Starting a business in Spain as a non-resident may seem daunting, yet it is a highly viable and lucrative endeavor. Spain provides a fertile ground for company growth, whether you are drawn to the country’s rich cultural legacy, strong tourism industry, or rising demand in sectors such as technology and renewable energy. Every year, countless entrepreneurs are drawn to the country by its quick business formation process, easy immigration pathway and high standard of living. In this post, we’ll look at the step-by-step procedure to start a business in Spain as a foreigner.
Why do you need to set up your business in Spain as an expat?
Spain has become an epicenter for the foreign entrepreneurs in Europe. Cities like Barcelona, Seville and Madrid become the hotspot for the business owners because these cities have the potential to make a successful business.
The following benefits for starting a business in Spain includes:
- Spain is a startup hotspot which attracts lots of foreign talent and investment every year.
- Spain provides a solid foundation by providing good logistics and infrastructure to the businesses.
- Spain supports a wide variety of business ideas, giving them plenty of room to grow.
- Growing a company is an adventure, and Spain’s friendly people, delicious food, rich culture, and sunny weather make the journey even better.
- The way business is done in Spain is perfect for building connections and achieving success with your venture.
Procedure to Start a Business in Spain as a Foreigner
The following steps to start a business in Spain as a foreigner include:
Obtain a NIE number
The first and foremost thing to do if you wish to start a business in Spain as a foreigner is to obtain an NIE number which is also known as tax identification number.
NIE number allows you to open a bank account and other legal activities. Acquiring the NIE number will allow you to operate your business in Spain.
Acquiring the NIE number is a very easy procedure. The amount of time in which you can obtain your NIE number totally depends upon whether you are an EU resident or Non-EU resident.
EU residents need 3-5 days to get a NIE number and Non-EU residents depend upon the respective Spanish consulate.
Name of the company
After receiving your NIE number, you need to apply for the company name certificate. This certificate will state that your company’s name is unique and viable to use. You need to verify your company’s name.
You need to make a list of minimum 3 names you like to use for your company. The name will be sent to the Corporate Register of Spain (Registro Mercantil) in order to check the availability.
The process will take 36-48 hours. After the company name gets registered, you can use the name on your invoices and other documents.
Establishing the shareholder of the company
You must decide on the number of shareholders for your corporation and who they will be. It is also necessary to choose who will serve as the company’s director.
When it comes to directors, there are two main types to consider:
First, there is the corporate director (“director mercantil”). This individual is not paid or required to have a work visa, and their only responsibility is to sign off on the company’s annual accounts once a year. However, if you choose this option, Spanish law requires at least one employee in your company.
Many businesses prefer to appoint a director who combines corporate and operational responsibilities. This option eliminates the requirement for a separate staff, which simplifies your setup.
After determining the director’s responsibilities, the next stage is to establish a shareholder agreement. This document will detail who the shareholders are and how much of the company each owns. It’s an important step since you want to foresee any potential problems down the road. As a result, it is highly recommended that you talk with a business lawyer to ensure that everything is in order.
Opening a bank account of your company
After getting your NIE number, it is easy for you to open your bank account in Spain as a non-resident. If you are planning to open a limited liability company, you need a minimum capital of 3000 euros which you need to deposit in a newly opened bank account.
You can use this amount for your day-to-day business activity. When that sum of money is contributed, a bank certificate attesting to the payment is created. On the day of the real constitution, you have to bring this document to the notary.
Sign the incorporation deed at the notary
After securing all required documents, such as the NIE number, bank certificate, and the certificate from the Registro Mercantil, your next step is to proceed to the notary to sign the public deed of incorporation.
This step involves establishing the identity of the investors/shareholders and the appointment of the administrator. You will also need to provide the company’s address and clearly define its business activities. It is advisable to list all related activities comprehensively to avoid the need for additional notary visits should your business expand or shift its core focus in the future.
Once these details are confirmed, the notary will proceed with registering the company in the Company Registry, a process that can take up to three weeks. However, from the day you sign the incorporation documents, you will receive a provisional VAT number, which allows you to begin business operations immediately. If you entrust us with the task of establishing your business in Spain, we will handle the entire process on your behalf, including notary representation and the coordination of all necessary appointments with legal institutions.
Obtain CIF number (Tax identification number)
After obtaining the incorporation deed from the notary, you need to go to the Spanish tax agency.
Submit the documentation for registration and have the deed officially stamped by the authorities. Obtain the final Tax Identification Number (CIF) for the company.
Register for Social Security
The final step is to register your company with the local social security office.
Requirements to Establish a Business in Spain as a Foreigner
As an EU-citizen
Individuals who are fiscally resident in Europe and plan to establish a company or become a director in Spain must obtain a Número de Identificación Extranjero (NIE) from the Spanish Police. This number functions as the Spanish tax code and is necessary for signing public documents or dealing with public administration.
