Setting up a company in Spain as a foreigner is relatively straightforward. There are two primary ways to start and operate a business in Spain: you can do it as a freelancer or sole trader, or register a limited liability company.

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​Non-EU nationals must apply for the appropriate visa or residence permit, such as self-employment visa, an entrepreneur visa for innovative start-ups. For freelancers or small business owners, Spain's self-employment visa requires a business plan, proof of financial means, and qualifications. ​

 

​It's important to note that only those with a valid residence and work permit in Spain can register as freelancers in the country. However, non-residents can establish and run a company; they simply need to obtain their NIE (Número de Identificación de Extranjero).

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For company registration:

• Obtain a NIE Number

• Select a business structure

• Select your company name

• Open a Spanish business account

• Draft and Sign the Deed of Incorporation

• Register the company

• Obtain the Tax Identification Number (CIF)

• Register for Social Security

• Apply for necessary licenses or permits

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Types of Legal Business Structure in Spain

​Before proceeding with company registration in Spain, it's essential to select the appropriate legal structure depending on your business size, risk, and goals.

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1. Sole Trader: This is ideal for freelancers or solo entrepreneurs to operate a business as an individual and is responsible for all debts and liabilities. It is quick to set up and less paperwork.

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2. Limited Liability Company (SL): This business structure is ideal for small and medium-sized companies. It required a minimum share capital of €3,000. Shareholders liability is limited to their investment in the company.

 

3. Public Limited Company (SA): This structure is used mainly by larger businesses. It requires a minimum share capital of €60,000. Shares can be publically traded, and liability is limited to the capital contributed.

 

Documents needed for starting a business in Spain:

• Passport or National ID

• NIE Number

• Proof of address: This can be rental contract, utility bill, or certificate of registration with the local town hall.

• Business plan outlining your business idea, market analysis, financial projections, and economic impact.

• Proof of financial means (bank statement or investment documents)

• Registration of Company Name with Mercantile Registry Central to ensure your business name is unique and legally protected.

• Tax Identification Number

• Business Bank Account

• Deed of Incorporation: Must be signed before a notary public when forming a limited company or other corporate entities.

• Company Registration at the Local Mercantile Registry

• Social Security Registration

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Taxes for Business in Spain:

​Businesses operating in Spain are subject to different taxes. The standard corporate tax is 25% on profits. However, newly formed companies can benefit from a reduced rate of 15% for their first two profitable years.

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Other taxes include:

• Value Added Tax (VAT or IVA): Standard rate is 21% with reduced rates of 10% and 4% for certain products.

• Social Security Contributions: Employers must contribute 30% to 40% of the employee’s gross salary.

• Local Taxes: Companies may need to pay local taxes such as property tax or business activity tax (IAE).

• Withholding Taxes: Applied to payments like dividends, interest, and royalties.

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Open a business bank account in Spain

Opening a business bank account in Spain, you need to provide your NIE (foreigner identification number), proof of company registration or incorporation documents, your tax identification number (CIF), and valid identification such as passport.

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Many banks may also request a detailed business plan, proof of address, and information about the company's directors and shareholders. It is important to compare banking fees and services, some banks provide online and multi-currency accounts, which can benefit international business operations.

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​If there is more than one shareholder, each shareholder must put in this business bank account the amount corresponding to the percentage they own in the business.

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FAQs 1. How long does it take to register a business in Spain?

Company registration in Spain typically takes 2 to 4 weeks, depending on the business structure and completeness of the documentation.

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FAQ 2: What is the minimum capital required to start a company?

For a limited company, the minimum share €3,000. Sole traders do not have a capital requirement.

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FAQ 3: What taxes do businesses pay in Spain?

The main tax is corporate tax at 25%, with a reduced 15% rate for new companies for first two profitable years. VAT and social security also apply.

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FAQ 4: Are there any language requirements for starting a business in Spain?

It's not mandatory, however, having a translator or local support can be helpful.

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