BR Exclusive: All you need to know if you want to open a business in Spain

Anca Alexe 20/04/2018 | 11:56

How can you open a business in Spain? What is the country’s fiscal system like? Is bureaucracy burdening? How does legislation apply to EU citizens? Business Review has prepared a guide that will answer the questions you may have if you are interested in doing business in Spain.

There are more than 1 million Romanians living in Spain, and they make up the largest foreign community in the country.

In the World Bank’s Ease of Doing Business ranking, which shows how business-friendly countries are, Spain ranked 28th for 2018. The same report puts Romania in the 45th spot this year, down 9 spots from 2017. Spain has gone through serious economic difficulties in the past decade, but things are getting better. Currently, the unemployment rate is around 16 percent, after having peaked at 26.3 percent in 2013.

With the exception of the defense industry, all economic sectors are open to investment in Spain, both by citizens and foreigners.

Individuals and companies can conduct commercial activities in Spain in one of the following ways:

  • Establishing a Spanish commercial society with its own legal status – the most widely used types of companies are share companies or limited liability companies.
  • Being a sole trader  – can operate in some activities, especially in the services sector, after meeting certain criteria – no minimum social capital requirement.
  • Branch or permanent headquarters – no own legal status, activity is conducted in the name of the parent company.
  • Joint ventures: association with Spanish residents under several possible forms
  • Operating based only on a contract with local distributors/agents/commissioners or under a franchise contract.

For a limited liability company (SRL), the minimum social capital is EUR 3,000, and a new SRL can have a maximum social capital of EUR 120,000.

Opening a company in Spain requires quite a lot of documents from various institutions:

  • a certificate showing the company’s name is available;
  • a foreigner identification number (NIE) for non-Spanish members of the administrative board;
  • a capital deposit certificate;
  • officially registering with a notary;
  • obtaining the fiscal identification code (CIF);
  • registering with the territorial financial agency;
  • registering with the commerce registry;
  • a foreign investment statement;
  • activating the tax on economic activities, VAT tax and social contributions;
  • obtaining the opening authorization and communicating it to the Work Centre
  • obtaining the registration book

 

For a SRL, the most common type of business, you’ll need a minimum social capital of EUR 3,000. You’ll also need to pay certain taxes and authorisation or notary fees, meaning that the total initial cost may go up to EUR 5,000.

If you want to open a SRL it will take at least 3 weeks, if all necessary documents are submitted correctly, but you should be prepared for it to take longer.

In general, entrepreneurs use management offices (gestoria) to handle their business registration, which they select based on the area where the company will be registered and its specialisation. However, you can also do everything yourself without assistance from such an office, but it may take a lot longer if you don’t have help from experts, since the procedure is quite complicated.

For a SRL, the most common type of business, you’ll need a minimum social capital of EUR 3,000. You’ll also need to pay certain taxes and authorisation or notary fees, meaning that the total initial cost may go up to EUR 5,000.

If you want to open a SRL it will normally take around 3 weeks, if all necessary documents are submitted correctly.

In general, entrepreneurs use management offices (gestoria) to handle their business registration, which they select based on the area where the company will be registered and its specialisation. Gestors can also help you with your taxes, employee salaries, healthcare registration and solve many other bureaucratic issues.

However, you can also do everything yourself without assistance from such an office, but it may take a lot longer if you don’t have help from experts, since the procedure is quite complicated.

Taxes

Limited companies pay corporation tax and have to pay the corporate income tax on all the company’s income worldwide. Tax is calculated on the company’s net profits.

The tax rate is 25 percent, but new companies pay 15 percent on their first EUR 300,000 and 20 percent on the remainder for the first two years. VAT is 21 percent, but there are exceptions for some goods which have a VAT rate of 10 or 4 percent.

Employers have to make social security contributions on behalf of their employees. The rate is 29.9 percent of an employee’s gross salary, plus variable rates to cover occupational hazards.

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Anca Alexe | 29/11/2022 | 10:17

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