When starting a new life in Spain, many expatriates consider starting a new business too. This guide covers everything you need to know, plus common concerns many expatriates face when setting up a business in Spain.
Spain’s location makes it a perfect hub for international business. It acts as a bridge between Latin America, Europe, and Africa. Spain also ranks as the 13th largest recipient of foreign investments globally. Plus, major cities like Madrid and Barcelona have recently ranked highly among the world’s most liveable cities, so Spain is a desirable place for both personal and professional reasons. With new tax incentives under the 2022 Startup Law, Spain has become an even more attractive place for businesses.
Choosing the right business structure in Spain: SLs vs. SAs
When you open a business in Spain, one of the first decisions you’ll need to make is what type of company structure you require. In Spain, the two most common corporate structures are Sociedades Limitadas (SLs) that’s the same as private limited companies, and Sociedades Snónimas (SAs) the public limited company equivalent. Both offer limited liability to their shareholders, but there are key differences.
What is an SL company? (Sociedad Limitada)
An SL is ideal for smaller businesses, as it requires a minimum share capital of just €1. Shareholders in an SL are not personally liable for the company’s debts, offering strong legal protection. However, once your capital exceeds €3,000, additional legal and financial rules then kick in. Under the 2022 Startup Law, startups benefit from a reduced corporate tax rate of 15 per cent for the first four years of profitability.
What is an SA company? (Sociedad Anónima)
For larger projects or companies looking to list shares publicly, an SA is the better option. The minimum share capital for an SA is €60,000, with at least 25 per cent of the nominal value needing to be paid upfront.
How to open a business in Spain in person
If you’re the type who prefers to manage the process face-to-face, here’s what you’ll need to do:
Central Commercial Registry (Registro Mercantil Central)
You’ll need to visit the Central Commercial Registry to request a certificate of clearance for your business name. This certificate confirms that your chosen company name is available and hasn’t been registered by anyone else.
The Central Commercial Registry has offices throughout Spain. The main office is in Madrid. You can find a directory of offices on their official website.
Notary public
You’ll need to submit a public deed of incorporation, which must be signed by a notary public. It’s also where you’ll provide the details for shareholders, company directors, and initial share capital contributions. If you’re using a power of attorney, make sure it’s legalised and translated into Spanish.
Tax Office (Agencia Tributaria)
Next, you’ll need to visit the Agencia Tributaria to apply for your company’s NIF (Tax Identification Number). You can find tax offices in most major cities.
Local Commercial Registry
Finally, submit your public deed of incorporation at the local Commercial Registry (Registro Mercantil). Once registered here, you will gain full legality and your business can officially start operating.
How to open a business in Spain online
It’s now possible in Spain to set up certain types of businesses entirely online, which is especially convenient for expatriates who may not yet be in Spain.
Online incorporation for SLs (limited companies)
If you’re setting up a Sociedad Limitada (SL), you can take advantage of Spain’s online incorporation system. Here’s how to do it:
Choose the simplified incorporation option: The government offers a fast-track process for SLs with standard regulations. This is ideal if you don’t have complex ownership structures.
Submit documents online: You can submit the incorporation documents electronically through the Punto de Atención al Emprendedor (PAE), or Entrepreneur Service Points. These are accessible through Spain’s official government website and allow you to complete the entire process digitally.
Electronic signature: To complete the online process, you’ll need a Digital Certificate. This certificate, provided by Fábrica Nacional de Moneda y Timbre (FNMT), acts as your electronic signature. You can apply for this certificate through the FNMT’s website.
Register for taxes online: Once your incorporation documents are approved, you can register with the Agencia Tributaria online for your provisional NIF and file your tax forms.
