The most common types of companies in Spain include:
- Sole Proprietorship (Autónomo): Best for individuals running small businesses.
- Limited Liability Company (Sociedad de Responsabilidad Limitada, S.L.): To set your LLC company in Spain, you need €3000 as minimum paid-up capital.
- Public Limited Company (Sociedad Anónima, S.A.): Ideal for large businesses. Requires a minimum capital of €60,000.
- General Partnership (Sociedad Colectiva): Formed by two or more partners with unlimited liability.
- Limited Partnership (Sociedad Comanditaria): At least one partner has unlimited liability, and others have limited liability.
- Branch Office: A foreign company’s extension operating in Spain.
The process for registering a company in Spain are:
- Obtain a NIE (Número de Identificación de Extranjero): Non-residents need this ID.
- Choose and reserve a company name: Submit the name for approval with the Central Mercantile Registry (Registro Mercantil Central).
- Open a bank account: Deposit the required share capital and obtain proof of deposit.
- Draft company statutes: Outline the company’s objectives and operational rules.
- Sign the incorporation deed: Finalize the formation before a notary.
- Register the company: Submit documents to the Mercantile Registry.
- Obtain a tax identification number (CIF/NIF): Register with the tax authorities (Agencia Tributaria).
Generally, it takes 5 to 7 days to incorporate your company in Spain, depending on the type of business, legal procedures, and document submission timelines.
Some of the documents required to register a company in Spain are:
- Valid passport or ID for all shareholders and directors.
- NIE (Foreigner’s ID Number).
- Proof of share capital deposit.
- Company statutes (Articles of Association).
- Certificate of name reservation.
- Notarized deed of incorporation.
- Tax registration forms.
No, non-residents can start a business in Spain. However, they must obtain a NIE and may require a local representative or resident director for certain business types.
The minimum capital required to start a company in Spain are:
- S.L.: €3,000.
- S.A.: €60,000 (25% must be paid upfront).
Yes, depending on the industry. For example:
- Restaurants may need food safety permits.
- Construction businesses require activity-specific licenses.
- E-commerce businesses must comply with data protection laws.
The name must be unique and approved by the Central Mercantile Registry. Submit at least three options in order of preference for reservation.
Yes, you can operate a business in Spain. Businesses like e-commerce or consulting can operate without a physical office. However, you need a registered address for official correspondence.
A notary authenticates and legalizes the incorporation deed, ensuring compliance with Spanish law. The deed includes shareholder details, capital, and company statutes.
- For the first 2 years of incorporation, you need to pay 15% of corporate tax. After 2 years, you need to pay 25% of corporate tax.
- VAT (IVA): Standard rate is 21%, with reduced rates for specific goods/services.
- Personal Income Tax: Applicable for autónomos and shareholders receiving dividends.
- Social Security Contributions: Mandatory for employees and autónomos.
Corporate tax is levied on company profits at 25%. Newly formed small companies may qualify for a reduced rate of 15% during the first two years of profitability.
Yes, Spain offers:
- Reduced corporate tax rates for new companies.
- R&D tax credits.
- Special incentives for tech startups under the Startup Act.
Businesses must register for VAT and charge it on taxable goods/services. Exemptions apply to specific industries (e.g., education, healthcare). VAT filings are typically done quarterly.
- Autónomo: Easier setup, lower costs, but higher personal liability.
- Limited Company (S.L.): Limited liability, better for growth, but involves more compliance and costs.
- Utilize tax deductions (e.g., business expenses, depreciation).
- Choose the right company structure.
- Take advantage of tax incentives and treaties.
- Work with a tax advisor.
Yes, Spain has treaties with many countries to prevent double taxation, allowing tax credits for income taxed abroad.
- Maintain detailed financial records.
- File annual accounts with the Mercantile Registry.
- Submit quarterly VAT returns.
- Pay corporate tax annually.
- Ensure payroll compliance for employees.
- Employment and Labor Issues
Yes, as a company owner, you can hire employees but must comply with Spanish labor laws, contracts, and social security obligations.
- Register the company with the Social Security Office.
- Draft and sign legal employment contracts.
- Adhere to minimum wage, working hours, and labor laws.
- Provide social security contributions and employee benefits.
Employers contribute a percentage of the employee’s salary toward social security, covering healthcare, pensions, and unemployment benefits. The total employer contribution is around 30% of the salary.
- You must register as an autónomo or an employee of your company.
- Social security contributions are mandatory.
