How to start a business in Spain

Spain can be a very nice place to live in, with its lovely weather, friendly locals and reasonably affordable lifestyle. So if you’re considering moving here and opening your own business, we explain you how.

If you want to open a business in Spain, you need to have a permit to live and work in the country. In case you’re an EU citizen, you’ll only need to obtain your tax identification number called NIE (Número de Identificación de Extranjero). With it you are able to pay your taxes, as well as any other activity that requires an official process, like opening a bank account or buying a property.

If you’re not from the EU, you will also need a visa and work permit.

To apply for a work permit when you’re planning to open a business, you have to do it at the Spanish embassy or consulate in your home country and you`ll need to provide the following documents:

After obtaining your permit, you will have to prove you still fulfill all these conditions every year for the next five years. After this, you can apply for long-term Spanish resident status.

Regulated professions and businesses

Certain professions and types of business are heavily regulated. So you need to verify that you comply with the applicable rules for your situation. Your qualifications will probably need to be officially accredited and in some cases, you may also need to apply for a license.

Rules can also vary between regions, so you should check out the national and regional rules of the region you plan to base your business.

Once you have a permit to live and work in Spain, you need to choose your business’s legal form. There are three main options:

1. Sole Trader
2. Partnership
3. Limited Company

1. Sole trader

This is the easiest, cheapest and most flexible way to start doing business in Spain. It requires doing three things:

1. Register with the Spanish tax office (as a sole trader or a freelance professional)
2. Register for social security under the special regime for autonomous workers (RETA) within 30 days of registering with the tax authorities.
3. Get a license (if required).

Healthcare

You will be entitled to free healthcare but as a self-employed person, you’ll need to join a health insurance fund via the social security authorities and it will cover any dependent family members living with you.

Other formalities

Each year you’ll need to file a personal income tax return, as well as quarterly returns. You’ll also need to keep copies of invoices and receipts for all expenses you want to deduct on your annual return. For this, we recommend consulting with a lawyer or accountant to avoid any fines or other penalties derived from failing to comply with any requirements.

2. Partnership

If you plan to go into business with one or more people, you can open a Partnership. The process is still flexible but a little more time-consuming and expensive.

You can choose from two types of partnership in Spain: general partnership and limited partnership, which have their own special requirements and gives different rights and responsibilities.
In both cases, you’ll need to:

3. Limited company

This is the most complex, formal and expensive type of company, but also has several advantages over the other ones, including limited liability and more favourable taxation.

Types of limited companies

There are six types of limited company you can choose from in Spain. They difference by the minimum number of shareholders and amount of money required to invest. But, whichever one you choose, you’ll need to follow the following steps.

1. Hire a lawyer or accountant.
2. Certificate of uniqueness (a certificate that confirms the business name is available).
3. Get a Tax Identification Code (CIF) that`s specific to your company.
4. Open a bank account in the name of your company and deposit the minimum investment amount.
5. Public deed of incorporation (the document that sets up your company). It must be published by a notary and is accessible to the public. You’ll also need to give the notary originals and copies of your tax forms, certificate of uniqueness, NIE and bank certificate.
6. Register your company.
   • To do so, you need to: Stamp the original deed in your local tax authority.
   • Take it to the Mercantile Registry for filing in the official registry of companies.
   • Once you receive confirmation of registration, you’ll need to obtain your final CIF number in your local tax office.
7. Register with the social security authorities.
8. Other formalities that include:
   • Setting up proper accounting books.
   • Obtaining any licenses necessary to operate your business, including an opening license.
   • Notify the regional authorities.
     

Taxes

When you open your business, evidently, you’ll have to pay taxes and the requirements will change extensively depending on whether you’re a sole trader, a partnership or a company. For this, we also strongly recommend consulting a local accountant to avoid fines or other penalties.

So, if you are planning to open a company in Spain or are considering it, do not hesitate to contact LABE Abogados. Our business opening specialists will be able to advise you on what type of business suits you better and guide you along this path, facilitating the whole process for you and, if it is the case, your partners.