How to Setup a Company in Spain – Ultimate Guide and FAQs

Company setup in Spain is not much different than setting up a company in any other country. However, you should be familiar with all of the rules and regulations of setting up a company so that you get it right the first time. 

Anyone, whether a foreigner or a Spanish citizen, is permitted to start a business in the country, provided they are able to submit the right paperwork. For instance, those who reside within the EU have to go through a pretty straightforward process that involves getting a NIE and EU registry certificate. For non-EU residents, starting a business in Spain is just as easy, but you will require to have a working visa first before starting your business operations in Spain. 

Getting a Business Visa

As mentioned, you are either going to need a business visa or a work permit before going through the company setup process in Spain. Foreigners are oftentimes unaware that there are two different working residencies that they can avail if they want to set up a company in Spain. 

These two options include getting a work permit as a self-employed person or choosing the entrepreneur visa that’s offered by the Spanish government. Since both of these options come along with their fair share of pros and cons, it is best to evaluate your situation to choose the option which suits you best. For those who are unaware, here’s a quick breakdown of the two visa types;

Self-Employed Work Visa

If you plan on opening a physical business in Spain that’s not considered innovative, such as a cafe or grocery store, then you will require a residence permit called the self-employed worker visa. This is a regular work permit that allows you to set up shop in Spain if you are not in the IT sector. It is important here to note that not every business type will be eligible for the self-employed worker visa, so it’s best to talk to a lawyer or business setup specialists who can help guide you further. 

Entrepreneur Visas

This is a visa option that mostly attracts youngsters to Spain. At its core, the business idea you want to start in Spain must be technology-based and innovative. However, the requirements for the entrepreneur visa in Spain are stricter as compared to the other option, and not every business is going to be eligible for an entrepreneur visa; there are some advantages. 

For instance, the application procedure for the entrepreneur visa is much faster, getting you residency within 30 days. That being said, it is important for entrepreneurs to first weigh the benefits with the requirements before proceeding with this option.

The idea is that you must have a business idea that’s innovative and will contribute to the local economy. This is why this is yet another critical consideration you must make before beginning. As previously stated, the associated residence card varies based on the sort of company you wish to establish. Finding the correct company idea is, therefore, critical. Furthermore, you cannot start a company unless you have an excellent business plan. 

Choosing the Company Type

Before we begin the process of forming a firm, we must first determine its type, as in the legal framework of the company. The Commercial Code defines the many company formations that exist in Spain. Each of them has distinct traits, and recognising their various functions is critical. Here’s a quick breakdown of the different types of corporations that you can open in Spain; sole trader comes with a higher income tax that can amount to up to €60,000 per year. 

A limited liability company will require a minimum capital investment of €3,000. You can also open a branch office in Spain if you already have a business in another country other than Spain. Of course, you will be required to present a notarised power of attorney along with a copy of the public deed of incorporation of your company. 

Get an NIE Number

The first thing you should do is obtain your NIE number. This is the identification number that will enable you to create a bank account, file taxes, and so on. The NIE is the most necessary item to have in order to operate freely in Spain.

Obtaining the NIE is a very straightforward process; however, the time it takes to receive it depends on whether you are an EU citizen or not. For instance, it takes 3 to 5 working days for EU people to obtain the NIE number, while the time period for non-EU individuals varies based on the respective Immigration Office. You can easily obtain the NIE number by making an appointment or visiting the Spanish consulate, or via a representative in Spain. 

What About Capital?

The capital must be put in a bank, in a company-owned current account. It is important to note that the current minimum capital for a limited liability company is 60000 €, while the minimum capital for a public limited company is 3000 €. Nonetheless, our law (Ley de Sociedades de Capital) enables the fourth portion (€ 15,000) to be paid for the constitution, with the remaining 75% paid in the deed itself.

The bank account must be opened in the presence of the shareholders or the manager of the firm. However, before beginning the process, you should be aware of the challenges associated with opening a bank account with a non-resident NIF (more on this in this post on cash handling services).

Bank Account and Registration

After obtaining a tax code and a certificate of no-name coincidence for a limited company, you must open a business account with a Spanish bank and deposit €3,000. This is the minimum share capital required to form a limited corporation. And what if you don’t have that kind of money? You can also utilise assets with the same value as capital. However, this option is not recommended by many experts, mainly because of the issues that arise if you plan on selling the company shares.

The first step in forming a limited company is to get a certificate confirming that the business name you wish to use is not already in use. A no-name coincidence certificate can be obtained from The Mercantile Registry (RMC). You may accomplish this on your own by using the RMC website. This phase takes around three days until you receive the RMC’s response through courier.

Corporate Taxes

You can use several business structures when setting up a company in Spain: subsidiary business, branch company, representative office, and so on; however, you will be required to pay taxes, regardless of the option you choose. 

The truth is, no business or business owner can avoid paying taxes in Spain. This means getting registered with the tax office before beginning your day-to-day activity. You must travel to the tax agency and activate your company using the provisional CIF you were provided in the previous stage. This will allow you to legally begin giving your services or selling your products, as well as complete out the necessary taxes, such as the quarterly VAT, yearly company tax, and accounts.

Finally, once you’ve done all of the preceding processes, you’ll be ready for the most essential stage: launching your firm and attempting to make it profitable. This is, without a doubt, the most critical phase, and it deserves your whole attention and work. That is why it is usually preferable to engage an experienced business lawyer to handle all of the other stages so that you can concentrate on what is truly important: growing your business.

Over the past few decades, Spain has emerged as a European business centre, with its large cities, such as Barcelona and Madrid topping the list of entrepreneur hot spots that attract thousands of start-ups each year. With the growth of the startup scene in Spain, foreign investors and business owners are attracted to what the country has to offer in terms of tax benefits and skilled manpower, and easy access to other major EU countries. For more detailed information on the company set up in Spain and a plethora of other valuable resources, visit Start Company Formations today.