Have you ever dreamt of living in the sun-kissed and culture filled land of Spain? Who hasn’t? Perhaps that dream even involves starting your own business in Spain. The Catalan capital of Barcelona itself is now known as the Silicon Valley of Europe. It is even arguably one of the top smart cities in the world. In spite of Spain’s recent recession, the country is bouncing back in innovative ways and entrepreneurs are a key part of this.
With this in mind, Spain sounds like the perfect place for you to start your own business. No idea how to do this? Well, you are in the right place. Spanish bureaucracy can be lengthy (they do love their paperwork) but we will help clarify all the steps needed for your business in this Mediterranean dream!
Before starting your business
It might go without saying but before starting your business, make sure to carry out some market research. It is best to research the Spanish market you are targeting and the existing competition in the area. This will allow you to establish whether there is a demand for your business.
You will then need to establish a business plan and determine the type of company you are. Below are a list of the most common options:
- Sole Proprietor (Autonomo)
- Partnership (Sociedad civil)
- Public Limited Company (Sociedad Anonima)
- Limited Liability Company (Sociedad Limitada/SL or Sociedad de Responsabilidad Limitada/SRL)
To find out more about types of companies, read here.
The below documents, among others, depending on your business, are required:
- NIE (social security number) – Find out more about how to get a NIE
- Passport and photocopy
- Certificate from the Central Commercial Registry (Register Mercantil Central) confirming that the name of your company is not already taken.
- A legal Spanish business plan (of course – it needs to be in Spanish)
You do not actually need to have a job in Spain to have a NIE number but you do need a NIE to actually be able to work. The NIE is also used to establish your social security contribution. As a self-employed individual, you will need to pay these but your manager will deduct the amount automatically if you work in a larger company.
By following the steps below you will be able to establish that your business is legitimate, there are a lot of scammers in Spain and you do not want to be labelled as one of them. Set yourself apart as a genuine and trustable business. Just to note, this is not relevant to IT related companies but it is always best to check just in case.
- RMC (Registro Mercantil Centro) – Register the company name and receive the Central Commercial Registry certificate stating your company name is original. You can do this yourself at www.rmc.es. You will wait about three days before receiving the answer from the RMC.
- C.I.F (company tax identification code) -You can download a tax form 036 at www.aeat.es and complete it yourself before making the application at the tax office (Delegation de Hacienda). Attend the Hacienda which is appropriate to your postal address and do not forget to bring the original and a photocopy of your NIE.
- Deposit capital – A deposit of authorised share capital is then needed to be entered in a bank account with the company’s name. The amount of capital will depend on the type of company you set up. For example, the minimum required for an SL (Limited Liability Company) is EUR 3,000.
- Deed of incorporation – The founding partners will sign the constitution deed for the business before a notary in Spain. You can find your nearest one here. You will need original documents of the NIE, RMC, the C.I.F. and the bank receipt of your deposit for this.
- AEAT – With the original deed of incorporation and NIE, go to the AEAT (Local Government Tax Authority) to register the deed. Previously, transfer tax of 1% of the company’s capital share was required to be paid at the office of the province where the company was formed. This is no longer necessary but the process is still required.
- RM (Registro Mercantil) – Register the deed at Corporate Registry. This will take around 15 days to complete.
- Delegacion de Hacienda – Formal declaration to start the activity of the company which needs to be filed at the Spanish Tax Office. Newly incorporated companies must use the 036 tax form to describe their business activity.
- Libro de matricula – A log required of personnel registration as well as visits that labour inspectors (Inspeccion de trabajo) pay to the work centre.
- Town Hall (Ayuntamiento) – Apply for the opening license here. You will need to present the premises map and its general location, description of the company activity and receipt of local tax payment.
- TGSS (Tesoreria General de la Seguridad Social) – The final step as the company’s director is to obtain the social security and occupational accident insurances at the Ministry of Labour and Social Affairs (TGSS). You will need the TA 0521 which can be found here.
Quick Tip – If all of this is too mind boggling for you, the simplest step you need to make is finding a Gestor who can sort out all the steps for you. The best place to find a suitable local Gestor would be through the Spanish Embassy, your Lawyer (if you have one) or through Google search failing the previous options.
Workers will need to be registered at the Social Security General Treasurership (Tesoreria General de la Seguridad Social). You will have 10 days to register their employment contract with the Spanish Institute of Employment (Instituto Nacional de Empleo – INEM). Hiring workers without any contracts or Social Security could mean being fined by Labour Inspectors for unregistered employees.
Points of Interest
Company tax is 25% of the amount earned up to EUR 120,202 (source) and 30% from that amount upwards.
An upfront tax payment needs to be paid by those who are self-employed. 20% of the profit from each quarter (3 months) of the previous year. Never fear, the majority of this can be claimed back as business expenses at the end of the tax year.
Now that you have the information to set up your own business, good luck with the process and feel free to leave any comments in the section below to share your stories of starting a business or to ask for further help. Keep up to date with Legal Lives on more information regarding our featured Lawyers to help with all your bureaucratic tasks.
Cover image: Source