1. Autónomo (Sole propietor)
This is the easiest business entity to set up in Spain and is commonly used by people working freelance. It is the equivalent to a sole trader in the UK. The company and person are considered one and the same and for that reason, the business owner does not have to file any special tax forms (just the normal Impuesto sobre la Renta de las Personas Físicas or IRPF; income tax) and is responsible for all debts incurred by the company. There is no minimum financial investment to start this type of business in Spain. A disadvantage to freelancers is the fixed monthly fee that must be paid even if no money was earned that month, currently about €220. Autónomos are usually required to declare IVA (VAT) each trimester and at the end of the year and must also file an annual Declaración de la Renta (Income Tax declaration).
Setting up as an Autónomo
1) Apply for a NIE (Número de Identificación Extranjera).
2) Register to pay Impuesto de Actividades Económicas (Tax on Economic Activity) at your local tax office (Delegación de Hacienda; find your nearest office through the web of the Agencia Tributaria).
3) Present a formal declaration of the start of your professional activities (Declaración Censal de Inicio de Actividad) at the tax office. This is form 037.
4) Register with the social security system (Seguridad Social). You will then begin to make monthly payments of a minimum of €205.54. You can pay more for more benefits. You will receive a temporary card with your social security number. You can use this card to apply for your health card for access to the Catalan public health system (CatSalut).
5) Depending on your type of business or service, you may need to also apply for special licences and permits. Your accountant will be able to help you with this.
2. Sociedad de Responsabilidad Limitada S.R.L. or S.L. (Limited Liability Company)
An S.L. is an autonomous legal entity and shareholders are not responsible for debts incurred by the company. All S.L.s are liable for Company Tax (Impuesto sobre Sociedades). In addition, an S.L.’s shares cannot be traded on the stock exchange. To start an S.L. in Spain, a minimum investment of €3,006 is required.
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