Company Formation in Spain: Expert Tips & Advice

Starting a Business Setup in Spain can be complex without the right help. Spain is ranked 30th in the World Bank’s Doing Business report. This shows it’s a good place for business, but you need expert advice.

At Start Company Formations, we help entrepreneurs through the Spanish Business Formation process. We aim to make your journey smooth from start to finish. This way, you can use Spain’s great location and business-friendly environment to your advantage.

Setting up a company in Spain gives you access to over 46 million consumers. It also offers good tax deals and a high quality of life. Spain has a low inflation rate of 2.3% and stable corporate taxes. This makes it a great place for new businesses.

The minimum capital needed is €3,000 for a Limited Liability Company (SL) and €60,000 for a Public Limited Company (SA). This gives you both flexibility and security.

We invite you to work with us for a smooth and successful Business Setup in Spain. Our experts will help you at every step, from planning to running your business. We ensure your business has a strong foundation.

Let Start Company Formations help you start a thriving business in Spain. Spain is one of Europe’s most vibrant markets.

Introduction to Company Formation in Spain

Setting up a company in Spain is a detailed process. It needs a deep understanding of Spanish business laws. In 2023, 109,003 companies were started, showing Spain’s appeal to entrepreneurs. Most, 107,611, were limited liability companies (Sociedad Limitada – SL), thanks to Spain’s business-friendly laws.

To register a company in Spain, you must know the basics. For an SL, you need at least €3,000 in share capital. This money helps the business grow and stay stable. Also, you must get a tax ID number from the Spanish Tax Agency quickly after starting.

Setting up a company in Spain involves legal steps. These include notarial and Commercial Register actions. These steps cost about €1,000 and take one to two months, longer if you have foreign partners. You can even start an SL with just one shareholder, making it easier for solo entrepreneurs.

The tax situation for new businesses in Spain is good. They pay 15% corporation tax on profits, down from 25%. Companies must also handle VAT every quarter and submit annually. They must also register for the Tax on Economic Activities (IAE) if they make over €1,000,000 a year.

Getting help from a professional can be very useful. A good consulting firm can make setting up a company in Spain easier. They ensure you follow all Spanish business laws, making the process smoother.

Benefits of Starting a Business in Spain

Starting a business in Spain has many advantages. It has a great location, low taxes, and a high quality of life. The country is now even more appealing thanks to the Startup Law, which offers big investment incentives.

Access to the European Market

One big reason to start a business in Spain is its access to the European market. Being part of the European Union means businesses can move goods, services, capital, and labour easily. This makes it easier to trade and do business across the continent.

Favourable Taxation Rates

Spain’s taxes are set to help businesses grow. The new Startup Law (Law 28/2022) cuts corporate taxes for startups. They pay just 15% tax on profits in their first year, down from 25%.

Startups can also delay paying corporate tax for up to 12 months in the first year. This gives them more time to focus on growing. These tax breaks are big incentives for investment.

High Quality of Life

Spain is known for its great quality of life. It has a nice climate, a lively culture, and top-notch healthcare and education. This makes it a great place to live and work.

Good quality of life boosts employee happiness and productivity. It also attracts expats and foreign investors. So, Spain is a top choice for business opportunities.

In summary, Spain offers great market access, low taxes, and a high quality of life. These benefits make it an excellent place for entrepreneurs to invest.

Types of Companies in Spain

Choosing the right business structure is key when starting a company in Spain. There are various types to meet different business needs. We’ll look at the main ones, like Spanish LLC, Public Limited Company Spain, Branch Office, and Liaison Office.

Limited Liability Company (SL)

The Limited Liability Company, or Spanish LLC, is very common in Spain. Now, you only need €1 to start one. This company protects its shareholders’ personal assets.

Setting up an SL takes about 20 to 30 days. You need a notarial deed and to register with the commercial register.

Public Company (SA)

The Public Limited Company, or Sociedad Anónima (SA), is for bigger businesses. It needs €60,101.21 in share capital, with 25% in cash or property. This option is less popular than the Spanish LLC but allows for more capital raising.

Branch Office

Foreign companies can set up a Branch Office in Spain. It’s like a local company but follows the parent’s laws. This lets foreign businesses manage in Spain while keeping control at home.

Liaison Office

A Liaison Office can’t do business or make money. It’s for market research and building relationships. It’s for foreign companies wanting to check the Spanish market first.

Minimum Share Capital Requirements

Starting a business in Spain means knowing the minimum share capital requirements. The rules change based on the company type. For a Private Limited Company (S.L.) or a Simplified Limited Company (S.L.S.), you need €3,000. This makes sure your company has enough money to start.

A Public Limited Company (S.A.) needs more, €60,000. You can pay 25% of this at the start. This helps with managing your first investment. The share capital guidelines in Spain help you understand these rules.

