Discover how to set up your dream company in Spain, the 15th largest economy globally and 4th in the Eurozone, boasting favourable market conditions and exceptional living standards. Know essential steps and diverse business options to kickstart your venture successfully.
Spain, with vibrant cities like Barcelona and Madrid, has emerged as a sought-after global destination for startups and new businesses in recent years. Considering the country’s favourable market conditions and exceptional living standards, it comes as no surprise. If you want to establish your own company here, you’re in the right place. This simple-to-read guide will walk you through the necessary steps and options to set up your business in Spain as a foreign entrepreneur.
From understanding the legal requirements and business structures available to foreign nationals to obtaining the necessary permits and licenses, we’ve got you covered. By the end of this guide, you will be well-equipped with the knowledge needed to confidently establish your company and tap into the abundant opportunities this dynamic country offers.
So let’s get started on your path to success in Spain!
Who Can Establish A Business In Spain?
Spain allows everyone, whether a foreigner or a resident, to start their business if they are legally authorized. While the process of establishing a business in Spain may not always be challenging, it can become somewhat bureaucratic and time-consuming, based on the type of company you are creating.
- For European Union citizens, the process is straightforward. First, acquire your NIE (Foreigner Identification Number) and E.U. registry certificate. Then, you can proceed with the constitution part.
- Non-EU citizens must have a working visa before starting their venture in Spain.
E.U. citizens establishing sole proprietorships or partnerships can quickly navigate the necessary requirements. Expats from non-EU countries must secure a work permit for Spain and start a business.
Legal Structures in Spain
You can run a business in Spain in multiple ways:
- A freelancer or self-employed, called “autónomo”
- Sole trader (empresa individual or Partnership (sociedad civil)
- A limited liability company called “sociedad limitada.”
- Stock corporation
Freelancer
Self-employed workers, commonly called “autonomos,” must get their businesses registered with Spanish tax authority alongside social security department. If you’re starting a business alone, you can register as a freelance professional (profesionales autonomos).
Sole Trader or Partnerships
If you want to start a business in Spain with minimal costs, you can form an unincorporated company as a sole trader (empresa individual) or as a Partnership (sociedad civil). Sole traders and partnerships are better suited for smaller businesses with lower annual turnover and fewer employees.
These options don’t require a significant initial investment or involve many formalities. Note that there is no separation between your corporate and personal assets in these structures. So, if the business accumulates debts, you will be personally liable.
As a sole trader, you will have to pay income tax (IRPF) and handle your tax returns annually.
Limited Liability Company
In Spain, there are different limited companies. The most prominent one is called “sociedad limitada” or S.L., which provides the owner protection from liability in case of bankruptcy. However, it involves further tax, accounting, and company obligations.
An S.L. must submit yearly Spanish corporation tax returns and statutory accounts. One significant benefit is that your liability is limited to the amount you invested in the business. You won’t pay income tax in this case, but you’ll pay corporate tax at 25% of your profits. The owner must also file VAT returns and other declarations.
Stock Corporation
A stock corporation or “sociedad anónima” is used by large companies that trade stocks. It has a more rigid setup and requires €60,000 for its establishment. The main advantage of this structure is the ability to obtain external financing through the sale of company shares in stock market.
Steps Required To Create a Company in Spain
To establish a limited company in Spain, follow these clear steps:
Obtain Tax Identification Number (NIE) or (NIF)
In Spain, it is crucial to acquire either an NIE (Número de Identificación de Extranjero) number for an individual or a NIF (Número de Identificación Fiscal) number for a foreign entity planning to become a shareholder or director of a newly established company. These identification numbers are essential prerequisites when setting up a business in the country.
If you are a foreigner planning to operate in Spain, obtain your NIE number, which serves as an identification for various purposes like opening a bank account and tax identification. The NIE is essential for smooth operations within the country.
Getting your NIE is a straightforward process, and the time it takes depends on E.U. citizenship. It usually takes around 5 working days for E.U. citizens, while non-EU citizens need to check with the relevant Immigration Office for their specific time frame.
You have two options to obtain the NIE:
- Apply for it from your home country with the help of Spanish consulate.
- Apply for it while you are already in Spain.
Register Your Desired Company Name with the Mercantile Registry (Registro Mercantil Central or RMC)
Once you have your NIE, the next step is to request your company’s name. The Spanish Commercial Registry allows you to provide around five preferred names. For applicants, checking the Central Business Register is a crucial legal step to ensure their chosen corporate name is available. We recommend providing at least three corporate names in order of preference when applying.
To verify their availability, sending them to the Corporate Register of Spain, also known as Registro Mercantil, is necessary. After submission, the Register will approve a name, as long as it’s not too similar to existing names in Spain.
This usually takes up to 48 hours. The approved name will be your official company name and used in official documents and invoices. If needed, you can also request an additional name from the registry for non-legal purposes or situations where an alternative name would be more suitable. Following these steps will aid in the successful establishment of your business in Spain.
Open a Business Bank Account
Once you have successfully reserved the corporate name, the next step is to open a bank account in the name of the company that you are incorporating. In this account, you need to deposit the specific capital corresponding to the legal form you chose for the company. In the case of a limited liability company, you’ll need to deposit a minimum of €3,000. This deposit is essential to obtain a bank certificate that confirms the capital has been deposited.
Draft Deed of Incorporation
To officially establish your company, you must apply for a deed of incorporation. This document includes essential company details, such as names, addresses, directors, shareholders, etc. You can arrange an appointment with a local notary to sign the deed, and the process usually takes one to three days, depending on the notary.
For the notary appointment, you must provide original documents and photocopies of the following:
- Tax form 036
- Mercantile Registry’s Certificate
- NIE (Tax Identification Number)
- Evidence of sufficient funds in bank account
Sign the Deed of Incorporation
After obtaining the deed of incorporation from the notary, register it with the Local Government Tax Authority. They will stamp and confirm its registration, a process that usually takes about two hours. Remember to bring the original documentation, deed photocopy, and NIE.
Next, take the deed to the Spanish Register of limited companies (RMC) for official registration. This step typically will take 15 days. Once the registration is done, your original documents will be returned.
Registering with the Tax Agency
Once you have received the deed of incorporation, the next step is to visit the Spanish Tax Agency (Agencia Tributaria). There are two main tasks you need to accomplish there:
- Register the documentation and let the Tax Agency stamp the deed.
- Obtain your Tax Identification Number (CIF) for your business.
Remember that you’ll have to pay taxes right after you start your business activities.
Obtaining a Company Tax Identification Number (CIF)
Your company must be recognized by the tax authorities, and to achieve this, you need to obtain your company’s CIF. The CIF is essential for conducting business operations, opening bank accounts, and complying with tax regulations. Here are the steps you should follow:
- Download the application form from the official website of the tax agency.
- Complete the form with all the necessary information.
- Schedule an appointment with your local tax agency office and bring along your NIE (foreigner identification number)
- The tax office will then issue a CIF, a unique identification number that is used for tax-related matters.
Register with Social Security
The final step involves visiting your local social security office to get your recently established business registered. The company typically goes through the registration process with the Social Security system and acquires its employer number, Código de Cuenta de Cotización. This can take around two to six weeks for registration.
How Long It Takes To Start a Company in Spain?
How long it takes to start a company in Spain depends on the method you choose:
- If you grant Power of Attorney to a company to handle the incorporation process remotely, it will take approximately two weeks from the submission of the paperwork.
- On the other hand, if you are physically present in Spain and submit the paperwork yourself, it will take around five business days from submission.
