APR for a Spanish Subsidiary: What Your AD Bank Will Ask For

A packaging manufacturer in Gujarat (a composite of cases we see, not a single client) owns a small S.L. in Barcelona. In October its finance team opened the annual filing calendar and found the bank had already emailed a checklist. Half the items were familiar. The other half had Spanish names attached, and nobody knew whether the local accounts, filed months earlier, would do the job.

They mostly would not, at least not as they stood. This is a walk through what an authorised dealer (AD) bank tends to ask for when the foreign subsidiary company sits in Spain, and how to assemble it without a second round.

The Bank's First Question: Which Entity, Which Investment

Before anyone looks at a number, the bank wants to tie the filing to a specific investment. That means the unique identification number (UIN) linked to your Form FC records, the Spanish company's legal name and tax number, and the Indian investor's stake.

If the Indian company holds the Spanish entity through an intermediate holdco, the APR is filed for the direct foreign entity, not the operating company beneath it. Sort this out first. A perfect Spanish audit attached to the wrong entity gets sent back.

The Documents, Item by Item

Banks vary in style, but the pack that clears smoothly usually contains the following.

The point of the table is that every document answers a question about reconciliation. The bank is checking that what you report, what you remitted, and what the foreign company published all agree.

Do You Need a Spanish Audit, or Just an APR Audit?

This is the question that catches people, because the two requirements are separate.

Spain requires a statutory audit where a company exceeds at least two of three thresholds for two consecutive years: total assets of roughly €2.85 million, net turnover of roughly €5.7 million, or an average of 50 employees. Thresholds change, so verify the current figures. Smaller companies can lawfully file abbreviated accounts without an audit.

The RBI requirement works differently. Where the Indian investor has control of the foreign entity, or the host country requires an audit, the APR must be based on audited statements. So a small Spanish S.L. that is legally exempt locally still needs an audit if your Indian company controls it. This is the same logic that makes Indian groups hire a UK auditor for APR filing for small UK subsidiaries. Local exemption does not switch off the Indian obligation.

If your company has no control and Spanish law does not require an audit, certified unaudited statements from the Indian entity's statutory auditor may be accepted. Check with the bank before relying on that route.

Choosing the Right Auditor in Spain

An audit of a foreign subsidiary of an Indian company only works if the report is credible to the bank. In Spain, that means a firm or individual registered in the ROAC, the official register of auditors maintained by the ICAC. An unregistered practitioner cannot issue a valid statutory report.

Three practical checks:

1. Verify ROAC registration on the public register before signing the engagement letter.

2. Confirm the standards. Spanish audits follow local auditing standards based on ISA, and the report should say which framework the accounts follow, usually the Spanish general accounting plan.

3. Agree the timeline in writing. Include when the draft, the final report and the signed accounts will be delivered.

Where a Spanish audit is legally required, the appointment must normally be made by the shareholders' meeting, not by management alone, and before the end of the year being audited. A late appointment can create problems locally, which then flow into your APR timetable.

Language, Standards and Currency

Spanish accounts and audit reports are in Spanish. Many AD banks accept English translations but some ask for a certified translation, so ask early. Check that the translated figures match the original exactly; a rounding difference between the two invites questions.

Currency is straightforward, since Spanish companies report in euros. The APR asks for figures in the foreign currency and the rupee equivalent, so record the exchange rate you used and keep the source.

Accounting follows the Spanish general accounting plan, which differs in presentation from Indian GAAP and IFRS. Do not try to convert. Report from the audited accounts as issued, and let any differences sit in a reconciliation note if the bank asks.

Matching the Spanish Calendar to RBI Reporting Requirements

Spanish timing is your friend if you plan for it. For a company with a 31 December year-end, directors normally prepare the accounts within three months, shareholders approve them within six, and the accounts are deposited with the commercial registry within a month of approval. An audit, where required, sits inside that window.

That means audited Spanish accounts should exist by mid-year, well before the APR deadline of 31 December. The trouble comes when nobody in India asks for them until October. Build the request into a spring calendar, and the APR becomes an assembly job rather than a scramble.

Where Banks Challenge the Numbers

Because Spanish filings are public, a bank can cross-check the accounts you provide against those deposited at the registry. Mismatches are easy to spot. Common causes are draft accounts used for the APR while a later signed set was filed locally, or management figures that were never audited.

A second area is consistency with your Indian records. Equity reported in the APR should agree with your Form FC and remittance history. Any dividend, loan or intercompany charge should show up on both sides. Discrepancies here are what turn a routine ODI compliance filing into a query.

A Pre-Submission Checklist

Before the pack goes to the bank, confirm the following:

• The APR is for the right direct entity and UIN

• Audited accounts are signed and match what the registry holds

• The auditor is on the ROAC register and the report names the framework

• Translations, where needed, are faithful and certified if required

• Equity, loans and dividends tie to remittance records

• The foreign entity's year-end and reporting period are stated correctly

• Your FLA return figures are consistent with the APR

The Short Answer

Your AD bank will ask for evidence that the Spanish subsidiary's figures are audited by a credible registered auditor, that they match the public record, and that they reconcile to your remittances. Have those three things ready, and the rest of the RBI paperwork is routine FEMA compliance rather than a negotiation.