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Setting up a company in Spain can be a strategic move for UK entrepreneurs looking to expand their business within the European Union. Spain offers a favourable business environment, economic stability, and access to a large market.
This guide provides a comprehensive overview of the steps required to register a company in Spain, including key facts, different types of companies, the registration process, and legal and tax considerations. By reading on, you’ll gain actionable insights to help you successfully establish your business in Spain.
Quick Facts About Company Registration in Spain
Understanding the essentials of company registration in Spain is crucial for a smooth setup. Here are some key facts to keep in mind:
- Minimum Share Capital: EUR 3,000 for a Limited Liability Company (SL), EUR 60,000 for a Stock Corporation (SA).
- Bank Account Requirement: Required for depositing the share capital.
- Corporate Income Tax Rate: Standard rate is 25%, with a reduced rate of 15% for newly created companies under certain conditions.
- Personal Income Tax for Sole Traders: Ranges from 19% to 47%, based on earned income.
- VAT Rates: Standard rate is 21%, with reduced rates of 10% and 4%.
Residency Requirement: Foreigners need the appropriate visa to conduct business in Spain.
Company Registration Timeline: Typically takes 1 to 3 months.
Different Types of Companies
Choosing the right legal structure for your business is a critical step in the registration process. Here are the main types of companies you can set up in Spain:
Limited Liability Company (SL)
A Limited Liability Company (SL) is suitable for small to medium-sized businesses. It requires a minimum share capital of EUR 3,000, which must be fully paid upon formation. This structure offers limited liability protection, meaning shareholders are only liable for the company’s debts up to the amount of their capital contributions.
Stock Corporation (SA)
A Stock Corporation (SA) is ideal for larger businesses that may seek to trade shares publicly. It requires a minimum share capital of EUR 60,000, with at least 25% paid upon formation. This structure allows for the issuance of bonds and other securities and provides greater flexibility for raising capital.
Sole Proprietorship (Autónomo)
A sole proprietorship is the simplest form of business, suitable for individual entrepreneurs. However, it entails personal liability for business debts, making it a riskier option compared to corporate structures.
Newly Created Limited Liability Company (SLNE)
Designed for new businesses, the SLNE offers a simplified registration process and lower capital requirements compared to the traditional SL. This structure is aimed at encouraging entrepreneurship and easing the setup process.
Steps to Register A Company in Spain
Setting up a company in Spain involves several key steps. Here’s a detailed guide to help you through the process:
Step 1: Obtain a Tax Identification Number (NIE)
Foreign citizens must obtain a Tax Identification Number (NIE) to engage in any economic or professional activity in Spain. This number is essential for all fiscal activities and can be obtained from the Spanish consulate or local police stations.
Step 2: Register Your Company Name
Register your chosen company name with the Mercantile Registry (Registro Mercantil Central). Ensure the name is unique and not already in use.
Step 3: Open a Business Bank Account
Open a corporate bank account in Spain to deposit the initial share capital. This is required for both SL and SA types.
Step 4: Prepare the Deed of Incorporation
Draft the deed of incorporation, which includes the company’s bylaws. This document must be signed before a notary public.
Step 5: Obtain the Company Tax Identification Number (CIF)
Apply for a CIF (Código de Identificación Fiscal), the company’s tax identification number. This is necessary for all tax-related matters.
Step 6: Register Your Company with the Mercantile Registry
Submit the deed of incorporation and other required documents to the Mercantile Registry. This step legally establishes your company.
Step 7: Register with the Social Security System
If your business has employees, you must register with the Spanish Social Security System (Seguridad Social).
Step 8: Obtain Special Licences and Permits
Depending on your business activities, you might need additional licences or permits, particularly for regulated industries such as healthcare, transportation, finance, and hospitality.
Why Set Up A Company in Spain
Setting up a company in Spain offers numerous advantages:
- Strategic Location: Access to European markets.
- Economic Stability: Favourable investment climate.
- Tax Incentives: Reduced tax rates for new companies.
- Skilled Workforce: Access to a talented labour pool.
- Entrepreneurial Support: Government incentives and support for startups.
Legal & Tax Considerations
When setting up a business in Spain, consider the following legal and tax aspects:
- Corporate Tax Rates: Standard rate is 25%, with a 15% rate for newly created companies.
- VAT Registration: Mandatory for all businesses selling taxable goods/services.
- Social Security Contributions: Required for businesses with employees.
- Annual Accounts: Submission of annual financial statements is mandatory.
- Residency and Work Permits: Necessary for foreign entrepreneurs.
FAQs About Spain Company Formation
What is the most common type of company formed by foreign investors in Spain?
The most common type of company formed by foreign investors is the Limited Liability Company (SL) due to its flexibility and limited liability protection.
Can a foreigner be a director or shareholder in a Spanish company?
Yes, foreigners can be directors or shareholders in a Spanish company, but they must obtain a Tax Identification Number (NIE).
How long does it take to register a company in Spain?
The registration process typically takes 1 to 3 months, depending on the complexity of the business and the efficiency of the registration process.
Is a local office required to register a company in Spain?
Yes, a registered office in Spain is required for company registration.
What are the corporate tax rates in Spain?
The standard corporate tax rate in Spain is 25%, with a reduced rate of 15% for newly created companies under certain conditions.
Do I need to visit Spain to register my company?
While it’s beneficial to visit Spain, the process can be completed remotely through a legal representative or power of attorney.
Can a Spanish company be registered online?
Certain aspects of the registration process can be completed online, but not all steps are fully digital.
Are there any incentives for foreign investors in Spain?
Yes, there are various incentives, including tax breaks and grants, aimed at encouraging foreign investment.
How much does it cost to register a company in Spain?
Costs vary depending on the type of company and specific business needs, typically ranging from EUR 500 to 2,000 for legal and consultancy fees.
Can a non-resident open a company in Spain?
Yes, non-residents can open a company in Spain, provided they obtain an NIE and comply with Spanish regulations.
Partner with J. Dauman & Co for Advice on Setting Up Shop in Spain
Navigating the complexities of setting up a company in Spain requires expertise and strategic planning. J. Dauman & Co offers comprehensive services in accounting, legal compliance, and business consultancy to help you establish and grow your business in Spain. Our team of professionals can assist you in every step of the process, ensuring compliance with all legal and regulatory requirements and maximising your business potential.
Contact us today to learn how we can support your business venture in Spain and help you achieve your strategic goals with confidence and efficiency. Visit our homepage for more information.
