The Spanish territory is the ideal landscape for foreigners from all around the world to start their own company. Ideal infrastructures, worldwide talent, and an entrepreneurial ecosystem makes cities like Barcelona or Madrid your best choice when deciding where to start. Nevertheless, the specific steps you should take in order to successfully have your company start running are not that clear. That is why we created this complete guide: to solve all your doubts. So get ready to learn the step by step process on how to set up your company in Spain as an expat.
Including some videos to make sure everything is understood easily!
Why should you open your company in Spain and not anywhere else?
During the last years Spain has become a real business European center. Madrid, Barcelona or Valencia are important entrepreneurial hubs that attract all the elements that can make a business successful.
In that sense, the main benefits of starting your company in the Spanish territory are the following ones:
- As too many successful startups are being born in Spain, this is attracting foreign talent and investment.
- The country has good logistics and infrastructures that can help your business project succeed.
- The country offers a big and diverse enough market to enable different types of business ideas to stick.
- Growing a company is a complete adventure. And Spain, thanks to its people, food, culture, and weather makes it the perfect place to enjoy that journey.
Who can start a business in Spain?
No matter if you are a foreigner or a local citizen of Spain, everybody is allowed to start your business in the country. The only requirement is that you are a legal resident. Nevertheless, according to your country of origin, the process can get more complicated.
The actual legal constitution steps of the business are the following no matter if you are a foreigner or not. What’s different is the need to become a legal resident in the country, which creates an extra prior step you will need to realize.
So let’s examine the two possible cases:
- If you are from any country from the European Union, the procedure is straightforward. You just need to get your NIE and EU registry certificate, and then you can simply move to the constitution part. You can learn more about how to move to Spain as a European citizen here.
- Nevertheless, if you are a non-EU citizen; you will need to get your working visa to start your business in the country.
How to get your business visa: work permit to set up a company
There are two different working residencies that can allow you to carry the process out: the entrepreneur visa and the work permit as a self-employed individual. These are the two permits that will grant you the specific type of residency that allows you to start a company.
You will choose one or the other according to the specific business idea.
If the business idea you would like to develop is innovative and technology is at its core of operations, then you should apply for the entrepreneur visa. Even though the requirements are much more strict and not any business idea will be valid to get the residency; it offers many advantages.
The application process is much faster and you can get your response just after 20-30 days.
Nevertheless, it is crucial that you understand the requirements before starting. Because you will need to present a really detailed business plan, prove you have enough skills and financing methods to ensure the company will grow.
That is why we suggest visiting our article about the legal process to get the visa as an entrepreneur.
Self-employed worker visa
Let’s say, for example, that you would like to open any type of classic brick-and-mortar store; like a cafeteria or local supermarket.
In those cases, as the project is not innovative enough (it’s something that already exists), the residence permit that will allow you to set everything up is the self-employed worker visa (a regular work permit).
Nevertheless, even if the project does not necessarily have to be technological for the self-employed worker visa application to be accepted, not every company will be valid. So how do I know which type of business should I start?
Finding the Right Business Idea
This is another really important consideration you must take before starting. As we have just seen, depending on the type of company you would like to start, the corresponding residency card changes. So finding the right business idea is crucial.
Besides, you cannot start a company if you don’t have a good business idea. It simply won’t succeed.
And nowadays, due to the rise of the internet and the interconnected world it has created, opportunities abound. In that sense, there are some really worth investment opportunities in Spain you should really consider.
Just in case you don’t know where to start, here you will find a list with 25 business ideas to start in Spain as an expat.
Which type of company should you choose? How to do business
Before starting the process of constituting a company, we must decide which will be its type. But we are not talking about the business model or specific project. We are talking about its legal structure.
In Spain, there are different company structures, which are defined by the Commercial Code. Each of them has its own characteristics, and understanding their different purposes is crucial. We are just going to briefly talk about the main ones:
The different business structures in Spain are the following ones:
Probably the best option for small companies, as the legal process for its creation is really simple. One of its main advantages is that it does not require any type of initial investment.
Nevertheless, being a sole trader (“empresa individual”), has an important disadvantage: there is no distinction between the company’s assets and your personal assets. Hence, you are fully liable for any possible debt the company has.