If a partner in a Spanish company is a corporation from another EU country, the corporation’s legal representative must also obtain a NIE. Additionally, the foreign corporation must secure a Número de Identificación Fiscal (NIF), which starts with “N” to indicate it is assigned to a foreign company not established in Spain.
As an EU-non citizen
Non-EU citizens must meet the same requirements as EU citizens to start a business in Spain, including obtaining a Número de Identificación Extranjero (NIE) and a Número de Identificación Fiscal (NIF) if the shareholder is a foreign corporation. Incorporating a company and obtaining work authorization are distinct processes. Non-EU citizens can form a company and serve as shareholders or directors, and they can receive dividends. However, they cannot draw a salary unless they have a valid EU work permit.
Documents required to Register a Business in Spain as a Non-Resident
The list of documents required to register a business in Spain as a foreigner includes:
- Valid Passport
- NIE (Número de Identidad de Extranjero)
- Form TA 0521
- CIF (Certificado de Identificación Fiscal)
- No-Name-Coincidence Certificate
- Proof of sufficient financial resources
- Any required professional qualifications or accreditations
- Incorporation Deed
- Business plan
- Application for a work permit
- Certificate of no criminal record
Types of Business Entities to Start a Business in Spain as a Non-Resident
1. Sole Trader or Sole Proprietor
This is the simplest method to start a business in Spain as a non-resident, with no initial financial commitment necessary. However, because there is no legal distinction between private and company assets, it entails infinite debt liabilities.
2.Jointly Owned Company
This sort of structure is appropriate for enterprises with numerous owners, as everyone is individually liable for the company’s debts.
3. Partnership
A partnership is a commercial structure in which two or more persons or entities collaborate to do business. Partners are individually liable for the company’s debt.
4. Limited Liability Company (S.L.)
A limited liability company in Spain is the most frequent type of business entity in Spain, combining convenience of establishment with legal protection for business owners. The minimum capital requirement is €3,005.06, which must be completely subscribed and paid for at the time of establishment.
5. Public Limited Company
This is the most frequent type of business entity in Spain, combining convenience of establishment with legal protection for business owners. The minimum capital requirement is €3,005.06, which must be completely subscribed and paid for at the time of establishment.
6. Cooperative
A cooperative is a business entity where the share capital is owned by the workers. This type of entity is suitable for businesses where the workers are also the owners.
7. Branch Office
A branch office is a type of business structure that allows a foreign company to establish a presence in Spain without incorporating a new legal entity. The parent company is liable for the branch’s obligations and debts.
Benefits for establishing a business in Spain as an expat
Market Accessibility and a Strategic Location
Due to its advantageous geographic position, Spain is a great place to launch an international business since it has access to markets in Latin America, the Middle East, North Africa, and Europe. Due to double taxation avoidance agreements and its gateway location to Europe, it is a desirable destination for worldwide firms seeking to expand.
Business-Friendly Culture and Incentives
Spain has a flexible corporate culture and is eager to attract international talent and investment. The government provides a variety of tax breaks, including lower corporation tax rates for new enterprises, tax incentives for R&D activities, and deductions for specific investments.
Well-Developed Infrastructure
Spain has an amazing infrastructure, including the world’s most comprehensive high-speed rail network, efficient highways, trains, ports, airports, and smart telecommunications, all of which help to facilitate commercial operations and link people.
Economic Opportunities
With the EU’s fifth largest economy and the 11th largest worldwide exporter of commercial services, Spain offers fertile ground for corporate expansion and access to an expanding consumer market. Operating costs, which include personnel, office space, and housing expenditures, are usually lower than in many other European nations.
Favorable Legal Requirements
Foreigners, both EU and non-EU nationals, can start a company in Spain; EU people have a simpler process, however non-EU citizens may need to take additional measures such as acquiring work permits and visas. The Spanish government recently enacted new startup legislation to make the process easier for non-resident investors.
Conclusion
Starting a business in Spain as a foreigner offers a good chance given its thriving economy and welcoming business climate. Despite its bureaucratic problems, Spain’s strong labor force, well-developed infrastructure, and welcoming legal system for foreign companies make it an advantageous entry point into the European market.
With the help of its advantageous position, diverse culture, and expanding industries like tourism, technology, and renewable energy, this dynamic environment can support the growth of businesses. Success, however, requires careful preparation, knowledge of local laws, and cultural adjustment. A business endeavor in Spain may lead to profitable returns and create opportunities for long-term growth and wealth if approached and pursued with the appropriate mindset and dedication.
Contact OnDemand International, if you want to register your business in Spain as a foreign expat hassle-free.
