How a foreigner can open a business in Spain: A Complete Guide

Contents

• Features of Starting a Business for Foreigners
• Stages of Company Registration for a Foreigner
• When and What Taxes Need to be Paid

Launching a business venture in Spain offers an exciting opportunity for global entrepreneurs. The country boasts favorable conditions for business activities, including robust infrastructure, a stable economic climate, and entry to the European market. This guide will detail the crucial steps for setting up a company, including choosing the proper legal framework and managing administrative processes.

Features of Starting a Business for Foreigners

Foreigners have the same rights as locals when starting a business in Spain. Nonetheless, there are specific nuances and requirements to remember when setting up your enterprise. The following highlights key factors that differentiate the process of establishing a company in this sunny destination for international entrepreneurs.

1. Legalization of Stay

   Foreign entrepreneurs can establish a business in Spain without needing resident status, provided they have a passport and an NIE. However, a fundamental restriction is that these individuals cannot be employees of their own companies. To work for the company, they must secure legal residency.

   EU Nationals: Citizens of the European Union, the European Economic Area, and Switzerland can work and establish a business in Spain without extra permits. However, obtaining an NIE is still compulsory for EU nationals.

   Non-EU Nationals: Those from countries outside the EU must secure the relevant visa or residence permit. The entrepreneur visa for business setup in Spain is issued based on a submitted business plan and accompanying documentation.

2. Foreigner Identification Number (NIE)

   The NIE (Número de Identificación de Extranjero) is an essential identification number for any foreigner starting a business in Spain. It is also required to complete financial transactions, open bank accounts, register companies, manage tax duties, and perform other procedures.

3. Restrictions for Non-Residents

   Foreign entrepreneurs in Spain without a residence permit face certain restrictions compared to nationals or residents. They are not allowed to be officially employed by their own company or any other business, nor can they receive a regular salary or contribute to pension and social security systems. Instead, they can hold positions such as CEO or founder and earn income through dividends.

Stages of Company Registration for a Foreigner

1. Selecting the Company's Legal Structure

   The initial step in launching a business is determining the company's legal structure. The most prevalent forms include:

   • Sole Proprietorship (Autónomo)
     Suitable for freelancers or starting entrepreneurs. Registering this option is easy, but the entrepreneur is liable for the company's debts. A sole proprietorship can be registered online.
   • Limited Liability Company (Sociedad de Responsabilidad Limitada, S.L.)
     A popular choice for small and medium-sized companies. The minimum share capital is 3,000 euros, and shareholder liability is limited to their contribution to the capital. Registration is available both online and offline.
   • Public Limited Company (Sociedad Anónima, S.A.)
     This structure is suitable for large businesses and requires a minimum share capital of 60,000 euros. Shareholders' liability is limited to their contributions. Registration requires personal presence.
   • Branch (Sucursal)
     A foreign company can establish a branch in the Kingdom. This branch is not a distinct legal entity; the parent company retains all responsibilities. There is no minimum share capital requirement, and registration can be completed either online or offline.





Specialists at Laduchi Consult can help you register a Sociedad Limitada (SL) remotely from anywhere in the world without a personal presence in Spain. You only need internet access.


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2. Obtaining an NIE

   As mentioned, an NIE is mandatory for all foreign citizens who want to start a business in Spain.

   Process: You can acquire an NIE either through the Spanish consulate in your home country or at a police station in Spain. The process involves completing the necessary form, presenting your passport, and specifying the reason for the request (such as for business purposes). Laduchi Consult specialists can help obtain an NIE and prepare the required documentation for company registration. Specialists at Laduchi Consult can assist with obtaining an NIE while preparing documents for company registration.

3. Registering the Company

   You can register with the company after choosing the type of company and obtaining an NIE. The process includes the following steps:

