with Spanish counterparties.
Commercial contracts are another key area of risk. UK companies frequently enter into agreements with Spanish clients, suppliers, agents or distributors without adapting their contracts properly to the Spanish legal environment. Jurisdiction clauses, governing law, payment terms, termination rights, guarantees and dispute resolution mechanisms should be reviewed carefully. A contract that works well under English law may not provide the same level of protection when enforced in Spain.
Payment delays and unpaid invoices are also common concerns in cross-border commercial relationships. UK companies doing business with Spanish counterparties should ensure that their contracts include clear payment obligations, documentary evidence, default provisions and practical enforcement mechanisms. If a debt needs to be recovered in Spain, the process will depend on the quality of the documentation, the jurisdictional position and the debtor’s financial situation. Poorly drafted agreements can make recovery slower and more expensive.
Brexit has also affected regulatory and administrative planning. UK companies may face additional requirements when providing services, moving personnel, importing goods or establishing a physical presence in Spain. Depending on the sector, authorisations, registrations or local compliance obligations may be required. Businesses in regulated industries should assess these issues before entering the market, rather than after commercial operations have already begun.
Employment law is another area where UK companies often underestimate the differences. Spanish labour law is highly protective of employees and applies strict rules to contracts, dismissals, restructuring, working time and compensation. Post-Brexit mobility issues can add further complexity when UK nationals are assigned to Spain or when Spanish teams report to UK management. Mistakes in employment planning can lead to disputes, financial exposure and operational disruption.
Tax considerations should also be reviewed from the outset. UK companies may need to analyse whether their activity creates a permanent establishment in Spain, whether VAT or withholding tax obligations apply, and how transfer pricing rules may affect intra-group transactions. Even limited activity can create tax consequences if contracts, personnel or management functions are connected to Spain.
Disputes are another area where Brexit has increased the need for careful planning. The recognition and enforcement of judgments, jurisdictional questions and cross-border litigation strategy may be more complex than before. UK companies should not assume that English court judgments or contractual clauses will always operate in the same way within Spain. Where significant commercial value is involved, dispute resolution planning should form part of the contract negotiation process.
For these reasons, many UK companies involve commercial lawyers in Spain before signing major contracts, entering the market or dealing with disputes with Spanish counterparties. Local legal advice helps adapt contracts, reduce uncertainty and protect the company’s position under Spanish law.
Doing business in Spain after Brexit remains a valuable opportunity for UK companies, but it requires more careful legal planning than in the past. Companies that understand the Spanish legal framework, adapt their contracts and manage regulatory, employment and tax risks early are better positioned to operate successfully and avoid costly disputes.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal, tax or professional advice.