Opening a company in Spain is an excellent option for foreign investors, as the country offers a competitive business environment and a strategic location within the European Union. To facilitate this process, it is essential to be aware of the legal, fiscal and administrative requirements that must be met. Below are the main aspects that investors should take into account:
1.- Types of company structures
In Spain, there are various legal forms under which a company can be incorporated. The choice of structure will depend on factors such as the type of activity, the number of partners and the liability for possible debts:
Self-employed:
Self-employment is a popular option for individual entrepreneurs. Self-employed persons assume full responsibility for the activity and have easier taxation, but their liability for debts is unlimited.
Limited Company (S.L.):
The Sociedad Limitada (S.L.) is one of the most common legal forms for small and medium-sized businesses. It offers a liability limited to the contribution of the partners and is suitable for companies with a moderate business activity. The minimum capital required to set up an S.L. is 3,000 euros.
Public Limited Company (S.A.):
The Sociedad Anónima (S.A.) is ideal for larger companies with growth prospects. It requires a minimum capital of 60,000 euros and allows the issuance of shares, which facilitates the raising of capital. The liability of the partners is limited to the capital contributed.
Sociedad Limitada Nueva Empresa (S.L.N.E.):
This variant of the S.L. is designed to facilitate the creation of companies with few partners (up to 5) and with a reduced share capital (between 3,012 and 120,202 euros). It also has a faster incorporation process.
Cooperative Society:
This is an option for companies in which the members actively collaborate in the management. Liability is limited to the capital contributed, and cooperatives can benefit from favourable tax treatment.
- Legal and administrative requirements
To open a company in Spain, it is necessary to comply with a series of legal and administrative steps:
Obtaining the NIE (Foreigner Identification Number):
Foreign investors must obtain a NIE, which is necessary to carry out any legal or tax procedures in Spain. This number can be applied for at a police station or at the Spanish consulate in the country of origin.
Negative name certification:
Before registering the company, it is necessary to obtain a negative name certification, which ensures that the chosen name is not already in use by another company. This certification is requested from the Central Commercial Register.
Drafting the Articles of Association and Memorandum and Articles of Association:
The partners must draft the articles of association, which are the legal framework of the company, and sign the deed of incorporation before a notary. This deed must be registered in the Commercial Register in order for the company to be officially recognised.
Registration in the Mercantile Registry:
The company must be registered in the Mercantile Registry of the province where it will be established, which grants it legal personality.
Obtaining the Tax Identification Number (CIF):
The CIF (Tax Identification Code) is necessary to identify the company before the tax authorities. It is obtained after registration in the Mercantile Registry and is essential for issuing invoices and paying taxes.
- Taxation and tax obligations
The Spanish tax system is complex, but it provides a clear framework for businesses. The main taxes that companies will be subject to are:
Corporate Tax: Corporate Tax is levied on the profits obtained by companies. The general rate is 25%, although there are reduced rates for newly established companies and small businesses.
VAT (Value Added Tax): VAT is an indirect tax on consumption. Companies must declare and pay this tax on their sales and income. The general rate is 21%, although reduced rates of 10% and 4% apply to certain products and services.
Tax on Economic Activities (IAE): This tax is applied to businesses based on the economic activity they carry out. It is not paid if the company’s turnover is below one million euros.
Other tax obligations: Companies must comply with obligations such as quarterly VAT declarations, paying withholding taxes on salaries, and annual tax returns.
- Permits and licenses
Depending on the type of business and its location, several licenses and permits may be required to operate legally. Some of the most common ones include:
Opening License: This is mandatory for any activity carried out in a premises. It is requested at the corresponding town hall and ensures that the premises comply with safety and health regulations.
Activity License: This is necessary if the business activity must comply with specific regulations, such as those related to the environment, safety, or hygiene. The type of license depends on the activity being carried out.
- Labor requirements
If the company plans to hire employees, it must comply with various labor regulations:
Hiring Employees: Companies can hire local or foreign workers, as long as the latter have the necessary work permits for Spain. Contracts can be indefinite, temporary, or part-time.
Minimum Interprofessional Wage (SMI): The minimum wage in Spain for 2024 is 1,080 euros gross per month for a full-time job. This wage may vary depending on the sector and the applicable collective agreement.
Social Security Contributions: Companies must make the corresponding Social Security contributions, both for self-employed individuals and employees. These contributions include payments for retirement, health, and unemployment.
- Foreign investment and financing
Spain is a very open country to foreign investment. Investors are not subject to restrictions for investing in most sectors, except those related to national security, defense, or strategic resources.
Financing Options: Businesses can finance themselves through traditional sources such as bank loans, credit lines, or financing through private investors. There are also grants and public aid available for new projects, especially those related to innovation and sustainability.
- Cultural and market aspects
The business environment in Spain is dynamic and competitive, and it can vary by region. Madrid, for example, is an important economic hub with excellent infrastructure, a large talent pool, and a diversified market. Spanish business culture values personal relationships, so networking is key.
Market Trends: In recent years, sectors such as technology, renewable energy, tourism, and food have been experiencing strong growth. Additionally, Spain is a hub for internationalization, as its strategic location allows easy access to European and Latin American markets.
- Resources and advisory
There are numerous resources for investors looking to open a business in Spain:
- Chambers of Commerce: The Chambers of Commerce provide advisory and training services for entrepreneurs.
- Specialized consultancies: There are various consultancy firms that can assist with legal, fiscal, and administrative procedures.
- Online platforms: Platforms like Invest in Madrid offer specialized information and advice for foreign investors.
- Frequently asked questions
How long does it take to open a business in Spain? The process can take between 1 and 3 weeks, depending on how quickly the permits are obtained and the registration in the Mercantile Registry.
What are the costs associated with opening a business? Costs vary depending on the type of business and services contracted, but typically include notarial, registration, and license acquisition expenses.
What are the main challenges for foreign investors? One of the main challenges is bureaucracy, which can be complex for those unfamiliar with the Spanish legal system. Additionally, market competition is high, so it is important to have a solid business plan.