The Treaty on the Functioning of the European Union recognizes the “freedom to provide services” and the “right of establishment” regimes. CRD IV, MiFID II and PSD2¹ further promote this freedom and this right by way of a mutual license recognition system among member states. Credit institutions and investment firms that are authorized in another member state may carry out activities in Spain with no other requirement than a prior notification from the relevant home member state’s competent authority to the relevant Spanish competent authority (depending on the type of entity) and vice versa. This regime is called the “EU passport.”

While the “right of establishment” essentially entails the opening of a fixed establishment, typically a branch, the “freedom to provide services” enables entities to provide services on a cross-border basis without a fixed establishment in other member states.

The process, as previously explained: (a) requires the legal entity to be legally entitled to pursue the relevant activity; and (b) is dealt with between the regulated entity and its home member state’s competent authority.

¹  Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market.