   • Choosing and Registering the Company Name in the Commercial Registry
     Check the availability of the name in the Central Commercial Registry (Registro Mercantil Central).
   • Creating the Founding Agreement (optional) and Statute
     These foundational documents define your company's structure and operating rules. You can contact a business support center (PAE) to prepare these documents but cannot change them. Alternatively, you can contact a notary, which will be more expensive and time-consuming but allows you to refine the statute according to your needs.
   • Obtaining a Tax Identification Number (CIF)
     A CIF is essential for commercial activities, including tax payments. You must submit the required documents to the tax office (Agencia Tributaria) to obtain a CIF. Once issued, this number allows your company to operate legally and meet its tax obligations.
   • Notifying the Tax Office About the Start of Economic Activity
     This mandatory step confirms your company's readiness to conduct business activities. Notification includes submitting a form specifying the activities the company will engage in.
   • Obtaining a Digital Signature for the Company
     A digital signature allows the company to securely and quickly sign documents in digital format. This dramatically simplifies interactions with government bodies and contractors, reduces document processing time, and ensures the legal force of electronic signatures. A digital signature is also necessary for submitting tax returns and fulfilling other obligations online.
   • Opening a Bank Account and Depositing the Share Capital
     To conduct business activities, you must open a corporate bank account and deposit the minimum share capital. This allows for financial operations management and simplifies accounting.
   • Hiring Employees and Registering with the Social Security Fund
     Register with the social security system (Seguridad Social) and formalize employment contracts by Spanish law if you plan to hire employees. You must also comply with minimum wage requirements and working conditions.
   • Obtaining Licenses, if Necessary
     Depending on the nature of your business, you may need additional licenses and permits to ensure compliance with legal and regulatory standards. For instance, if you're starting a restaurant, you'll not only need a commercial activity permit but also licenses for alcohol sales and a sanitary permit.

When and Which Taxes Need to Be Paid

In Spain, entrepreneurs and companies are required to pay several key taxes. Knowing the deadlines and procedures for these payments is crucial for complying with the law and ensuring a successful start.

Below, we review the main types of taxes and their payment deadlines.

1. Corporate Tax (Impuesto sobre Sociedades)

   Corporate tax is levied on organizations' profits. The standard rate is 25%. However, new companies benefit from a reduced rate of 15% for the first two years.

   • Annual Tax Return
     The annual tax return must be filed within six months and 25 days after the end of the fiscal year (which usually aligns with the calendar year). For example, for a fiscal year ending on December 31, the return must be submitted by July 25 of the following year.
   • Advance Payments
     Companies are required to make advance payments for corporate tax in April, October, and December. If the company's turnover is below 6 million euros, these payments amount to 18% of the estimated annual profit. For companies with a turnover exceeding 6 million euros, advance payments are calculated using a complex formula based on the previous year's profit.
2. Value Added Tax (IVA – Impuesto sobre el Valor Añadido)

   IVA is applied to the sale of goods and services. There are three rates: the standard rate of 21%, the reduced rate of 10%, and the super-reduced rate of 4%.

   • Quarterly Reports
     Companies must submit quarterly IVA reports (Form 303). These reports are due by the 20th of the month following the end of the quarter. For example, the report for the first quarter (January-March) must be submitted by April 20.
   • Annual Declaration
     Companies must also submit an annual IVA declaration (Form 390) by January 30 of the following year.
3. Personal Income Tax for Employees (IRPF – Impuesto sobre la Renta de las Personas Físicas)

   IRPF is withheld from employees' salaries and paid to the tax authorities by the employer.

   • Monthly or Quarterly Payments
     Employers must remit the withheld monthly or quarterly tax, depending on the company's size and other factors. Payments are made by the 20th of the following month or quarter (Form 111).
   • Annual Declaration
     Companies must also submit an annual declaration of withheld taxes (Form 190) by the end of January of the following year.
4. Social Security Contributions (Seguridad Social)

   Employers must contribute to the Social Security system for each employee. These contributions cover pensions, healthcare, and insurance benefits.

   • Monthly Payments
     Social Security contributions are paid on the last working day of each month. Contribution rates vary depending on the type of activity and working conditions but generally amount to around 30% of the employee's salary.
5. Local Taxes (Impuestos Locales)

   In addition to national taxes, companies may be required to pay local taxes, which vary depending on the municipality.

   • Economic Activity Tax (IAE – Impuesto sobre Actividades Económicas)
     This tax is levied on companies with a turnover exceeding 1 million euros. The declaration must be submitted annually.
   • Property Tax (IBI – Impuesto sobre Bienes Inmuebles)
     This tax is imposed on commercial real estate owners. Payments are usually made once a year, and deadlines depend on the municipality.

Compliance with tax regulations is mandatory for all entrepreneurs and companies. It's essential to keep accurate records of all financial transactions and consult with tax specialists to minimize tax risks and avoid penalties. The experts at Laduchi Consult can help you manage this task without unnecessary stress.

Conclusion

Registering a company in Spain and conducting business as a foreigner requires thorough preparation and fulfilling various legal formalities. At this stage, knowing all the potential pitfalls and understanding the local nuances is crucial. The experts at Laduchi Consult will provide the necessary support at every process stage. Our deep knowledge of local legislation and many years of experience enable us to successfully register your enterprise in this country, bypassing bureaucratic complexities. Apply for company registration in Spain, and our experts will contact you shortly!

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