- Self-employment can provide tax advantages but increases personal liability.
- Fiduciary Duties: Directors must act in the best interest of the company and its shareholders.
- Compliance: Ensure adherence to tax laws, employment laws, and corporate regulations.
- Record-Keeping: Maintain accurate financial records and submit annual accounts to the Mercantile Registry.
- Liability: Directors can be held personally liable for damages caused by negligence, fraud, or non-compliance with the law.
- Trademark Registration: Register your business name and logo with the Spanish Patent and Trademark Office (OEPM).
- Patent Protection: File patents for inventions to secure exclusive rights.
- Copyright: Automatically protect original works like software or content; consider formal registration for additional security.
- Non-Disclosure Agreements (NDAs): Use NDAs when sharing sensitive information.
- Monitor Infringements: Act promptly if intellectual property rights are violated.
- Fines and Penalties: Failure to meet tax or labor obligations can lead to significant financial penalties.
- Business Suspension: Persistent violations may result in the suspension of business operations.
- Personal Liability: Directors may face personal liability for legal breaches.
- Damage to Reputation: Non-compliance could harm your business’s credibility and relationships with stakeholders.
Yes, you can operate a Spanish company remotely. However:
- You need a registered business address in Spain.
- Compliance with Spanish tax and labor laws is mandatory.
- A local representative or manager may be required for day-to-day operations.
Spanish banks offer various options, including:
- Traditional Banks: Santander, BBVA, CaixaBank, Sabadell.
- Digital Banks: N26, Revolut (for ease of international transactions).
- Specialized Business Accounts: Designed for companies with features like multi-currency accounts, payroll management, and invoicing tools.
- Choose a Bank: Select one that meets your business needs.
- Prepare Documents: Include your NIE, company statutes, tax ID, proof of registration, and address.
- Visit a Branch: Some banks require in-person verification, while others allow online applications.
- Deposit Capital: Ensure the initial share capital is deposited for company registration.
- Use accounting software compliant with Spanish tax laws.
- Maintain detailed records of income, expenses, and VAT.
- File quarterly and annual tax returns.
- Hire a local accountant or gestoría familiar with Spanish regulations.
Yes, Spain permits the formation of companies with foreign partners or shareholders. Foreign individuals and entities can establish and own Spanish companies without the necessity of Spanish residency. However, all foreign shareholders and directors must obtain a Foreign Identification Number (Número de Identificación de Extranjero, NIE) or a Tax Identification Number (Número de Identificación Fiscal, NIF) for legal and tax purposes.
Entrepreneurs in Spain often encounter several challenges:
- Bureaucratic Procedures: The process of company registration can be complex and time-consuming due to extensive administrative requirements.
- Taxation Complexity: Navigating Spain’s tax system, including corporate taxes and VAT, requires careful planning and understanding.
- Labor Regulations: Spain has stringent labor laws, including regulations on employment contracts, social security contributions, and employee rights, which can be challenging for new businesses to manage.
- Language Barrier: Non-Spanish-speaking entrepreneurs may face difficulties in communication and understanding legal documents, as Spanish is predominantly used in official matters.
- Access to Financing: Securing funding can be challenging, especially for startups without an established credit history in Spain.
Following Brexit, UK nationals are no longer EU citizens, which has implications for those wishing to start a business in Spain:
- Residency and Work Permits: UK nationals must now obtain appropriate visas and work permits to reside and operate a business in Spain.
- Taxation: The UK-Spain Double Taxation Agreement continues to apply, but UK businesses may face additional tax considerations as non-EU entities.
- Spanish Chamber
- Regulatory Compliance: UK businesses must comply with EU and Spanish regulations as third-country entities, which may involve additional compliance requirements.
- Despite these changes, UK nationals can still establish businesses in Spain, provided they adhere to the new legal and regulatory frameworks.
Yes, it is possible to change the structure of a company in Spain after its formation. This process, known as corporate restructuring, can include changes such as converting the legal form of the company (e.g., from a limited liability company to a public limited company), merging with another company, or altering the ownership structure. Such changes require adherence to specific legal procedures, including:
- Approval by Shareholders: Obtaining consent from the company’s shareholders through a formal resolution.
- Notarial Deed: Executing a public deed before a notary to document the changes.
- Registration: Filing the changes with the Mercantile Registry to ensure they are legally recognized.
- It is advisable to consult with legal professionals to navigate the complexities of corporate restructuring in Spain.