How to set up a company in Spain?

Setting up a company in a foreign country is sometimes challenging if you are unfamiliar with the country's rules and regulations. Spain is one of the most attractive countries in Europe, and starting a business there could be very lucrative for entrepreneurs. Before starting a business venture in Spain, it is important to learn about the country's taxation system, to know who has the right to start a business and which business requires a permit to operate.

Who can start a business in Spain?

Spain is open to anyone who wants to start a business in the country, regardless of their nationality. The country makes no distinction between EU and non-EU citizens when it comes to starting a business. However, to work for your business in Spain as a non-EU, you may need a valid work permit. 

Requirements for EU and non-EU citizens

European Union citizens and non-EU citizens have the same requirements.  To register their company in Spain or be appointed as a director, they must obtain a Numero de Identificacion Extranjero (NIE). The NIE number is issued by the Spanish police. It serves as the Spanish tax code and is required to sign any public documents. Non-EU citizens can be shareholders but cannot receive any salary unless they possess a valid work permit in the European Union. 

Documents Required to register a business

• A valid passport
• A Numero de Identificacion Extranjero
• A Numero de Identificacion Fiscal 
• Proof of sufficient financial resources (depending on the type of business)
• A business plan
• Certificate of no criminal record
• Any professional qualification (some types of businesses require specific qualifications or accreditations)

Type of companies in Spain

• Self-employed workers or autonomos in Spain
• Sole traders in Spain
• Partnerships in Spain
• Limited companies in Spain (SL)
• Stock corporations in Spain
• Branch office in Spain
• Subsidiaries in Spain
• Business cooperation in Spain
• Offshore company in Spain
• Non-profit company in Spain

Taxation in Spain

• Social Security: All businesses operating in Spain are required to register with the Social Security General Treasury and are responsible for paying the social security contributions on behalf of its employees.
• Value Added Tax (VAT): The Value Added Tax standard rate is 21% but the reduction rate is 10% and 4%
• Corporate Tax is 25%

To fast-track your business registration process, you can use a verified company formation agent. Company formation agents are professionals with knowledge in this area and can advise you on the steps and documentation required.

Costs of setting up a business in Spain

The cost of setting up a company in Spain depends on the type of business. A sole trader business is a lot cheaper than other types of business. As a sole trader, you will need:

• Your business visa or work permit (if applicable)
• A business premise (if relevant)
• Accounting services for personal tax return

It is important to know that as a sole trader, you are responsible for your personal income tax, VAT, social security contribution, and insurance. The cost will be between €294 per month and a maximum of €1,266.66 per month, depending on your monthly income. Check for recent fees

To set up a Limited Liability business in Spain, you will need a minimum share capital of €3,000 plus another €1,500 – €2,000+ for the various certificates, notary fees, legal fees, and trademarks.

The €3,000 minimum share capital must be deposited into a Spanish bank account before you can register a Spanish business.

Registration Costs

To register your business, you will need:

• €150-350 for the notary
• €200 for the Registro Mercantil Central (Central Mercantile Registry), including €39 for the no-name-coincidence certificate for your company name and €10 for postage
• €100-250 to be placed on the business register
• €50 to legalise your accounting books (annually)
• €150 to register a brand name in Spain or €900 to register your brand name throughout Europe (this must be renewed every 10 years)
• €600 plus IVA (21%) to have a legal firm set up your business for you
• €1,000+ for business activity licenses for your business premises
• Funds for additional fees and taxes, including waste collection, property tax (IBI), and the economic activity tax (IAE)
• Your first month of rent plus a bond of 1-2 months’ rent
• The costs to fit out your business premises
• Product development and production costs
• Labour costs for the first few months

Please note that the cost listed above where those available at the time of this article. For more accurate information or if you will like to use our support and assistance for the incorporation of your company in Spain, do not hesitate to contact us.