When it comes to setting up a company in Spain, many people get frustrated and overwhelmed due to the amount of bureaucracy they encounter in comparison to other countries where companies can be easily incorporated in minutes without the need of even seeking a lawyer’s assistance.
Procedures to incorporate a new business in Spain may take some time, however, they tend to be straightforward once you understand the different steps to be followed, and with a bit of patience and the right assistance, you are sure to succeed.
This case study guide has been designed by our Corporate Lawyers in Spain to provide you with an internal glimpse at the Spanish regulations and the different steps you need to take into account when deciding to start your own business in Spain.
1.“How to start?”
Before initiating your venture, it is important to be able to answer some questions such as: Where will the company be incorporated? Who will be the Director and what will the company do? and also, keep in mind Spanish timings (everything is just a bit slower).
Once this has been settled, we jump to question
2. “What do I need?”
As for most things in Spain, the first document you will need, is the famous NIE, once you have this, the procedure will be quite simple.
The NIE is the “Foreigner Identification Number” that any foreigner (resident or not) will need in order to do any kind of activity in Spain, also for setting up a business. NIEs can be obtained at a local Police Station in Spain or at a Spanish Consulate abroad. Note that in most cases, an appointment is required.
Once you have your NIE, you need to register a company name with the Commercial Registry. This is a step that can be done online and it usually takes about 24-48 hrs. to obtain a response.
The company is governed by its bylaws (“Articles of Association”), which have to be in accordance with Spanish regulations. At this point it is necessary for you to have an address in Spain for registration purposes and to have a clear understanding of the activities your company will carry out. The company can realise any activities you wish to include, however you have to assess whether you need any licences and make sure to obtain them beforehand.
One of the most important steps would be to sign the Establishment Deed (the proper formal incorporation of the company) before a Notary Public. At the Notary is important to submit a form called “D-1A” which documents foreign investments conducted in Spain for statistical purposes. Later, the Deed along with the bylaws will be submitted to the Commercial Registry of the province where the company has its registered address. Appointments at Public Notaries for these purposes can easily be obtained and the fees for Notary and Registry combined usually amount to around 650 €. This process of “formal registration” may take up to 15 business days.
Last but not least: Bank Account!
Once your company has been properly registered, you will need a corporate bank account. Note that banks may take their time, once you present them with the whole set of registered documents. Nowadays, there is also the possibility to open online bank accounts for EU citizens, which should ease the process.
IMPORTANT: Note on taxes and social security
Any person who resides legally in Spain and carries out an economic activity must be registered with the Social Security System. That includes freelance workers and employees, and affects companies in the following way:
The Administrator(s) (the one tasked with managing the company) will have to be registered with Social Security as a freelance worker, with a monthly cost of approximately 300 €.
In order to be able to register at Social Security, the Administrator must be a Spanish citizen or have a Spanish residence and work permit!
If you are not planning on living in Spain and still wish to be the Administrator, note that you have to appoint a legal representative in Spain for the purposes of registering with Spanish Social Security, since you cannot do so as a non-resident.
Corporation tax and VAT
The General Corporate Tax Rate in Spain for companies is 25% over profits.
Note that there is a Reduced Tax Rate of 15% for entrepreneurs to be applied to the first two profitable years. This reduction does not apply if the company is part of a group.
VAT: Tax accrual for any commercial operation, subjected to a quarterly and yearly declaration. The standard tax rate is 21%, applicable to most commercial operations.
Should you want to know more about the establishment of a Limited Liability Company in Spain and how we can help you in that regard, make sure that you visit our website: https://www.lexidy.com/boutique-online-legal-services/company-formation-in-spain/
This article does not constitute legal advice. It is intended to provide general information only.