How to start a business in Spain - company formation, virtual offices, VAT & taxes
Spain has a deserved reputation as a low-cost land of opportunity for foreign investors but administrative requirements are strict so expert help, like that provided by us here at Euro Start, is essential for businesses looking to start up in Spain.
Requirements for company formation in Spain:
- A Spanish ID number (NIE) is required for all directors and shareholders. This can be applied for via Power Of Attorney. This will be provided in Spanish and will need to be signed in front of a notary and legalised for use in Spain. If you wish to have the POA in English then it would need to be a sworn translation which we can assist with. It takes approx. 8 weeks to obtain the NIE if you apply at your local Spanish consulate. (Alternatively, if you are able to visit Spain, it takes only two weeks).
- Minimum share capital to be deposited for a limited company is €3,000.
- No minimum directors required - you can be a director and a shareholder at the same time.
- If an EU VAT number is required, then a Serviced/Physical Office will be needed
- If only a local tax number required, then only a registered address is required
- A Digital Certificate is compulsory in order to receive all communications from the tax authorities electronically. This is required for all directors and the company.
- Social security contributions will need to be paid in Spain. This is either paid by a director or an employee with the Power Of Attorney to pay on the company’s behalf.
What are the main types of company in Spain?
The two most popular forms of corporate structure in Spain are as follows:
- Public limited company (S.A.)
- Private limited company (S.L.)
What other types of company are there in Spain?
Other business formats, less common but equally valid, are as follows:
- Sole trader – one owner with unlimited liability
- Joint ownership – two or more proprietors with unlimited liability
- General or limited partnership
- Branch or representative office
What is the business climate like in Spain?
Spain has improved its business climate to become more liberal for foreign entrepreneurs, but professional advice on administrative requirements remains absolutely essential when establishing a company in Spain. We are experts in company formation in Spain and are able to guide you through the process smoothly to minimise frustration and language difficulties.
What about corporation tax?
Corporation tax in Spain has recently been reduced and is lower than a few of its European neighbours. The good news is that for the first two years of a new business, it's about 10% lower, which is a significant benefit for companies just finding their feet in a new location.
How easy is it to recruit staff in Spain?
Recruitment is rarely a problem for foreign companies seeking local staff. The workforce is well educated and flexible, labour costs are low and there are recruitment agencies throughout the country. The labour market is subject to a maximum working week of 40 hours and companies have to provide six weeks annual leave to all workers. We will be happy to refer you to our network of local recruitment specialists to navigate any recruitment contracts.
What is the regulatory environment like?
In line with standard EU practice, companies are required to register and to submit annual accounts to the regulatory authorities. Annual audits are compulsory for larger companies. There are very few controls on foreign investment apart from restrictions on non-EU residents in certain strategic sectors, such as telecommunications.
Are there financial incentives available?
Spain offers a broad range of incentive schemes, many of them funded by the EU. These include regional incentives for investment in less developed areas of the country, measures to encourage investment in specific sectors and tax breaks aimed at reducing unemployment among young people.
What about banking facilities?
Spain is said to have more banks than any other EU country. There are two reasons for this. First, there is a plethora of regional banks and second, Spain is a magnet for international financial institutions. We will be happy to tackle the paperwork of opening a business bank account on your behalf, freeing you to focus on your business.
For more information about opening a bank account in Spain, along with any other company incorporation issues including virtual offices, VAT and taxes, please contact us on 0033 (0)1 53 57 49 10 or email us from our contact page and we’ll be happy to help.