Quick guide to entrepreneurship in Spain

Opportunities and considerations for foreign investors

Spain is one of the most attractive destinations for foreign investors in Europe, and the Community of Madrid, as its main economic centre, is positioned as one of the most dynamic regions for entrepreneurship.

With an investment-friendly environment, a diverse market and a strategic location on the European continent, Spain offers opportunities in multiple sectors ranging from technology to renewable energy.

The following explores the key aspects that foreign entrepreneurs should be aware of when setting up a business in Spain, with a particular focus on the Madrid region.

1.- Economic outlook and opportunities

Spain has shown a solid recovery in recent years, driven by key strategic sectors such as technology, tourism, renewable energies, sustainable agriculture, automotive, mobility and logistics, pharma and biotechnology, microelectronics and semiconductors, video games and audiovisual, data centres, and aerospace and defence. These sectors present great opportunities for new business:

• Technology and innovation: The technology sector is booming, with Madrid as a hub for startups in areas such as artificial intelligence, software, big data and cybersecurity. In addition, the digitisation of Spanish companies remains a priority, creating a growing demand for innovative solutions.

Madrid not only offers a privileged location, but complements it with one of the most advanced and competitive infrastructures in Europe. The telecommunications market is liberalised, with multiple companies operating in the country. Heavy investment in recent years has resulted in new generation networks with first class international connectivity.

• Tourism: Spain remains one of the world’s leading tourist destinations, making the sector an excellent investment opportunity. From the creation of boutique accommodation to the development of personalised tourism experiences, the possibilities are vast.
• Renewable energies: Spain is a world leader in renewable energies, especially in solar and wind energy. The Spanish government offers fiscal and financial incentives for projects in this field, with Madrid being a hotspot for clean energy investments.
• Sustainable agriculture: Spain is a key producer of agricultural products in Europe, and the trend towards sustainable agriculture is expanding. Innovative companies in this sector, combining sustainability and technology, are seeing great potential for growth.
• Automotive, mobility and logistics: Madrid offers a unique proposition for automotive and mobility companies: a rich industrial heritage, a commitment to sustainable and smart mobility solutions, highly skilled and cost-competitive professionals, a strategic location, and a collaborative innovation ecosystem. For companies in these sectors, Madrid is not just a destination, but a partner to drive the future of mobility.
• Pharma and biotechnology: the pharmaceutical and biotechnology industry in the Madrid region is characterised by the confluence of renowned research institutions, cutting-edge biotech companies and pharmaceutical giants, all intertwined in a network that thrives on both collaboration and competition. A strong scientific base, highly qualified human capital, an integrated healthcare system and state-of-the-art research infrastructure and technologies are the pillars on which it is built.
• Microelectronics and semiconductors: the recent supply crisis in Europe is a turning point for the Region of Madrid, which is promoting the establishment of a semiconductor industry hub in its territory. Cutting-edge innovation, favourable business environment, skilled labour, availability of land and energy, and strategic connectivity are all part of the regional value proposition.
• Video games and audiovisual: At the heart of Spain, Madrid is emerging as a beacon for the audiovisual industry, offering an attractive mix of creative talent and cutting-edge technology. The region’s transformation into an audiovisual hub is the result of strategic investments and a vibrant cultural backdrop that inspires innovation.
• Data centres: The Region of Madrid is a benchmark for connected digital infrastructure in the Iberian Peninsula, and has become a priority area for investment by technology companies. The growing density and capacity of data centres, the proximity to large submarine cabling systems, the advanced stable electricity grid, facilitate the deployment and connection of cloud services currently demanded by companies and public bodies, within a secure legal framework and a favourable tax regime.
• Aerospace and defence: Madrid offers an upward trajectory for aerospace and aeronautics companies. With a foundation built on innovation, a strong support infrastructure, and strategic global connections, the region leverages its historical legacy of exploration to boost its range of opportunities for those looking to elevate their operations to the next frontier. 