For a General Partnership (Sociedad Colectiva), there’s no minimum capital. But, partners risk everything. A Limited Partnership (Sociedad Comanditaria) also doesn’t have a minimum. But, each partner’s risk is only what they put in. A Cooperative Corporation (Sociedad Cooperativa) can decide its capital, or it’s €3,000 by default.

Every business in Spain must consider these financial rules. Following the right funding rules is key for a strong start. Entrepreneurs should follow official steps to make their journey smooth and successful.

Legal Formalities for Incorporating a Company

In Spain, setting up a company follows strict rules. The steps include making key documents, going to a public notary, and registering with the trade register.

Document Preparation

We start by getting a provisional company name certificate. This usually takes 2-3 days if the name is unique. We also need to fill out a Single Electronic Document (DUE).

The DUE is important, more so if we use the CIRCE system from 2003. It helps with the electronic setup of some business types like SRL. Entrepreneur Service Points (PAEs) offer free help with the DUE to make starting a business easier.

Public Notary Procedures

Then, we go to a public notary. Here, we sign the deed of incorporation. This step is key to proving our company’s legal status.

The notary also handles registering a subsidiary if needed. Even though it doesn’t have its own legal identity, it’s legally recognised.

Trade Register

The final step is registering with the provincial trade register. This is essential for our company to be legally recognised. The process costs about €175 for publishing in the BORME.

We must submit all necessary documents. It’s important to meet deadlines to avoid delays. Also, we get a Tax Identification Number (NIF) on the same day we submit our application.

Company Formation in Spain as a Foreigner

Setting up a company in Spain as a foreigner has its challenges. Foreign investors in Spain must first get visas. Non-EU immigrants can get a visa for up to a year for business purposes. The visa costs €60 and requires several documents, like a medical certificate and a clean criminal record.

To start a limited liability company (SL), you need €3,000. For a public company (SA), you need €60,000. Getting a corporate name approved is quick, taking up to 48 hours. The deed of incorporation takes 1 to 3 days, followed by 15 days for official registration.

Setting up an international business in Spain means dealing with taxes. Additional branches and subsidiaries must pay income tax and VAT quarterly. Getting a tax identification number (NIE) is key. EU citizens get it in about five days, while non-EU citizens should check with the Immigration Office.

Registering with the Local Government Tax Authority takes about 2 hours. Registering with Social Security takes 2 to 6 weeks. Self-employed workers need a declaration of responsibility for certain activities. They don’t need initial capital but must be aware of personal liability.

A solid business plan is essential. It should outline the company’s purpose, financing, and job creation. Spain is the 15th largest economy and the 4th in the Eurozone, making it attractive for foreign investors. Don’t forget to register the company name and get necessary authorisations for a smooth setup.

Obtaining a Non-Resident Identification Number (NIE)

For any *foreign entrepreneur* wanting to start in Spain, getting a Non-Resident Identification Number (NIE) is key. This number is unique and needed for all business dealings and official tasks in Spain.

Importance of NIE

The NIE Spain is vital for setting up a business here. It helps with opening bank accounts, buying property, and filing taxes. Without it, foreign entrepreneurs can’t fully work in Spain’s systems. This nine-digit number helps avoid delays in business plans.

Step-by-Step Process

Getting an NIE Spain involves several steps:

1. Gather Required Documents: You need your passport, a copy, two photos, a filled EX-15 form, a residence certificate, and a reason for needing an NIE.
2. Fill Out the Application Form: Fill the EX-15 form correctly. Make sure all details are right to avoid delays.
3. Pay the Fee: The NIE costs about €10.71. You can pay this at any bank on the day of your appointment.
4. Make an Appointment: Book a time at a local police station or immigration office. It’s hard to get appointments during busy times, so plan early.
5. Visit the Office: Go to your appointment with all your documents. The whole process usually takes one to two hours, including waiting.
6. Obtain your NIE: Getting an NIE can take one day to three weeks. Temporary NIEs are for property purchases and last three months. Permanent NIEs never expire.

For non-EU citizens, there are extra steps. They might need a TIE (Tarjeta de Identidad de Extranjero) if staying in Spain over three months. This can add complexity, with costs around €60 for notary services.

You can have someone else apply for your NIE. This might take four to six weeks, costing between €100 and €200. But, getting an NIE is essential for any foreign entrepreneur in Spain to succeed.

Registering Your Business Name

Choosing and registering a unique business name is key in Spain. It makes sure your name is legally safe and stands out. We’ll look at how to apply and what documents you need for Business Name Registration Spain.

Application Process

First, you need to check if the name is free. Look in the Central Mercantile Register (Registro Mercantil Central) for similar names. If it’s clear, you can apply. This step is vital to avoid legal issues later.

After approval, your name is reserved for six months. This gives you time to finish the Company Setup Spain steps.

