Yes, you're right, it's a slightly modified Peugeot 202 body on a VW platform. So the point is yours!
Where did you get the information that the conversion took place in Spain? The photographer was a motoring journalist and photographed rare, interesting, bizarre or otherwise remarkable vehicles in Germany from the mid-1950s onwards. Judging by the vehicles in the background, the photo was probably taken in Germany. But perhaps the builder took a trip to Germany, as the license plate is unfortunately not visible...