The legal requirements for expats opening a business in Spain
Setting up a business in Spain requires specific documentation. Here’s an overview of what you need:
Tax Identification Number (NIE/NIF)
Before you can start your business, you’ll need a Número de Identificación de Extranjero (NIE) if you’re an individual, or a Número de Identificación Fiscal (NIF) if you’re setting up a company. The NIE serves as a tax identification number for foreigners, and it’s compulsory for carrying out any financial activities, including setting up a business.
Company name registration
Your business will need an official name that isn’t already in use. This requires a certificate of clearance from Spain’s Central Commercial Registry, which certifies that your chosen name is available. It’s best to have some backup names in case your first choice is unavailable.
Notarised public deed
All incorporations must be recorded through a public deed, signed by a notary public. In addition, if you’re using a power of attorney to appoint someone to represent you, it must be legalised and, if not in Spanish, translated by a sworn translator. This is when the costs can start to creep in!
Business bank account
Once your business structure is set, you’ll need to open a business bank account in Spain. This is particularly important for depositing share capital for SAs, as it must be demonstrated through a bank certificate at the time of incorporation.
How much does it cost to open a business in Spain?
Minimum Share Capital – €1 (SL) or €60,000 (SA)
Notary fees – €600 to €800
Commercial Registry fees – €200 to €400
Legal/administrative services – €800 to €1,500
NIE/NIF legal representative fees – €100 to €300
Digital certificate – €25 to €50
Business bank account deposit – €100 to €300
Accountant (annual) – €500 to €1,000
Translation services (if needed) – €100 to €300 per document
Understanding Spain’s tax system
Spain’s tax system is complex, particularly for expatriates. It’s essential to understand the various taxes that could apply to your business, depending on its structure, size and industry.
Corporate Income Tax (CIT)
Corporate income tax is imposed on the worldwide profits of Spanish tax residents. The CIT rate is fixed at 25 per cent, however, newly formed companies may qualify for a reduced rate of 15 per cent in their first year.
Value-Added Tax (VAT)
VAT in Spain is applied at various rates, depending on the goods and services you offer. The standard VAT rate is 21 per cent, though reduced rates of 10 per cent or even 4 per cent apply to certain products.
Tax incentives for startups in Spain
Under the 2022 Startup Law, new businesses and foreign entrepreneurs enjoy the following tax benefits:
15 per cent corporate tax rate: For the first four profitable years for startups.
Deferred tax payments: New businesses can defer tax debts for the first two years of profitability.
Special tax regime for expats: Digital nomads and foreign entrepreneurs can pay a flat tax rate of 24 per cent on income earned in Spain
Common concerns for expats setting up a business in Spain
Language barrier
While many Spaniards speak English, especially in big cities, legal and bureaucratic procedures are often conducted in Spanish. This can be a huge hurdle if you’re not fluent. Consider hiring a bilingual business consultant or solicitor.
Bureaucratic processes
In Spain, expatriates tend to complain about the endless paperwork involved in setting up a business. It’s best to familiarise yourself with the required documents early on and consider engaging local legal support to save yourself a headache.
Cultural differences
Spain is known for its relaxed work culture, which may feel a lot slower than what you’re used to. For example, businesses in many parts of Spain close for an afternoon siesta – usually 2-5pm. As a business owner, understanding these cultural differences is key. If you can’t beat them, join them?!
Hiring employees for your business in Spain
If you plan to hire employees for business, you’ll need to register with Spain’s Social Security system. Both the employer and employees contribute to social security, with the employer responsible for a portion of the contributions (around 32 per cent).
The minimum wage in Spain is set at €15,876 per year (2024), but specific industries may have higher thresholds.
Starting a business in Spain can be incredibly rewarding and profitable. With the right amount of planning, a good grasp of the local legal and tax requirements, and an open mind to embracing the cultural differences, you can set yourself up for success as an entrepreneurial ex
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Publish date : 2024-10-22 09:14:00
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The post How to set up a business in Spain as an expat « Euro Weekly News first appeared on Love Europe.
Author : love-europe
Publish date : 2024-10-22 18:56:21
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