For whom is this structure? For painters, web designers,… For those individuals whose activity does not require a company for its undertaking, as the work freelancers do.
Sole trader taxes
In terms of taxes, as a sole trader, you will pay income tax (IRPF). That implies that you will annually be in charge of your tax returns.
As your activities are regulated under the income tax regime, it is possible that you end up paying an unnecessary amount of taxes by using this legal structure. And that will happen if your incomes are higher than € 50.000 – € 60.000 per year.
So in case you are expecting to earn above that, our advice is to go for a limited liability company.
Sole trader vs “autonomo” (self-employed)
There is a generalized misconception that we must tackle here.
Many times we mistakenly assume that the word “autónomo” and self-employed are the same. And it’s wrong. Because yes, you may have your work permit as a self-employed worker. Nevertheless, that does not imply that the company you set up is as an autonómo.
An autonómo is two things: a freelancer and the administrator of a company. On the other side, a freelancer or self-employed does not administrate the company necessarily.
Why are we mentioning this? Because the constitution process is exactly the same. You will need to fill out the model 036 or 037, depending on the case. In that form, it is asked whether you are a sole trader (“empresa individual”) or a self-employed individual (autónomo). You must choose the former.
Limited liability company (SL)
This is, without any doubt, the most popular firm structure in the Spanish territory. Why? Because of its flexibility and easiness in the registration process, just demanding € 3.000 for the constitution process as a minimum capital investment.
If you foresee that you are going to get incomes over 60.000€, directly constitute a company instead of establishing yourself as a self-employed worker.
One of its main advantages is that your liability is limited to the capital investment made. So if you just invested € 3.000, that is the maximum amount it can be requested from you in case of indebtedness.
In this case you won’t pay income tax, but corporate tax (“impuesto de sociedades”), which is equal to 25% on your profits. Filing your VAT returns (“IVA”) is also required. Nevertheless, there are several exemptions that you can benefit from which can reduce the taxable amount considerably.
That is why we recommend you rely on an accountant to manage your quarter and annual returns. You will really save money.
A stock corporation or “sociedad anónima” is the legal structure reserved for big companies who trade with stocks. It is characterized by a much more rigid structure, and € 60.000 are needed for its constitution.
Its main advantage is that you can get external financing as the company’s shares can be bought at the stock market.
Nevertheless, we would suggest you first start with an SL and then move to a stock corporation once you decide to go for an IPO.
But what happens if you already have your own company in any other country and would like to expand in Spain?
In those cases opening a branch in Spain is the right path. It will offer you the possibility to expand to a new market while harnessing the power of your brand and systems.
If you want to set up a branch of your company, you will need to present a notarized power of attorney and a copy of the company’s public deed of incorporation. In case the business law of your country requires it, you also need to present a certificate of good standing.
In this specific case, if you are the one opening and running the branch in the Spanish territory, you must be a resident in the country.
How to set up a company in Spain as an expat
In order to start your business in the Spanish territory, you will need to go through the next steps:
- Get your NIE number
- Defining the names of the company and checking its validity: certificate of uniqueness
- Getting your CIF or tax ID number
- Opening a bank account to be used by the company
- Establish the shareholders and creating the shareholder agreement
- Going to the notary and signing the public deed of incorporation
- Registering the company with the tax authorities
- Registering the company in the social security
The 8 steps to starting your business as a foreigner
Let’s now analyze each of the 8 steps to constitute your company as an expat in Spain.
Get the NIE Number
The first thing to do as a foreigner is to get your NIE number. That is the identification number that will allow you to open a bank account, be tax identified, etc. The NIE is the most important thing in order to freely operate in Spain.
Getting the NIE is a really simple process. The amount of time in which you can obtain it will depend on whether if you are an EU citizen or not: it takes 3 to 5 working days to obtain the NIE number for EU citizens; and the time period for non-EU ones will vary depending on the corresponding Immigration Office.
There are two possibilities to get this number:
- Do it from your country of origin, at the Spanish consulate
- Doing it while in Spain. For that, getting an appointment in any police office is required.
Names of the Company
Once you have your NIE number you need to obtain what’s called a certificate of uniqueness. This document states that the name of your company is free to be used and is now under your possession. How to get it?
You need to make a list of 3 names you would like to give to your company. They must be sent to the Corporate Register of Spain (Registro Mercantil) in order to check their availability.