Required Documents

You’ll need a few things to secure your business name:

• Valid proof of identity (like a passport) for all directors
• A Non-Resident Identification Number (NIE) for foreign investors
• A certified copy of your company’s documents
• Proof of bank deposit for initial capital if needed
• A certificate showing your name is available from the Central Mercantile Register

With these documents ready, registering your business name is easier. It’s a key part of setting up your company in Spain. Costs can be between €1,500 to €2,000, covering notary fees. This makes sure your investment is well-protected.

Banking Requirements for Spanish Companies

Starting a business in Spain means you need to know about banking requirements. This is key for managing money and following local rules. Business Banking Spain is vital for your company’s financial health.

Opening a Corporate Bank Account

Getting a Corporate Account Spain takes some steps and papers. You’ll need to show the company’s Articles of Association and proof of registration. Also, the directors’ ID details are required.

Spanish banks might ask for a mercantile registry certificate and an NIE number for foreign directors. This is to check the company’s legitimacy and financial health.

Opening a corporate bank account is detailed because of strict Spanish banking rules. It’s wise to meet with a bank rep to make sure everything is right.

Minimum Deposit Requirements

Spanish banks ask for a minimum deposit to open corporate accounts. The amount depends on the account type and bank rules. For example, a Sociedad Anónima (SA) needs at least EUR 60,000, with 25% to be paid upfront.

A Sociedad Limitada (SL) has a minimum deposit based on its share capital. This can be as low as EUR 1 under certain conditions or up to EUR 3,000.

Many Spanish banks offer services like online banking and international transactions. They also help with payroll. Having a solid Business Banking Spain setup is important for your company’s success and financial health.

Drafting the Articles of Association

The Articles of Association are the legal backbone of any company in Spain. They outline the company’s structure, rules, and how it operates. It’s vital to draft these documents carefully to meet legal standards and best practices.

Essential Components

A good Articles of Association should include key elements as stated in Article 23 of the Capital Companies Act. These elements are:

• Company Name and Activity: Clearly state the company’s name and its business goals.
• Registered Office: Mention the official address for legal communications.
• Share Capital: Detail the minimum share capital. For SLs, it’s one euro, and for SAs, it’s €60,000.
• Governing Bodies: Explain the roles and duties of the board of directors or managing entity.
• Mode of Deliberation: Describe how decisions are made, focusing on voting and meetings.
• Date of Commencement of Operations: State when business activities will start.

Approval Procedure

After creating the Articles of Association, it must go through a detailed approval process. It needs to be included in a public deed and registered with the Commercial Register. This process usually takes two to four weeks.

When changes to the Articles of Association are needed, a General Meeting of shareholders must approve them. The meeting must be called with clear reasons for the changes. After voting, the changes are formalized, and the meeting minutes are notarized. The updated Articles then need to be registered again.

It’s critical to ensure the Articles of Association are correctly prepared and approved. Following the Company Bylaws Spain and preparing thorough Legal Documents Spain helps businesses avoid legal issues. This way, they can ensure their foundational documents comply with all legal requirements.

Taxation and Financial Obligations

It’s key for businesses in Spain to know about taxes. This includes corporate income tax and VAT. We’ll look at what companies need to do financially.

Corporate Income Tax

In Spain, the corporate income tax (CIT) rate is 25%. New companies pay 15% for their first two years. Small businesses have different tax rates based on their income.

Start-ups can pay 15% for their first year and the next three. Companies with big sales must pay at least 10% tax.

VAT Rates

Spain’s standard VAT rate is 21%. But, some items like food and books have lower rates. Companies must file VAT returns every quarter and an annual summary.

Annual Returns and Audits

Companies must file their tax return within 25 days after six months of the year end. They also need to file VAT returns and an annual VAT summary. Audits might happen based on company size and type.

Staying on top of taxes is important. It helps avoid fines and keeps a company in good standing. Knowing about Corporate Tax Spain and Business Taxes Spain helps companies stay compliant.

Virtual Offices and Registered Addresses

Many entrepreneurs find Virtual Office Spain services very useful. They offer flexibility and save money. These services help businesses grow by giving them a professional image without a physical office.

Benefits of Virtual Offices

Virtual offices in Spain have many benefits. They give businesses a prestigious address. This boosts their credibility and trust in the market.

They also help businesses work from anywhere. This flexibility is great for growing companies. Services like Clevver provide local phone numbers and virtual receptionists, improving a business’s image.

Other perks include meeting rooms, mail management, and secure digital storage. These features save money compared to traditional offices.

Providers of Registered Addresses

Spain has many providers of registered addresses. Each offers different packages for businesses. Clevver, for example, provides services like local addresses and mail forwarding.

Prices start at 35€/month + VAT for basic plans. More advanced packages can cost up to 150€/month + VAT. These include features like meeting room use and local phone numbers.

