Thinking about Starting Your Business in Spain?

Sponsored by Lusa Legal.

In difficult economic times, when the future seems uncertain, many business owners will close their doors; yet even at the most difficult times new business opportunities appear. This could be the perfect time to catch the trends and move forward with promising new business or freelance projects. But, what’s the best way to go about it?

There are numerous options to establish new business in Spain: you can start a new company from scratch, buy an existing business, set up as self-employed (autonomo) or open a branch or subsidiary office. Whatever business you are looking to create, you should ensure that you have all the proper documentation and understand the process well.

8 Main Steps to Setting up a New Business in Spain:

1. Get Your NIE Number

You’ll need to have a número de identidad de extranjero (NIE). This is an identification number for foreigners in Spain. The process of getting a NIE for EU nationals is fairly easy, but for third country nationals it is more complicated.  

2. Choose What Type of Company You Want

It’s important to decide what type of company you will set up: a private limited liability company, a public limited liability or self-employed. The main differences between these types are in starting capital and types of taxes: corporate tax or income tax.

3. Decided on Your Company or Brand Name

You will need to prepare a list of three possible names and provide them to the Registro Mercantil Central, which will check the availability of those names. This can take a couple of days. Also, if you are launching a product or service under a specific brand name, you should consider registering a trademark in Spain or the entire European Union. More about trademark registration below. 

4. Open a Bank Account

Once you establish your company in Spain, you will also need to open a bank account in a Spanish bank. You can open a bank account only after you have your NIE number. 

If you're setting up a Limited Liability Company, you will need to deposit a minimum of €3,000 in your bank account. 

5. Shareholders and Corporate Director

You will need to determine who the shareholders are and who will hold the title of director. Having a company director is required under the Spanish legal system.

6. Notary

Registration of a new company takes place at a notary’s office after the submission of all the necessary documentation including:

  • NIEs of all shareholders and the director.
  • Certificate for company bank account.
  • Company’s name certificate from the Registro Mercantil Central.
  • The company’s bylaws.

7. Tax Identification Number

Getting the company’s tax identification number is required in order to start business activity once the bylaws have been ratified by a notary. 

8. Commercial Register

The last step to validate the company is the inscription of the bylaws in the Registro Mercantil Central which takes approximately three weeks. Though, it may take longer now as a result of disruptions in the work of the Spanish government due to pandemic. 

What to Know about Opening a Branch Office or Subsidiary in Spain

When you are planning to open either a branch or subsidiary of an existing business, you should decide which type best fits your needs. There are several differences between them:

  • Amount of share capital: opening a branch does not require capital. However, to open a subsidiary you’ll need from €3,000 to €60,000, depending on the type of company. 
  • Who holds the responsibility: the parent company is fully responsible for a branch. By contrast, the officers and administrators of a subsidiary have legal and fiduciary responsibilities of the subsidiary corporate entity.
  • The organization of management and shareholders is different for the two types of companies.
  • They have different taxation processes. A branch pays taxes as a non-resident legal entity. A subsidiary needs to declare taxes as a Spanish company. 

Also, depending on what type of company you are going to open, the process of collecting documents and starting the company will differ significantly.

There are many factors that must be taken into account in order to choose the best option for your specific business needs. Therefore, it is highly recommended that you consult with professionals in the field to avoid difficulties in opening your company and fulfilling accounting and taxation requirements.

Buying a Business in Spain

Buying a business can be an excellent form of investment with high return on investment. Reasons for selling a business can vary—one of the most common reasons is that the owner wants to retire. Now, due to the situation with COVID, many attractive offers for purchasing a business are appearing. Investing money today could bring profit in the long term when the situation returns to normal.

What you need to consider when purchasing a business:

  • Purchase price.
  • Understand the financial situation of the company: turnover, income, expenses, taxes, dept, credits, etc.
  • Company assets.
  • What is the potential of the business: growth, scale of business, etc.
  • Is the business unique and who are its competitors?

If you decide to buy a business, you will need to prepare a purchase offer for the seller. You will also need to perform due diligence, including a review to validate the accuracy of the financial statements provided. After agreeing on all the conditions and cost, the relevant contracts for the transfer of business need to be prepared.

If you are interested in buying a business in Spain, the Lusa Legal team can assist you in every step of the process, from selecting a company to the audit and execution of the transaction.

Trademark Registration in Spain or EU

Your trademark is your brand name with logo, brand identity and can also include slogans. Registering your trademark will legally guarantee that no one else can use it.  

It's important to understand where you plan to operate, as the relevant jurisdictions will drive precisely where to register the trademark.

There are several steps to registering your trademark: 

  • Ensure that no one else is using it, this can be checked in special registers. 
  • Choose where to register: Spain, EU, worldwide, or any other specific country.
  • Choose the classifications of your brand. There are 43 different classifications, and it’s very important to choose them correctly and cover all fields of your business. 
  • Obtain all required documentation and pay all fees.
  • Submit documentation.

After you finalize all these steps you will need to wait for approval. Once approved, your trademark will be registered.

Although determining how to set up a business in Spain may feel like a complicated process, with the proper guidance and help of experienced lawyers you can arrange it quickly and easily. Lusa Legal has more than 20 years of experience assisting clients in their corporate needs. By entrusting Lusa Legal with your legal and administrative matters, you can focus all of your attention on growing and expanding your business.

If you have questions or business ideas you can contact Lusa Legal at: +34 607 29 44 28 or write to info@lusalegal.es. You can find Lusa Legal online at lusalegal.es. on Facebook at: @lusa.legal, on Instagram at: @lusa_legal and on LinkedIn.

Sponsored by Lusa Legal.