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.Opening a new business in a foreign country can be a nerve-wracking proposition. However, getting your head around the key regulations and implications of setting up shop can help give you a head start and boost your chances of success. This helpful guide, provided by expert immigration attorneys Balcells International Lawyers Group, covers everything you need to know about starting a business in Spain. This includes information on business culture, the main types of business, and the most important insurance and taxation considerations. The guide includes advice on:
- Business culture in Spain
- Who can start a business in Spain?
- Legal structures for businesses in Spain
- How to start a business in Spain as an expat
- Foreign companies opening up a branch or subsidiary in Spain
- Starting up a non-profit company in Spain
- Administrating your business in Spain
- Business banking in Spain
- Taxation for businesses in Spain
- Business insurances in Spain
- Employing staff when starting a business in Spain
- Useful resources
Balcells International Lawyers Group
Balcells Group provides legal advice to individuals, companies, investors, immigration agencies and other intermediary agents. They have over 40 years of professional experience, and have built their firm based on the integration of several generations of lawyers that offer a balanced vision based on experience and modernity.
Business culture in SpainSpanish business culture may differ considerably from that in your home country. A more laid-back approach, for example, can result in deadlines overrunning and meetings stretching late into the evening. That said, perception of Spain as having an old-fashioned or twee business culture aren’t completely accurate. One example of this is siestas, which don’t really exist anymore in Spanish business; although long lunches still do. In addition, some companies are moving away from an outdated hierarchical decision-making culture. The Spanish government is also pressing forward with a decree to cut a gender pay gap of around 14%. While it might take some time to adjust to business practices in Spain, there is no need to be put off. The 2018 World Bank Ease Of Doing Business Survey placed Spain 28th out of 190 countries, meaning it’s considerably easier to do business here than in the majority of its neighboring nations. You can find out more in our full guide on business culture in Spain.
Who can start a business in Spain?Starting a business in Spain doesn’t always need to be an arduous process. Depending on the type of company you are setting up, however, you might find the journey somewhat bureaucratic and long-winded. EU citizens setting up as sole traders or partnerships can jump through the required hoops relatively quickly. It’s a different matter, though, for expats from outside of the EU; they will require a work permit to move to Spain and set up a business. With a range of different business structures available, setting up a limited company can be both time consuming and expensive. This is largely due to the Spanish government invoking minimum financial requirements for those looking to incorporate in Spain.
Legal structures for businesses in SpainThe rules and considerations around starting a business in Spain vary depending on the scope of your plans. The main types of business structure are as follows.
Self-employed workers in SpainSelf-employed workers in Spain are commonly known as autonomos, and must register their business with the Spanish tax authority and Spanish social security department. Most autonomos have to present quarterly VAT (IVA) returns, as well as an annual income tax return (I.R.P.F.). Other declarations are frequently applicable on a quarterly and annual basis, depending on your circumstances. Find out more in our full guide on how to set up as a freelancer or as self-employed in Spain.
Sole traders and partnerships in SpainThe cheapest way of setting up a business in Spain is by forming 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 required when setting up a limited company. As a business owner, you will be responsible for your own personal tax return. There is no legal distinction between your business assets and your personal assets. Therefore, if your business gets into debt, you 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 are starting up a business in Spain alone, you can also choose to set up as a freelance professional (profesionales autonomos). If a few people are setting up as a partnership and want to limit the amount of personal liability and give the business a more formal structure, they can set up as a limited partnership (sociedad comanditaria) instead of a general one.
Limited companies in SpainSeveral types of limited company structure exist in Spain. The most common form, however, is the sociedad limitada or S.L. Incorporation is important in protecting the owner from personal liability in the event of bankruptcy, but this kind of structure does involve a number of additional tax, accounting, and mercantile obligations. An SL has to present an annual corporation tax return and statutory accounts. The owner will have to file their VAT returns (IVA), and several other periodic declarations are usually applicable.
How to start a business in Spain as an expatIf you want to set up a limited company in Spain, there is a defined path to follow. We will go into more detail shortly, but the process works like this:
- Ensure you have a foreigner’s tax identification number (NIE)
- Register the company name with the Mercantile Registry (Registro Mercantil Central or RMC)
- Get a company tax identification number (CIF)
- Open a business bank account
- Sign the deed of incorporation
- Register the company
- Register for social security
How to obtain a business visa in SpainNon-EU citizens moving to Spain to start a business will need a valid work permit to do so. To get a work permit, you will need to apply to the Spanish embassy in your home country. First of all, you will need to provide evidence that you have enough capital to invest in your business and support yourself while living in Spain. You may also be required to submit a business plan and proof of your skills and experience. The Spanish government can ask you to provide evidence on how your company could create jobs for workers in Spain. Work permits must be renewed every year, but after five years you can instead apply for resident status in Spain. This removes the need to get a work permit in the future.
Licenses and permitsBefore 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 (NIE). The NIE is essential for any fiscal transactions in Spain, such as incorporating 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 out how to apply for an NIE with our full guide to the Spanish NIE number.
Registering your business in SpainThe first step in setting up a limited company is to obtain a certificate to verify that the company name you want to use is not already taken. This is called a no-name coincidence certificate and is available from The Mercantile Registry (RMC). 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.
Setting up a business bank account in SpainAfter you have obtained a tax code and the certificate of no-name coincidence for a limited business, you will need to open a business account with a Spanish bank and make a deposit of €3,000. This is the minimum share capital allowed when setting up a limited company. 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.
Deed of incorporationYou will now need to apply for the deed of incorporation to establish your company. This is the official document that states the key details of the company (name, address, details of directors, 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 the Mercantile Registry
- Your NIE
- Evidence of having cash in your bank account
Registering the deed of incorporationWith the original deed of incorporation obtained from the notary, you should then go to the Local Government Tax Authority to register it. 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 RMC 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.
Tax and social security considerationsAs mentioned above, your company will need a tax number. To obtain this, you will need to complete the tax form 036; this can be done online or by 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). If you make the application in person at your local tax office, bring the original and a photocopy of your NIE (numero identificacion extranjero). 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 on the social security website.
Foreign companies opening up a branch or subsidiary in SpainIf you are running your own company at home, but are looking to set up a branch or subsidiary, doing this can be simpler than starting from scratch with a new company. When processing your application, you must provide a series of documents, including the following:
- A copy of the main company’s certificate of incorporation and certificate of good standing
- Notarized power of attorney
- Spanish tax identification number (NIE)
- A member of staff at the Spanish branch to be a resident in Spain, who will agree to be liable for any company debts and tax payments