The way you sell into Spain has consequences far beyond the sales team. Your choice between agent vs distributor vs subsidiary in Spain affects risk allocation, margins, tax exposure and exit costs. A structure that looks simple on a slide can create hidden liabilities if it ignores Spanish commercial, agency and labour rules. With the right legal design, however, you can grow in Spain with clear contracts and predictable costs.
Why Your Go-To-Market Model in Spain Matters Legally and Financially
Many international businesses start in Spain “on the side”. A contact introduces an agent, or a distributor approaches you at a trade fair. It feels easy to sign a short contract and see what happens. Later, once sales grow, the legal and tax consequences appear.
Your go-to-market model defines who owns the customer relationship, who holds stock, who sets prices and who carries credit risk. It also influences whether you risk creating a permanent establishment, how Spanish courts will view disputes and whether you owe statutory compensation when you terminate a relationship.
If you appoint commercial agent Spain representatives without proper contracts, you may find yourself paying mandatory goodwill compensation when you want to change strategy. If you rely only on distributors, you gain distance from local customers but lose control over pricing and brand positioning. A subsidiary offers maximum control but includes set-up costs, local governance and ongoing compliance.
In short, the way you choose sales structure Spain market entry can either support your long-term plan or lock you into expensive arrangements. Analysing options at the start is cheaper than litigating later.
Commercial Agents in Spain: Pros, Cons and Compensation on Termination
A commercial agent introduces clients and often negotiates and closes sales in your name and on your behalf, usually in exchange for commission. The agent does not normally buy the goods, so they do not carry stock or credit risk. This makes agency attractive for businesses that want a light structure and direct contracts with Spanish customers.
Spanish agency law, which implements the EU directive on commercial agents, is protective. In many cases, an agent is entitled to goodwill compensation when the contract ends, especially if they have brought new clients or significantly increased business that still benefits the principal. Parties can agree on how to calculate that amount, but they cannot usually exclude it entirely.
The main advantages of agents are low fixed costs, flexibility and direct visibility over customer data. The main risks are mandatory compensation on termination, potential exclusivity issues and the possibility that Spanish courts apply local law even if the contract chooses another system.
A lawyer for agency and distribution Spain can help you draft clear scopes, territories and termination rules, and align commission structures with the legal compensation logic. That reduces surprises if you later decide to restructure or replace an agent.
Distributors and Resellers: Risk Allocation and Competition Rules
A commercial distributor buys your products and resells them in its own name and on its own account. You invoice the distributor, not the end customer. In exchange, the distributor sets resale strategy within agreed parameters and usually carries stock, logistics and credit risk.
This structure gives you distance from local liabilities and often simpler invoicing. However, it can blur your view of final prices and customer relationships. A strong distribution agreement Spain law approach is therefore essential. Contracts should cover territory, exclusivity, minimum purchase obligations, marketing duties, returns, IP use and grounds for termination.
Spanish and EU competition rules set limits on resale price maintenance, exclusive territories and non-compete obligations. Poorly drafted clauses can be unenforceable or risky. At the same time, courts have developed criteria to award “clientele” compensation to some long-term distributors by analogy with agency rules, depending on the facts and case law.
In practice, a distributor model suits companies that want a local buffer and are ready to trade some margin for less operational involvement. The legal key is to allocate risk, compliance and competition issues explicitly, not assume that “standard” terms will work in Spain.
Lawyer’s Tip:
Before choosing between agent and distributor, map who carries each risk: stock, credit, product liability, compliance, FX and termination. Then review how Spanish law treats that role. If the legal reality does not match your internal assumptions, adjust the structure or the contract before signing.
When You Should Create a Spanish Subsidiary Instead
At some point, the scale or nature of your Spanish business may justify incorporating a local company. A subsidiary lets you hire staff directly, sign leases, apply for licences and centralise operations. It can also reduce disputes with key partners by bringing sales and account management in-house.
Creating a subsidiary makes sense when you want stronger control over pricing, branding and customer relationships, or when regulators and large clients prefer dealing with a local entity. It can also clarify tax and social security positions for senior managers moving to Spain, compared to ad hoc arrangements with agents or distributors.
