The Kingdom of Spain is well-known for its art, landscape, cuisine and architecture. Its breath-taking views and rich culture are enough reasons to travel the country. But as there are many reasons to visit the country, there are also numerous reasons Spain is an ideal destination to set up a company.
In this article, we provide information you need to know to set up your next business venture in Spain.
Spain as a growing business hub
Spain is seeing an increase in new business projects and opportunities for several reasons. With one of the largest economies within the European Union, investors eye the Spanish market to domicile their businesses.
Why should you consider setting up your company in Spain?
- Vibrant economy. Spain’s booming economy is evident by its $1.2 trillion worth of GDP (Gross Domestic Product). The country is also hailed as having the 14th largest economy in the world and 4th within the European Union (EU).
- Strategically positioned. With its strategic position in Europe, it has easy access to the markets of bordering countries and the EMEA region.
- Strong international relations. Spain is a member of the EU, Organisation for Economic Cooperation and Development (OECD), World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT), among others. Moreover, it has guaranteed double tax treaties with 90 countries. Its international relations significantly contribute to the country’s growing market and inflow of investments.
- Openness to innovation and development. Spain’s internal research and development expenditure increased by 1.3 per cent in 2020 with the business sector representing the highest sum. In addition, the country’s R&D ecosystem consists of various sectors such as transportation, healthcare and renewable energy, to name a few.
- Modernised infrastructure. Spain has modern infrastructure, adding to its accessibility to the global economy. It has 15 major ports and boasts efficient rail and subway systems.
How to set up a company in Spain
Who can set up a company in Spain?
Any person can set up a company in Spain for as long as they are a legal resident. For foreigners, there are two possible scenarios:
- If a person is a citizen of a country within the EU, they would only need to have their Foreign Identity Number (NIE) and EU registry certificate. A person’s NIE will also be their Tax Identification Number (NIF).
- On the other hand, a non-EU citizen is required to have a working permit/visa. Recently, Spanish authorities introduced reforms that would ease the requirements for foreigners who are looking to acquire a work permit in the country.
What are the legal structures for business formation in Spain?
There are two general classes of business that can be set up in Spain: individual and corporate companies. The main differences between the two classes are the existence of a separate legal personality, the need for registration in the Commercial Registry and a public deed for the latter.
Some of the well-known types of business types in Spain are:
- Sole trader or empresa individual
- Private partnership or sociedad civil privada
- Limited liability company or sociedad limitada (SL) or sociedad de responsabilidad limitada (SRL)
- New limited liability company or sociedad limitada nueva empresa (SLNE)
- Public limited company or stock corporation or sociedad anónima (SA)
The limited liability company or sociedad limitada (SL) is the most common business structure used in Spain. Here is a quick breakdown of the abovementioned legal structures.
|Sole Trader||Private Partnership||Limited Liability Company||New Limited Liability Company||Public Limited Company|
|Minimum Investment||No minimum investment||No minimum investment||Minimum investment of €3,000 and must be 100 per cent subscribed and paid at the time of the constitution||Minimum investment of €3,000 and maximum of €120,000||Minimum investment of €60,000, but can be paid either instantaneously or successively|
|Liability||Unlimited and personal||Unlimited and personal||Limited Liability wherein a shareholder’s liability is limited to the capital contribution||Limited Liability||Limited liability|
|Taxes||Personal income tax or IRFP||Personal income tax||Corporate income tax which is 25%||Corporate income tax, with a more simplified tax and accounting system||Corporate income tax|
|Number of shareholders||Not applicable||Not applicable||At least one shareholder||At least one shareholder and a maximum of 5 at the time of constitution. The number of shareholders can be subsequently increased through share transfers.||At least one shareholder|
|Company name||Same as the sole trader’s name||Total freedom but should be in accordance with the criteria set by the Central Mercantile Register (RMC)||Should be in accordance with the criteria set by the RMC, followed by “SL” or “SRL”||Two surnames and the first name of one of the partners, a unique alphanumeric code (from the CIRCE), followed by “SLNE”||Should be in accordance with the criteria set by the RMC, followed by “SA”|
If you are looking to determine the best business structure when you set up a company in Spain, do not hesitate to contact our team.
What are the procedures for company formation in Spain?
The several types of structures available in setting up a business in Spain involve various procedures and differing timelines. We would discuss more on the limited liability company or sociedad limitada (SL) being the most popular business structure in Spain.
An outline of the set-up procedure is as follows:
- Obtain a foreign identity number (NIE) for non-resident partners
- Acquire a company name and certificate with the Central Mercantile Register or Registro Mercantil Central (RMC)
- Acquire a temporary tax identification number (CIF) for the new company
- Open a bank account under the new company and deposit at least the minimum amount of capital
- Issue and sign the public deed of incorporation
- Register the company in the Mercantile Registry
- Register for a permanent tax identification number (CIF) and submit tax form 036
- Register for social security
- Notify the Ministry of Labour and Social Economy before the start of operations
For existing international businesses that are looking to enter the Spanish market with a branch or subsidiary, specific documents are necessary (some of which were already mentioned above). This includes:
- Notarized Power of Attorney
- Copy of the existing company’s certificate of incorporation
- Certificate of good standing
- Tax Identification Number (NIF)
- A resident staff member in Spain
Supplemental steps and reminders may be associated with each of the steps. As a corporate service provider, Bolder Group can help you navigate through these steps and requirements to set up your company in Spain efficiently.
Bolder Group in Spain
Market entrants can ensure a successful and efficient set-up in Spain with the guidance of professionals. As a corporate service provider, Bolder Group can provide the expertise needed to reduce the administrative burden and risks of entering a new market.
Looking to be a part of Spain’s competitive business scene? Contact us for more information.