Tax expert Alex Chumillas Amat explains how to set up a limited company in Spain for expats wanting to start a business in Spain.
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. To set up a business in Spain, you can start:
- as a new company,
- as an acquisition,
- as a joint venture,
- as a Spanish branch,
- as a representative office, or
- as a self-employed person.
Self-employed workers in Spain
Self-employed workers in Spain are commonly known as autonomos. Their registration process has to be made with the Spanish tax authority and the Social Security 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.
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 annually a 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. Applications for a NIE can be made at a police station with a foreigners’ department (Oficina de Extranjeros) of a national Spanish police station (comisaría). You can read more about the procedure, as well as find your local foreigner’s department, at www.mpt.gob.es.
Documents required to get a NIE:
- An application form, the Solicitud de Número de Identidad de Extranjero (NIE) y Certificados (form EX-15)
- Receipt for payment of the fee, stamped by the bank.
- Identity card or original passport and photocopy.
- Two passport photographs.
- Certified documentation stating the reasons for applying for the NIE may be required. For instance, if you want to incorporate a company, prior to the company incorporation procedure it might be advisable to get a letter from a notary stating you wish to incorporate a company in that notary, so you can justify the police the reason for obtaining the NIE.
2. 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 www.rmc.es. This step takes about three days before you receive the answer from the RMC by courier.
3. AEAT – Agencia Estatal de la Administracion Tributaria
Next you have to apply for your C.I.F (tax identification code). You can download a tax form 036 at www.aeat.es (pdf file). We recommend you fill it in carefully at home before going to the Hacienda or Treasury or tax office to deliver it.
Bring the original and a photocopy of your NIE (numero identificacion extranjero). Be sure to do this step in the appropriate office of the Hacienda, which will be the one that belongs to your post code address. You will get the tax number immediately. To find this, look in a local phone book.
4. The bank
Once you have obtained the tax code and the certificate of no-name coincidence (see point one), a deposit of €3,000 – which is the minimum authorised share capital – has to be paid into a Spanish bank account. Evidence of payment can be obtained in the form of a bank certificate for delivery to the 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. The notary
Now, with the three previous documents, you can visit a notary to apply to be appointed as the company founding director (administrator), as well as prepare the company constitution. 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. AEAT / Generalitat
With the original deed of incorporation obtained from the notary, you should then go to the Local Government Tax Authority (or AEAT) to register the deed. This step was previously subject to a stamp duty of 1% of the initial share capital; however, currently this 1% has been removed although the formality must still be fulfilled. 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.
7. RM – Registro Mercantil
The deed has to be taken to the Registro Mercantil where it will be registered in the Spanish Register of limited companies. It should take no less than 15 days until it is registered and original documents are returned. When you collect the original deed it will bear a certificate from the Mercantile Registry that the company is already registered.
8. AEAT – Agencia Estatal de la Administracion Tributaria
The next step to register your trading company involves another visit to the tax office. This time it is to obtain the permanent Corporate Tax Identification Number (CIF) at the Hacienda 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 other circumstances of your business. Do not forget the original and photocopy of the deed and NIE.
9. TGSS – Tesoreria General de la Seguridad Social
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 Labour and Social Affairs (or TGSS).
Although there are different options, usually the director is the person registered as autonomo. The monthly payments for autonomos are about EUR 235. You will need to do this step using original and photocopy of deed of incorporation, NIE, 036 form and form TA 0521. You can obtain this last form at www.seg-social.es.
Obviously, there are many legal issues that we have not considered. But we suggest you contact a professional such an economist or lawyer to help you throughout the process to avoid mistakes. However, if you have a clear idea about how you want to work, you can set up your company by following the previous steps.
Economist – Member of The Col.legi d’Economistes de Catalunya and The British Chamber of Commerce in Spain.
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