On the other hand, a subsidiary requires corporate governance, accounting, directorship decisions and ongoing filings. You may still choose to work with local agents or distributors alongside the subsidiary, for certain regions or channels.
Choosing between agents, distributors and subsidiaries is not a one-off decision. Many groups start with an agent, move to a distributor and later set up a subsidiary that gradually internalises key accounts. What matters is planning each transition carefully, especially regarding termination rights and potential compensation.
Avoiding Misclassification: Agent or Employee?
Spanish courts and labour authorities look at substance over labels. If a “commercial agent” works like a full-time employee, you risk a requalification as employment. This can trigger claims for salaries, social security, dismissal compensation and other labour rights.
Warning signs include exclusivity without real autonomy, fixed working hours, use of your internal systems as if they were staff, and detailed control over how the person performs their tasks. If the agent has no real business independence and depends economically on you, they may argue that they are, in practice, an employee.
Commission agent vs employee Spain disputes usually arise when you terminate the relationship or when the agent faces financial difficulties. Contracts that mix elements of both models, without clarity, are particularly dangerous. You may end up facing both an agency compensation claim and a labour claim.
Clear drafting, combined with coherent day-to-day practice, is essential. If you want a genuine independent agent, treat them as such. If you need close management control, consider an employment relationship or a subsidiary-based sales team instead.
How Mecan Legal Designs and Documents Your Sales Structure in Spain
• Analysing your product, sector and risk appetite to compare agent, distributor and subsidiary models in practical, financial terms.
• Drafting and negotiating agency and distribution contracts that reflect Spanish law and your commercial goals, including compensation and non-compete clauses.
• Advising on choosing between agents, distributors and subsidiaries so your long-term expansion path is clear from the start .
• Modelling the tax impact of each sales model in Spain, including permanent establishment risks and indirect tax effects.
• Handling disputes with agents or distributors under Spanish law and supporting orderly exit or restructuring of your sales network.
For international businesses, Spain is attractive but legally specific. Agency and distribution rules, labour protections and tax concepts such as permanent establishment all influence the right sales model. Copying a structure that works in another country can be expensive if it clashes with Spanish law.
Mecan Legal helps you treat sales structures as strategic legal design rather than routine paperwork. We map how you sell, to whom, through which channels and with what internal resources. Then we turn that into contracts, governance and tax positions that are consistent and defensible.
If you are already in Spain with legacy arrangements, we can audit existing agency and distribution agreements, identify hidden liabilities and propose a roadmap for safer structures. The goal is always the same: to grow your Spanish sales with clear rules, controlled risks and predictable costs.
Frequently Asked Questions
Do commercial agents in Spain have a right to compensation when we terminate the contract?
In many cases, yes. Spanish agency law usually grants commercial agents a right to goodwill compensation on termination if they have brought new clients or significantly increased business that still benefits the principal. The exact amount depends on contract terms and case law. Proper drafting and planning help you manage that exposure.
Is a distributor in Spain considered my “permanent establishment” for tax purposes?
Not automatically, but it is a key risk to analyse. A truly independent distributor that buys and resells on its own account is less likely to create a permanent establishment than a dependent agent that habitually concludes contracts in your name. Each structure must be reviewed with tax advisers to understand how the Spanish tax authorities may view it.
Can I start with an agent and later switch to a subsidiary without legal issues?
You can, but you must manage the transition carefully. Ending a long-standing agency relationship may trigger compensation claims and notice obligations. You also need to avoid unfairly moving clients away from the agent in breach of contract. Planning timelines, documentation and communication with the agent reduces conflict and cost.
Question: How can I avoid an agent being treated as an employee under Spanish law?
The safest way is to ensure that both the contract and day-to-day practice reflect genuine independence. The agent should control their own time, tools and organisation, work for several clients where possible and bear some business risk. If your operational needs require tight control, consider hiring staff through a Spanish entity instead of stretching the agency model.