Starting a business in Spain
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Creating your own company here is no easy task. You'll need a little determination and perseverance and, ideally, some professional help. The process for setting up either kind of company can be broken down into simple steps (see below). However in all cases it is advisable to find a gestor, or accountant, to guide you through the process and take care of the admin.
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 company 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 €265. Autónomos are usually required to declare IVA (VAT) every quarter and must also file an annual Declaración de la Renta (Income Tax return) by 30th June each year.
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 - currently about €265, although this is lower for certain groups, such as under 30s and women returning from maternity leave. You will also 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.
For a more detailed run-down on the ins and outs of becoming an autonomo in Spain, see here.
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. The World Bank Group recently put together a table detailing the costs and timescales involved in starting an S.L. - you can find it here.
How to set up an S.L.
1) Obtain a certificate (Certificado Negativo de Nombre) from the Mercantile Register confirming that your proposed company name is not already registered. You can check the Register's website here to consult existing company names and to submit your name. They also have a list in English of advice to follow to avoid having your business name rejected - check it first here to avoid disappointment.
2) Obtain your provisional CIF (company tax identification code) from the tax office (Delegación de Hacienda). For this you will need your company name and certificate from the Mercantile Register, your passport or residency permit and the company address. You can also apply for a CIF online here.
3) Open a bank account in the company's name. Deposit a minimum of €3,000 (minimum capital required) and obtain a deposit certificate (Certificado del Desembolso Efectuado). You will need this certificate to present to the notary who will grant the deed of incorporation.
4) Register the business online through CIRCE. This is an online platform that allows entrepreneurs to complete one application, which is then sent to all the relevant administrative bodies involved in the process. Through CIRCE you can fill out the Single Electronic Document (DUE - Documento Unico Electronico). The DUE can be filed online via CIRCE (requiring an electronic certificate) or at a help desk for entrepreneurs (Puntos de Atención al Emprendedor - PAE). You can find your nearest PAE here.
5) Attend appointment with the notary. This appointment will take place approximately seven days after receipt of the DUE, and will cost from approximately €475 for the notary and €252 for registration costs. All founding members of the company must be physically present at the appointment to sign the deed of incorporation (Escritura de Constitución). This is also where you will receive your fiscal identification number (CIF).
5) Pay Asset Transfer Tax at your local tax office - you can find yours here. This is 1 percent of the company capital and must be paid within 30 days of signing the deed of incorporation.
6) Pay municipal tax for urban services (tasa por prestación de servicios). This costs €414 and is paid at the bank, where you will also receive a receipt of the payment.
7) Register the company and legalise company books at the Mercantile Registry. You will need the deed of incorporation, proof that the transfer tax is paid and the name certificate.
8) Register for company tax (Impuesto sobre Sociedades) at the tax office by submitting a formal declaration of the start of the company's activities (Declaración Censal de Inicio de Actividad).
9) Obtain a municipal licence to open business premises (Licencia Municipal de Apertura) at the city council's Departamento de Urbanisme.
10) If you will be taking on employees you must file for social security and affiliate employees with the local social security office (Tesoreria General de la Seguridad Social).
11) Notify your local autonomous community. Each community has its own forms and procedures, but they must be informed of your business within 30 days of it starting.
To read the experiences of others who have successfully started a business in Spain, take a look at Entrepreneurs Explained.