So, you’ve moved to Spain, and now think it’s time to plant your roots here even more so? Well, setting up a business in your new home country is certainly one way to do that!
Before you decide to take the plunge, it’s important you know the intricacies of setting up a business in this country. So, before anything else, you’ll need to seek the advice of a Spanish lawyer to help you with the details of setting up a business in Spain.
In order to give you a taste of some of the myriad of considerations your lawyer can help you with, this article should help. Here, we’re going to break down some of the key ingredients you’ll need to get your business up and running. Take a look at our expat company setup steps below.
Why Start A Business In Spain
First and foremost, let’s go into the details of why setting up a business in Spain is a popular and fruitful endeavour. The truth is, Spain has become a real business centre in Europe, with Madrid, Barcelona and Valencia being important entrepreneurial hubs. They truly attract the elements that can make a business successful, including:
• Good infrastructure and logistics to help your business succeed.
• Many successful start-ups have made their mark from here, making it a hot spot for new ideas.
• The market here is diverse, providing plenty of room for imagination and growth.
• Has a brilliant business culture, fostering great networking opportunities and relationships.
• Amazing surroundings, including beautiful food, company, and weather.
• Spain is known for its second-to-none work/life balance.
What Are The Legal Requirements To Start A Business In Spain?
The great thing about starting a business in Spain is that the only requirement is that you must be a legal resident here.
For those already living in the European Union, the procedure is straightforward. All you need is an NIE number and EU registry certificate. The NIE is essential for all fiscal transactions in this country, such as incorporating a company. You can apply for this at a processing office for foreign citizens (Oficina de Extranjeros) or at a national Spanish police station (comisarÃa).
However, if you are a non-EU citizen, you will need to get a working visa sorted before anything else. There are two types of working visas you may need to choose from. These are:
• Entrepreneur Visa: For those looking to develop an innovative technological business. The application for this visa usually takes between 20-30 days to come through, but there are much stricter regulations on this than the next option.
• Self-Employed Worker Visa: If you want to open up a business in something that already exists, for example a coffee shop, this work permit is more appropriate.
Consider The Type Of Business You’re Setting Up
Depending on the scope of your business plans, the legal set-up will vary. Let’s take a closer look at the different types of business you could consider:
Self-Employed Workers In Spain
Self-employed workers in the country are known as autonomos. They must register their business with the Spanish tax authority and Spanish social security department. Most autónomos will have to take care of the following when in business:
• Quarterly VAT (IVA) returns
• An annual income tax return (I.R.P.F.)
• Depending on your circumstances, other declarations may be necessary
You can either register as a freelance professional (autonomo profesional), which is usually applicable if you are working alone, or a sole trader, which we’ll discuss further below.
Sole Traders And Partnerships In Spain
If you have a small number of employees, you should register as one of the above. This is the least expensive method of setting up a business in Spain, and removes all the requirements otherwise needed to set up a limited company, making it much simpler to achieve.
As a sole trader owner, there is no legal difference between your business and personal assets. This will mean you are responsible for your personal tax return. What’s more, if your business gets into debt, you are personally liable.
Limited Companies In Spain
If you are setting up a larger company, then you should consider setting up a limited company. There are a variety of limited company types that can be formed in Spain, but the most common of these is a sociedad limitada or S.L. Incorporation.
These protect the owner from personal liability if the company goes bankrupt. An SL owner will have to present an annual Spanish corporation tax return, statutory account, VAT returns (IVA), and several other annual or quarterly declarations.
What Does An Expat Need To Set Up A Limited Business In Spain?
The steps you’ll need when setting up a limited company include:
• Getting in touch with a lawyer.
• Ensuring you have a foreigner’s tax identification number (NIE), as described above.
• Registering the company name with the Mercantile Registry (Registro Mercantil Central or RMC), so you can get a business certificate.
• Applying for a company tax identification number (CIF) via the revenue service (the Agencia Estatal de la Administracion Tributaria).
• Opening a Spanish bank account for the company.
• Preparing and signing the deed of incorporation.
• Registering the company at your local tax authority, taking your deed of incorporation and all of your other documentation with you, including your NIE, tax form, evidence of cash in your bank account, certificate from the Mercantile Registry
• Visiting the tax office to get your permanent Corporate Tax Identification Number (CIF), or tax ID.
• Registering for social security by visiting your local office.
Setting Up Business Insurance In Spain
Depending on the size of your company, whether you employ staff, and the nature of your assets, you’ll also need to take out business insurance. The three most important insurances you need to consider are:
- Personnel Insurance Policy: This will protect you against the event of your employees getting sick or in an accident.
- Public Liability Insurance: This is necessary in case you are involved in any third party claims. For example, if there are any accidents or injuries on your property, you will be covered.
- Buildings And Contents Insurance: Protecting against damage to your building or stock, for example in a fire or flood.
It’s best to seek the advice of an expert broker in order to get this right.
It’s Time To Employ Some Staff For Your Spanish Business
As you can see, there’s lots to consider. This article has tried to cover it all, but we may have missed some important steps, so be sure to get in touch with a Spanish lawyer to ensure you do everything by the book.
Good luck with setting up your Spanish business!
