When it comes to setting up a business in Spain, many people can be become easily frustrated and overwhelmed due to the lots of bureaucracy they may encounter in comparison to other countries where companies can be easily incorporated in minutes without the need of even seeking for a lawyers’ assistance.
Procedures to incorporate a new business in Spain may take some time, however, they tend to be straightforward once you get to understand the different steps to be followed, and with a bit of patience and the right assistance, you can easily succeed.
This guide has been designed to provide you with an internal glimpse of Spanish regulations and the different steps you would need to take into account when deciding to start your own business in Spain.
Where to start when setting up a business in Spain
Before initiating your venture, it is important to be able to answer some questions such as: Where will the company be incorporated? Who will be the Director and what will the company do? and also, keep in mind Spanish timings (everything is just a bit slow).
Once this has been settled, we jump into point number 2:
What you need to set up your Spanish business
Getting your NIE number
We would have to say that as for most things in Spain, the first document you will need, is the famous NIE. Once you have this, the procedure will be a piece of cake.
The NIE is the “Foreigner’s Identification Number” that any foreigner (resident or not) will need in order to do any kind of activity in Spain, also for setting up a business. NIEs can be obtained at a local Police Station in Spain or at a Spanish Consulate abroad. Note that in most cases, previous appointment will be needed.
Registering your company in Spain & signing the Establishment Deed
Once you have your NIE, you would need to register a company name at the Commercial Registry. This is a step that can be done online and usually takes about 24-48 hrs. to obtain a response.
The company will be governed by its bylaws (“Articles of Association”), which will need to be in accordance with Spanish regulations. In this point it will be necessary for you to have an address in Spain for registration purposes and have a clear understanding of the activities your company will carry out. The company can carry out all the activities you wish to include, however you have to keep an eye and be sure you can carry out such activities without needed any specific licenses.
One of the most important steps would be to sign the Establishment Deed (the proper formal incorporation of the company) before a Notary Public. At the Notary is important to submit a form called “D-1A” which documents foreign investments conducted in Spain for statistical purposes. Later, the Deed along with the bylaws will be submitted to the Commercial Registry of the province where the company has its registered address. Appointments at Public Notaries for these purposes can easily be obtained, and the fees for Notary and Registry combined would be around 650 €. This process of “formal registration” may take up to 15 business days.
Setting up a Corporate (Business) Bank Account in Spain
Once your company has been properly registered, you will need a corporate bank account. On this point, banks may take their time. However, if you take the whole set of registered documents, the procedure should not have to be a hassle. Nowadays, there is also the possibility to open online bank accounts for EU citizens therefore this will ease the process a bit.
Taxes and Social Security in Spain
Any person who resides legally in Spain and carries out an economic activity must be registered at the Social Security System. That includes freelance workers and employees, and affects the companies in the following way:
The Administrator(s) (the one tasked with managing the company) will have to be registered at the Social Security as a freelance worker, with a monthly cost of approximately 300 €.
In order to be able to register at Social Security, the Administrator must be a Spanish citizen or have a Spanish residence and work permit!
If you will not live in Spain and still wish to be the Administrator, note that it will also be possible. Non-resident Administrators are excluded from the System of Spanish Social Security. However, they must appoint a legal representative in Spain for the purposes of registering at Spanish Social Security.
In case you were wondering, of course, Spanish companies have to pay taxes in Spain.
Corporation tax and VAT in Spain
The General Corporate Tax Rate in Spain for companies is 25% over profits as of 2017.
Note that there is a Reduced Tax Rate of 15% as of 2017 for entrepreneurs if the company represents the start of a new economic activity, to be applied to the first two profitable years. This reduction does not apply if the company is part of a group.
Tax accrual for any commercial operation, subjected to a quarterly and yearly declaration. The standard tax rate is 21%, applicable to most commercial operations.
Should you want to know more about the establishment of a Limited Liability Company in Spain and how we can help you in that regard, make sure that you visit our website.
Please note: This article does not constitute legal advice. It is intended to provide general information only.