Spain has become a very interesting place for foreigners to establish their businesses. They can find a solid entrepreneurial ecosystem, skilled partners and workers, and nice weather. All these elements are attractive enough to start an entrepreneurial adventure.
In this article we are going to outline some of the basic requirements that everyone should have in mind when starting a business in Spain.
Legal Structure
In Spain there are two main ways to structure a business: the first one is to work as a Freelancer (Autónomo), and the second one is to incorporate a Spanish Limited Company (Sociedad Limitada).
Identification
First of all, any foreigner interested in starting a business in Spain, either as a freelancer or through a Spanish Company, shall have a foreign identification number (NIE).
Freelance (Autónomo)
To be an Autónomo means to begin a business as a self employed person. There are two steps to become an Autónomo; first of all you have to notify to the Spanish Tax Administration (Agencia Tributaria) that you are going to start an economic activity, and then you should register to the regime of self employed persons in the Social Security (Seguridad Social), with a notification validated by the Tax Administration.
Once you are registered in the Social Security, you will have to pay a monthly fee, being the base fee 256,72 euros. However, current reductions for new Autónomos have recently being approved by the government, including the following features:
For new Autónomos under 30 years old the following reductions will apply:
- An 80% Social Security fee reduction during the first 6 months. (50 euros approximately);
- A 50% Social Security fee reduction during the next 6 months after the previous period of time;
- A 30% Social Security fee reduction during the next 18 months after the previous period of time.
For new Autónomos with 30 years old or over the following reductions will apply:
- An 80% Social Security fee reduction during the first 6 months. (50 euros approximately);
- A 50% Social Security fee reduction during the next 6 months after the previous period of time;
- A 30% Social Security fee reduction during the next 6 months after the previous period of time.
Furthermore, an Autónomo must comply with several tax obligations, mainly to present its quarterly declarations of taxes relating VAT and Retentions made by other professionals.
Spanish Limited Company
A Limited Company is the legal structure most used in Spain to start a company. As stated above, it is necessary to hold a NIE to become a shareholder of a Company.
The main steps to incorporate a Limited Company are as follow:
- First of all, it is necessary to obtain the Name of the Company through a Certificate issued by the Companies Registry (Registro Mercantil).
- The next step is to open a bank account and to deposit the minimum share capital to incorporate a Limited Company, which is 3.000 euros. The Bank will issue a Certificate of deposit that shall be presented at a Public Notary.
- Both Certificates are necessary to incorporate the Limited Company before a Public Notary. All the shareholders will have to be present and sign the deed and the Articles of Associations of the Company.
- After signing the deed, it will be necessary to obtain the Tax Identification Number of the Company (NIF = Número de Identificación Fiscal).
- Finally, the incorporation of the Company will have to be registered at the Companies Registry, and the beginning of the activity shall be notified to the Tax Administration.
It is important to add that it’s necessary to appoint a Director of the Company, and that the person occupying this role will have to be registered at the Social Security as an employee or as a self employed person (Autónomo) if he or she is a shareholder of the Company with 25% or more of the share capital.
I hope that this article has served its purpose of being a general guideline to evaluate the different options that any person has prior to start a business in Spain. We support the entrepreneurial initiative and encourage any person to follow its goals.
If you have further questions or any doubts regarding initiating your project, feel free to contact us at i[email protected]
Pablo Mancía
Lawyer
www.delvy.es