If available, they will accept one of the three, depending on the preferences you set beforehand when submitting them. This process can take up to 48 hours.
This will be the official name of the company, which will appear on your invoices and other documents.
Nevertheless, you can ask the registry for an additional name to be used in other non-legal situations or purposes.
Getting your CIF (tax ID code)
You need your company to be identified with the tax authorities. That is why you need to request the company’s CIF. So, basically:
- First of all, you need to download the corresponding application form on the tax agency’s website
- Then, you fill that form out
- You get an appointment with your local tax agency office to present it, along with your NIE.
If you want to import/export within the EU, you will need an EORI number. In most cases, it is assigned automatically when you register your company, but otherwise, you will have to apply for it as well.
Opening a Bank Account for your Business
Now that you already have your NIE and CIF, you can easily open a business bank account in Spain.
Assuming you chose to start a Limited Liability Company, you are required to contribute with 3.000€ in cash for the constitution of the firm, which you will need to have on a deposit in the newly created account.
For sure this is not money lost and can be used in the firm daily operations.
The contribution of that amount of money generates a bank certificate that demonstrates the payment. You must bring this document to the notary on the actual constitution day.
And what happens if you don’t have that amount of cash? You can also use assets that are valued the same to work as capital. For example, you can use your computer, phone or any other asset that is similar and that can sum up to that amount.
Nevertheless, that is something we do not recommend. Why? Because afterward, if you would like to sell the shares of the company or divide the capital of the firm for the different shareholders, you will have a much more difficult time than if you used cash.
At this point, you need to decide how many and who will be the shareholders of the company. Besides, determining who the director of the company will be is a required step.
In that sense, there are two different types of directors.
- First of all, we find the corporate director (“director mercantil”). She doesn’t need to have a salary or a work permit, and once a year he needs to sign the annual accounting of the company. Having this type of director implies that you will also need to have one worker under your structure, as the Spanish legislation requires.
- But what many companies actually do is to have one director with corporate and working functions altogether, so the need to have an employee is eliminated.
Once that is decided, you just need to create the shareholder agreement, defining each shareholder and the share percentage each has. This is one of the most crucial steps of the process; as you need to foresee any future possibilities in order to avoid problems later on. That is why we hugely recommend relying on a business lawyer.
Going to the notary to sign the public deed
With all the previously mentioned documents (NIE number, the bank certificate and the certificate from the Registro Mercantil), you now need to go to the notary to sign the public deed of incorporation. There, you will establish who the investors/shareholders and the administrator are.
Furthermore, you will need to introduce an address.
Also, you will need to clearly define which is the activity of the company. Our advice here is to be as open as possible: introducing all the activities related to what you are going to do. That is a crucial step. Why? Because it will avoid the need of going again to the notary in the future if you expand your business or pivot the core activity.
Then, the notary will register the company in the Company Registry. This process can take up to 3 weeks. Nevertheless, from the day we sign the set up of the company at the notary, they will give you a provisional VAT number, with which you can start your activity.
If you rely on us for the whole process of opening a business in the Spanish territory, we will coordinate and represent you in the notary, getting all the required appointments with the different legal institutions that appear among all the steps.
Going to the Tax Agency
Now that you have obtained the deed from the notary, you should go to the Spanish Tax Agency (Agencia Tributaria) in order to:
- Register that documentation, getting the deed stamped by them
- Get your final Tax identification number (CIF) for the company.
Bear in mind that you will start paying taxes once when you start your activity.
And, finally, the last step: visiting your local social security office to register your newly created business.
Bear in mind that if you are registering as a sole trader there’s a specific regime that applies, called RETA. During your appointment, you’ll need to present the 036 or 037 form, your NIE, passport and IRPF form.
And then you are ready to go!
Get legal assistance from our business lawyers
This has been a guide for expats who want to start their business in the Spanish Territory. You will face 8 steps in order to set up your company, but it can get a bit tedious sometimes. Not only are we talking about delicate steps and documents (for example when it comes to the shareholder agreement); but also because you must make sure you stay up to date with your tax duties.
This is why we highly recommend you to contact us in order to let us help you with the overall process. Our business lawyers will solve all your doubts and manage the whole process for you. And our accountants will be in charge of your taxes.