Are you an Indian entrepreneur who is thinking of growing their business sales in the European Union by setting up a business there? Over the years, a lot of Indian entrepreneurs who chose to migrate to overseas locations have chosen to settle down in Spain for business reasons.
But do you know what makes Spain such an attractive location? An Indian business owner in Spain can choose to apply for permanent residency after staying in Spain for 5 years under the Spain Business Entrepreneur visa. However, in order to apply for this visa, you must first start a business in Spain from India.
Through this guide, we will be covering the procedure to start a business in Spain from India. Additionally, we will be covering the requirement, costs as well as advantages of business registration in Spain as an Indian entrepreneur.
How Can I Start a Company in Spain from India?
The following steps to start a company in Spain from India includes:
Step 1: Choose the Right Business Structure
There are two primary choices for starting a business in Spain from India: working as a freelancer or sole trader (known as “autónomo” in Spanish), or establishing a limited liability company (“Sociedad Limitada” or SL). The decision between these options relies on the business’s size, nature, and desired level of personal liability.
Step 2: Obtain the NIE Number
Indian entrepreneurs who wish to establish a business in Spain must obtain a NIE (Foreigner Identification Number). This number is essential for various business tasks such as setting up a bank account, complying with tax regulations, and recruiting staff.
Step 3: Define the Company Name and Check Its Validity
The name of the company needs to be one-of-a-kind and not already taken in Spain. You must provide a certificate proving that the name is available.
Step 4: Obtain a CIF (Tax ID Number)
A CIF, also known as a Tax Identification Number, is necessary for companies to carry out various business activities such as filing taxes and opening a bank account.
Step 5: Open a Bank Account
To conduct business operations, such as receiving payments and paying taxes, you need to open a bank account in Spain.
Step 6: Establish Shareholders and Create a Shareholder Agreement
This step involves defining the company’s ownership structure, including the names of shareholders and their respective shares.
Step 7: Sign the Public Deed of Incorporation at a Notary
The official document of establishment is a legal paper that confirms the company’s creation and details its organization and goals. It needs to be signed in front of a notary.
Step 8: Register the Company with the Tax Authorities
The company needs to register with the tax authorities in order to get a temporary CIF, which enables the company to begin its operations.
Complete Guided Video Regarding Spain Company Incorporation
Types of Entities to Incorporate Your Business in Spain
1. Limited Liability Company (Sociedad Limitada)
The Sociedad Limitada (SL) is the most popular form of business entity in Spain due to its simplicity and flexibility. It is akin to the Limited Liability Company (LLC) in other jurisdictions.
2. Public Limited Company (Sociedad Anónima)
The Sociedad Anónima (SA) is ideal for larger businesses and those looking to raise capital through public offerings. It is similar to a Public Limited Company (PLC) or Corporation in other countries.
3. General Partnership
A General Partnership is a business structure where two or more individuals operate a business together, sharing profits, losses, and management responsibilities.
4. Branch Office
Foreign companies can establish a branch office in Spain to conduct business under the parent company’s name.
5. Representative Office
A representative office allows foreign companies to establish a presence in Spain for marketing and liaison purposes without engaging in commercial activities.
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Requirements for Setting up a Business in Spain from India
- Obtain a NIE (Número de Identidad de Extranjero): This is a foreigner identification number required for all foreign partners or individuals involved in the company.
- Obtain a CIF Number: The CIF (Certificado de Identificación Fiscal) is a tax identification number required for companies in Spain.
- Register the Company Name: A certificate of uniqueness is required to confirm the chosen company name is available and not already registered.
- Open a Spanish Bank Account: A Spanish bank account is necessary for business operations, including receiving payments and paying taxes. The minimum share capital for a limited company in Spain is €3,000, which must be deposited into a new account.
- Establish Shareholders and Create a Shareholder Agreement: Define the company’s ownership structure, including the names of shareholders and their respective shares.
- Sign the Public Deed of Incorporation at a Notary: This legal document establishes the company’s existence and outlines its structure and purpose.
- Register the Company with the Tax Authorities: The company must be registered with the tax authorities to obtain a provisional CIF, allowing the company to start operating.
- Register the Company in the Social Security System (if Applicable): If the company plans to hire employees, it must register with the Social Security System to obtain a social security number.
Advantages of Starting a Company in Spain from India
- Access to Trade Partnerships and Markets: Spain’s advantageous position allows businesses to tap into the markets of the EMEA region and Latin America, creating valuable trade alliances and business prospects. This is particularly beneficial for companies looking to expand their operations.
- Progressive Business Culture: Spain has a progressive business culture, especially in cities like Barcelona and Madrid, which can be advantageous for sectors like hospitality, retail, and restaurants.
- Well-Developed Infrastructure: Spain has advanced infrastructure with excellent railway systems and major ports in Europe, which makes shipping goods easy. The country also provides fast internet connections and widespread fiber optic cable installation.
- Lower Tax Burden: Spanish companies enjoy lower taxes compared to the EU average. The Spanish Tax Agency offers a user-friendly online system for convenient procedures and has agreements in place to prevent double taxation.
Costs for Opening a Business in Spain from India
The cost to start a business in Spain as an Indian entrepreneur is discussed below:
- Minimum Set-Up Capital: To set up an LLC in Spain, you must invest a minimum of EUR 3,000 as the starting capital for your company.
- Statutes of the Company and Deeds: It is important to establish the company’s statutes and deeds to outline how your business will operate and what limitations it will have. Typically, this process will cost approximately EUR 200.
- Notary Fees: The price for notarizing the company’s constitution can fluctuate, usually averaging about EUR 600, depending on how intricate the paperwork is.
- Company Registration Costs: Registering your company with the Registro Mercantil incurs a fee of approximately EUR 250.
- License for Commercial Premises: To operate a business with a physical location, you must get a license to open. The price varies from EUR 400 to EUR 800, depending on the local government.
Conclusion
Starting a business in Spain from India involves understanding local regulations, choosing the appropriate business structure, and complying with both Spanish and Indian legal requirements. Key steps include obtaining the necessary visas, registering the company, securing a tax identification number, and opening a local bank account.
While the process may seem complex, careful planning and professional guidance can facilitate a smooth entry into the Spanish market. Leveraging Spain’s strategic location and business-friendly environment can lead to successful expansion and growth opportunities for Indian entrepreneurs.
Contact OnDemand International to set up your business in Spain from India. OnDemand International’s experts provide you with the complete consultation and hassle-free incorporation process.
FAQ’s
Yes, anyone regardless of nationality can set up a business in Spain. Spain makes no distinction between EU and non-EU citizens when it comes to launching a business.
Yes, non-EU citizens moving to Spain to start a business will need a valid work permit. To get a work permit, you must apply to the Spanish embassy in your home country.
Yes, you can set up a business in Spain online or in person. The process may vary a little depending on the entity type and whether you incorporate online or in person.
Spain offers many benefits for foreign entrepreneurs, including a strong strategic location, access to European markets, investment incentives, a skilled workforce, and entrepreneurial support. Spain is keen to attract foreign talent and investment.
The company registration with the Mercantile Registry may take several weeks to complete. However, OnDemand International can help open a company remotely through a power of attorney to speed up the process.
Yes, opening a business bank account is one of the key steps in setting up a company in Spain as a foreigner.
