Spanish Digital Agency Sets Up Irish LTD for EU Tax Efficiency — 22 Working Days, Zero Billing Disruption

Spanish Digital Agency Sets Up Irish LTD for EU Tax Efficiency — 22 Working Days, Zero Billing Disruption

Background: scaling EU enterprise revenue strained the Spanish SL structure

The agency had grown on the back of three large enterprise contracts with media buyers in Germany, the Netherlands and the UK. Spanish corporation tax (currently 25% standard rate) and the Spanish SL’s compliance overhead were starting to drag on margin and complicate cash management. Several enterprise clients also asked for invoicing from a single, group-level entity to simplify their procurement.

The challenge: tax-effective restructure without disrupting clients or staff

The founder did not want to relocate; the engineering and creative team would remain in Madrid. The Spanish SL would continue to deliver the work and employ the staff. The Irish LTD would be the contracting entity for EU and UK enterprise clients, sub-contracting the delivery back to the Spanish SL on a transfer-pricing-compliant basis. This requires careful coordination between Spanish and Irish tax counsel and clean intercompany documentation.

The solution: incorporation, intercompany framework, client re-papering

Chern & Co coordinated with the agency’s Spanish tax counsel to:

• Incorporate the Irish LTD with the founder as sole director (Spanish residency satisfies Section 137 EEA requirement)
• Draft a constitution suitable for EU enterprise contracting and a future minority investment
• File the A1 with the CRO; certificate issued day 14
• File the RBO declaration
• Register the Irish LTD with Revenue for CT and VAT
• Draft an intercompany services agreement under which the Spanish SL is sub-contractor at a transfer-pricing-compliant margin
• Re-paper enterprise client contracts so the Irish LTD is the contracting party (counter-signed without comment in 17 of 18 cases)
• Open EU bank accounts in EUR and GBP

The outcome: cleaner group structure, no billing disruption

The Irish LTD invoiced its first enterprise contract in week four; the Spanish SL continued to invoice the Irish LTD monthly under the intercompany services agreement. No billing cycle was missed. The agency’s Spanish payroll, employment contracts and operations remained unchanged. The Irish LTD pays Irish corporation tax at 12.5% on its post-cost-share margin; the Spanish SL pays Spanish tax on its arms-length services revenue.

When does an EU founder benefit from an Irish LTD?

EU founders with material EU and UK enterprise revenue often see meaningful efficiency from a two-entity structure with an Irish LTD as contracting party and the local entity as service provider — provided the structure has real substance and arm’s-length intercompany pricing. Without those, tax authorities will challenge it. Chern & Co works only on structures that pass that test.