2. Legal and administrative requirements

Setting up a business in Spain is a relatively straightforward process, but a number of legal and administrative requirements must be met:

• Visa and residence permit: non-EU foreign investors must obtain an entrepreneur visa, which allows them to reside in Spain and manage their business. The Golden Visa is a popular option for investors investing a significant amount in the country.
• Company registration: The process of registering a company in Spain includes choosing the legal form (S.L., S.A., etc.), obtaining a Tax Identification Number (NIF) and registering with the Mercantile Registry.
• Licences and permits: Depending on the type of activity, companies must obtain local licences (such as activity licences) and comply with safety and environmental regulations.
• Tax system and tax obligations: Spain has a competitive tax system, with relatively low corporate tax rates compared to other countries in Europe. Companies must comply with VAT (Value Added Tax) and Corporate Tax, among other taxes. In addition, there are tax incentives for investment in research and development (R&D).

3. Corporate culture and labour standards

Business culture in Spain is characterised by a collaborative approach, close personal relationships and a hierarchical structure in many companies. It is important to consider the following working rules and practices:

• Working hours: In general, working hours in Spain are from 9:00 to 18:00, with a lunch break that may be longer than in other countries. However, some industries, such as commerce and hospitality, have more flexible working hours.
• Holidays and labour rights: Employees in Spain are entitled to a minimum of 30 calendar days holiday per year. In addition, Spanish labour law protects workers’ rights, and it is important to comply with regulations on hiring and firing.
• Business practices: Trust and personal relationships are fundamental to business success in Spain. Networking and building alliances are essential to grow a business.

4. Financing and support for entrepreneurs

Spain offers a wide variety of financing options for entrepreneurs. Some of the most important are:

• Grants and subsidies: The Spanish government and autonomous communities, such as the Community of Madrid, offer grants and subsidies to start-ups, especially in innovative and sustainable sectors.
• Loans and credits: There are numerous banks and financial institutions that provide loans to entrepreneurs, with favourable conditions for new businesses.
• Private investment: Venture capital funds and business angels are very present in Spain, especially in Madrid, which offers great financing opportunities for technology and start-up companies.
• Support programmes for entrepreneurs: Organisations such as ICEX or ENISA offer support to foreign entrepreneurs, from advice to financing for innovative projects.

5. Networking

Networking is an essential tool for business success in Spain. Madrid is an epicentre of events and fairs where entrepreneurs can make key contacts. Some important events include:

• Madrid Investment Forum: an innovative meeting place for companies, administrations and prestigious national and international economists, where the attractions of the Madrid Region for foreign capital are highlighted.
• South Summit: An internationally renowned innovation and startup event that brings together the most ambitious startups, visionary investors and leading companies to create real business impact. It is the most valuable network for global entrepreneurship.
• Madrid International Business Center: A centre that organises meetings and events to promote investment.
• Chambers of Commerce and associations: The Chambers of Commerce offer networking programmes and business advice.

6. Common challenges and how to overcome them

Foreign entrepreneurs may face a number of challenges when setting up in Spain, such as:

• Bureaucracy: Although the administrative process has improved, some paperwork can be lengthy and complicated. It is advisable to have local legal and accounting advice.

However, the Community of Madrid offers a committed business environment against bureaucracy and over-regulation.

The regional government is committed to easing the path to business operations by reducing red tape and administrative obstacles.

• Competition: Some sectors, such as technology or tourism, can be highly competitive. The key to standing out is to offer differential value and take advantage of market trends.

• Language and culture: Although Spanish is the official language, many business people speak English. Investing time in understanding the local culture can be key to success.

7. Success stories and testimonials

Companies such as Glovo (food delivery platform) and Cabify (transport service) are examples of companies that have been successful in Spain, growing internationally. These foreign entrepreneurs have been able to adapt their business models to the needs of the Spanish market, offering innovation and quality.

8.- Frequently Asked Questions

How long does it take to set up a business in Spain?: The process can take between 1 and 3 months, depending on the type of business and the permits required.

What are the start-up costs?: Costs can vary depending on the sector, but an entrepreneur may need between 3,000 and 5,000 euros to start a basic business.

Which cities are best for entrepreneurship?: Madrid, Barcelona and Valencia are the top cities for entrepreneurs, with Madrid leading as the main economic centre.