Customers get discounts on rentals and can receive parcels. They also enjoy flexible contracts for temporary projects. The mail forwarding service ensures legal compliance during company setup.

Virtual offices also help the environment by reducing travel and office space needs. They are key for successful business registration in Spain and help businesses grow.

Steps to Register a Company in Spain

Setting up a company in Spain is a key step for legal recognition and smooth operation. It involves preparation, application, and completion stages. Each stage requires specific actions and follows Spanish laws. Here’s a detailed guide to help you establish your business in Spain.

Preparation

• First, decide on the right company type for your business. You can choose between a Limited Liability Company (SL) or a Public Limited Company (SA).
• Check the minimum share capital needed. An SL needs €3,000, while an SA requires €60,000, with at least 25% paid upfront.
• Then, draft the company bylaws. These must outline the company’s goals, structure, and how capital is contributed.

Application

In the application phase, you must submit documents and forms to the authorities:

1. Get a provisional tax ID number from the tax office by filling out a form.
2. Next, create and sign the public deed of incorporation with a notary. Make sure all details are correct and follow Spanish laws.
3. Then, register the deed with the Commercial Registry. This gives your company official recognition.

Completion

• Get a permanent tax ID number within six months of the provisional one.
• Register for tax on economic activities and VAT before starting work. You’ll also need to pay the opening license tax.
• Lastly, register with Social Security and get work accident insurance. This is necessary for employment laws.

By carefully following these steps, you can register your company in Spain successfully. Paying close attention to detail and following the law is key for a smooth setup.

Common Mistakes to Avoid During Company Formation

Starting a business in Spain is exciting, but it’s key to avoid common mistakes. Many entrepreneurs make errors that slow down their business start-up. Knowing these mistakes can help you form your company smoothly.

Ignoring Legal Advice

Disregarding legal advice is a common mistake. Spain’s laws, influenced by European rules like GDPR, need careful attention. Not following GDPR can result in big fines, up to €20 million or 4% of global sales.

Legal experts help your company follow all laws. Without their advice, you might face penalties and misunderstandings. Getting help from Start Company Formations is very helpful.

Incomplete Documentation

Starting a company in Spain needs detailed paperwork. Not having the right documents is a big mistake. About 40% of new companies have incomplete articles of association, leading to problems later.

Submitting incomplete documents can cause delays or even get your application rejected. Also, 70% of entrepreneurs find issues with their company name. Make sure to check everything carefully.

It’s important to make sure all your documents meet the rules. Companies like Start Company Formations can help check and make sure everything is right.

Tips & Advice for Business Incorporation in Spain

Starting a business in Spain might seem tough due to its ranking on ease-of-doing-business indices. But, with the right advice, the process can be easier. Here are some expert tips to help you through the complex steps and set up your business well.

First, know the capital needs: For a Sociedad Limitada (S.L.), you need €3,000. For a Sociedad Anónima (S.A.), it’s €60,000, with 25% needed at start. Law 18/2022 lets you start a Limited Liability Company (SL) with just 1 euro, but with some limits.

Next, get a Negative Company Name Certificate to check if your name is free. This usually takes 3–5 business days. Also, use English-speaking bank advisors to open a corporate bank account, which is needed for capital deposit.

It’s key to follow tax rules. Spain’s Corporate Tax is 25%, and VAT (IVA) is 21%. There are lower rates for some goods and services. Social Security contributions start at about €300 monthly. New autónomos can get a “Tarifa Plana” for about €80 a month for the first year.

The incorporation process can be faster online, taking 24 to 72 hours. But, in-person, it can take up to 15 working days. Expect to pay 100 to 300 euros for notary fees and 100 to 250 euros for registration fees.

Choose how your company will be run, from one person to a full board. This affects how your company is managed and works.

Also, remember that companies don’t pay the Tax on Capital Transfers and Documented Legal Acts (ITP-AJD). You need to fill out Form 600 to avoid this tax. It’s important to document your contributions clearly, if your share capital isn’t in a bank account for Limited Liability Companies.

By following these tips and advice, you can tackle the challenges and build a strong base for your business in Spain.

How Start Company Formations Can Help You

At Start Company Formations, we help entrepreneurs and businesses in Spain. We make sure your company setup is smooth and follows all laws. Our team takes care of every detail, so you can start your business confidently.

Getting a Foreigner Identification Number (NIE) is key for foreign shareholders in Spain. We help you get this, using our connections and experience. We aim to reduce legal risks and make the process easier, from the start to getting your Tax Identification Code (CIF).

Knowing Spanish corporate law is vital for setting up a company. Start Company Formations gives you legal advice that fits your needs. We handle taxes and make sure you follow Spanish laws. With offices in Madrid and Málaga, we offer top support wherever you are. Choosing us means your business is in good hands for success in Spain.