For expats, starting a business in Spain can open up lots of opportunities. Learn what kind of business structure is right for you and how to get started.
If you are interested in setting up a company in Spain, you must first be aware of the different possibilities to enter the Spanish business market. If you are starting a business in Spain, you can set up:
- as a new company
- as an acquisition
- as a joint venture
- as a Spanish branch
- as a representative office
- as a self-employed person
Balcells International Lawyers Group
Barcell Group’s Business Department will help you with everything you need when setting up your company in Spain. Their business lawyers provide business legal advice for both companies and individuals on how to set up a company, accounting, labour matters, trademark registration, tax optimisation and more.
Self-employed workers in Spain
Most autonomos have to present quarterly IVA – or value added tax (VAT) – returns and an annual income tax return (I.R.P.F.). Other declarations are frequently applicable on a quarterly and annual basis, according to circumstances.
Sole traders and partnerships in Spain
If you’re starting up a business in Spain, the easiest and cheapest way of doing so is to set up as an unincorporated company. You can do this as a sole trader (empresa individual) or partnership (sociedad civil). With these arrangements, there are no minimum investment requirements and you won’t need to go through many of the formalities needed for setting up a limited company. The business owner(s) is classified as an autonomo responsible for their personal tax return. However, there is no legal distinction between your business assets and your personal assets. If the business gets into debt, the business owners are personally liable.
Sole traders and partnerships are more suitable for smaller businesses that won’t have a large annual turnover or employ many staff. If you’re starting up a business in Spain alone, you can also choose to set up as a freelance professional (profesionales autonomos) instead of a sole trader. If a few of you are setting up as a partnership and and you want to limit the amount of personal liability and give the business a more formal structure, you can set up as a limited partnership (sociedad comanditaria) instead of a general one.
See our guide to how to set up as a freelancer or self-employed in Spain for further information.
Limited companies in Spain
With regard to limited companies, several types exist but the commonest form is the sociedad limitada or S.L. Though it is important in protecting the owner(s) from personal liability in the event of bankruptcy, its incorporation does mean a number of additional tax, accounting and mercantile obligations.
An SL has to present an annual corporation tax return and statutory accounts. They will have to file their IVA, and several other periodic declarations are usually applicable.
Here we will consider how to set up a new limited company. You will find information and guidance regarding the steps and the public offices you must visit to fulfil the different forms and all the red tape in order to get your sociedad limitada set up by yourself.
How to start a limited company in Spain
1. NIE – foreigner’s tax identification number
Before you can start the process of setting up a business in Spain, all resident and non-resident foreigners with financial affairs in Spain must have a foreigner’s tax identification number or NIE. The NIE is essential for any fiscal transactions in Spain, for example, to incorporate a company. If you are a Spanish national, you will have a NIF rather than a NIE number. Applications for a NIE can be made at a processing office for foreign citizens (Oficina de Extranjeros) at a national Spanish police station (comisaría). You can find a list of local offices here.
See our guide to the NIE number in Spain for information on how to apply and what documents you will need to produce.
2. Register the company name with the RMC (Registro Mercantil Central)
The first step in setting up your SL will be to obtain a certificate (called a no-name coincidence certificate) from The Mercantile Registry to verify that the company name you want to use is not already taken, so you can choose it for your new company. You can do this by yourself through the RMC website. This step takes about three days before you receive the answer from the RMC by courier.
3. CIF – company tax identification number
Next you have to apply for your C.I.F (certificado de identificacion fiscal) which is your company tax number. You need to complete the tax form 036, which can be done online or hard copy delivered to your local tax office. You can find information about the form along with form downloads and links to completing online at the Spanish Tax Agency (Agencia Tributaria) website.
If you make the application in person at your local tax office, bring the original and a photocopy of your NIE (numero identificacion extranjero).
4. Open a business bank account
Once you have obtained the tax code and the certificate of no-name coincidence (see point one), you will need to open a business account with a Spanish bank and make a deposit of €3,000 – which is the minimum authorised share capital for a SL. Evidence of payment can be obtained in the form of a bank certificate which will need to be provided to a notary or lawyer showing the act of incorporation of the company. If you don’t have a Spanish bank account, find out how to open a bank account in Spain.
5. Deed of incorporation
You will now need to apply for the deed of incorporation to establish your company. This is the official document that states they key details of the company (name, address, details of director, board members, shareholders, etc.). You can arrange a local notary appointment to sign the deed of incorporation. You can find the nearest one in your area at www.notariado.org. This step lasts about one to three days depending on the notary.
You must supply the notary with original documents and photocopies of:
- tax form 036,
- your certificate from Registro Mercantil,
- NIE, and
- the evidence of payment in the bank.
6. Register the company
With the original deed of incorporation obtained from the notary, you should then go to the Local Government Tax Authority to register the deed. The deed will be stamped certifying this fact. This step should not take longer than two hours. Do not forget to take with you your original documentation and photocopy of the deed and your NIE.
You will then need to take the stamped deed to the Registro Mercantil where it will be registered in the Spanish Register of limited companies. It should take around 15 days for the deed to be registered and original documents returned.
Finally, you will need to return to the tax office to obtain the permanent Corporate Tax Identification Number (CIF) after the completion of the incorporation process.
Newly incorporated companies must use the 036 form used to request a tax identification number, to describe their business activity, and disclose other business details. Do not forget to take along the original and photocopy of the deed and NIE.
7. Register for social security
The last step of the registration process as the company’s director is for social security and occupational accident insurance purposes.
You will have to comply with certain procedural formalities at the local office of the Ministry of Employment, Migration and Social Security (Seguridad Social). There are different options for registration. Usually the company director will be registered as autonomo and will make monthly payments, which are currently set at between 26.5% and 29.8% of the contribution basis.
To register for social security when starting a business in Spain, you will need to take along your deed of incorporation, NIE, CIF and form TA 0521 (which can be obtained from your local social security office). Details of local social security offices in Spain can be found here.
This guide only covers the basics of starting a business in Spain and there are many legal issues as well as further issues (such as setting up accounting procedures, obtaining necessary business or trading licenses and notifying regional authorities) that will need to be considered.
It is recommended that you obtain help from a professional such as a lawyer or an economist, or an administrator (known in Spain as a gestor), to guide you through the processes when starting a business in Spain. Firms such as Balcells International Lawyers Group, Carbray, and Lexidy can guide you through every step of the way, providing advice on how to set up a company and manage accounting, labour matters, trademark registration, tax optimisation, and more.