For anyone with any experience of Spanish life, it will come as no surprise to learn that setting up a business in Spain is anything but straightforward. There are endless bureaucratic hoops to jump through, taxes and charges at every turn, and you’re unlikely to be able to manage it without paying someone to help you. Here are our suggestions for the easier entry routes into life as el empresario.
Is Spain a good place to start a business? The pros and cons
In some ways, yes. Despite having suffered a lengthy period of economic woe, it’s still the fifth largest economy in the EU. And it’s growing again, so there should be plenty of opportunities for a business to flourish here.
Although there are 45 million potential consumers in Spain, unemployment – especially among the young – is high and this hampers the spending power of a key demographic. Still, depending on what kind of business you’re thinking of, you do also have access to the additional marketplace made up of the 70 million visitors who flood into the country every year.
The flip side of the high unemployment figures is that your wage bill is going to be lower here than it would be in many other European countries, so basing a business in Spain can make sense if you’re looking at developing a sizeable workforce. If your customer base is outside Spain, this could be a source of some competitive advantage.
One of the biggest downsides of doing business in Spain is the red tape. Be prepared to wrestle with a lot of this or – better still – find someone to handle it on your behalf. More on gestors later…
Where are the best places to start a business in Spain?
This depends very much on the kind of business you want to set up, of course. If you need any kind of IT or transport infrastructure, you’ll need to stay in the cities. If you want access to Spain’s profligate holidaymakers, you’ll need to head to the tourist spots. For British people who aren’t fluent in Spanish, the most popular businesses tend to be Anglo-centric hospitality services such as bars and restaurants in the expat enclaves.
First, find your gestor…
There’s little that Spanish officialdom loves more than making someone fill in a form. Two forms are better and the icing on the tarta de Santiago is if they can make you queue up in person to hand it in. Unless you’re proficient in both the language and the labyrinthine corridors of local and national governments, your best bet is to find yourself an English-speaking gestor.
Gestors are not regulated professionals in the sense that a lawyer or accountant is, but they are just as valuable. Gestors know every hoop and hurdle of Spanish bureaucracy and will jump through and over every one on your behalf (or get one of their runners to do it). They are by far the easiest and fastest way for an individual or small company to deal with the bureaucracy of the state. Ask your lawyer or someone else you trust to recommend a local gestor. Alternatively, try the Yellow Pages.
Can I start a business in Spain?
If you have the right to live and work in Spain, for example as an EU citizen, then you pretty much have the right to start a business here. Obviously, some professions and businesses are regulated, but for most kinds of operation there are few restrictions. You’ll need to have a ‘foreigner identity number’ (número de identificación de extranjero or NIE) which is your unique Spanish tax identification number. The process for getting one varies slightly from region to region, but typically involves completing the EX 15 form in Spanish and taking it to one of the local immigration offices (oficinas de extranjeros) that are usually found in designated police stations (comisaría de policía). There’s a list of them here. You’ll need to take your passport, a photocopy of it, two passport-sized photos and the fee (approximately €10).
What legal entity should I go for?
There are three main ways of doing business in Spain:
- sole trader/freelance professional
- limited company
Sole trader / freelance professional
This is the easiest kind of business to set up so if your business is just you – at least to begin with – becoming an autonomo is probably the best first step.
First, you’ll need to register for tax by visiting your nearest tax office with your passport and your NIE. You’ll be asked to choose between being a sole trader (autonomo empresarial) or a freelance professional (autonomo profesional). If you choose the latter, you’ll find yourself in the world of Spanish retention system (retenciones) under which, if you invoice another Spanish business (not individuals or foreign entities), that business must retain a percentage of the invoice value to pay as an advance on your tax bill. As a sole trader you will usually pay an estimated tax bill quarterly in advance.
Second, you’ll need to register for social security in order to make fairly hefty compulsory contributions of €285.41 a month to the Spanish social security system through the Special Regime for Autonomous Workers (régimen especial de trabajadores autónomos or RETA). A lower charge of £50 a month for the first 12 months has recently been introduced to encourage more people to register.
A gestor can help you with all these formalities, as well as the ongoing burden of preparing and filing your quarterly and annual tax returns. Whether you’re a sole trader or a freelance professional, you’ll need to file a personal income tax return each year, as well as quarterly returns. Your gestor or accountant can advise you of any additional local obligations that may apply.
If you’re going into business with someone else you can opt for a partnership (sociedad civil) which is slightly more complex than being a sole trader, but doesn’t require the minimum investment required to set up a limited company. The process is similar to that of setting up as a sole trader, but you’d be well advised to get a lawyer to set up a partnership agreement which you and your business partner should then sign in front of a notary.
Spain offers no fewer than six kinds of limited company depending on how many shareholders there are and how much you need to put up in the way of initial investment. The smallest possible investment is €3,000, although this can be withdrawn immediately once the business has been set up. The main advantage of setting up a company is that your personal liability is limited but there are more administrative burdens and legal, tax and trading obligations than you would have to deal with as a freelancer.
The commonest form of limited company is the sociedad limitada (SL) which requires €3,000 of investment and for there to be only one shareholder.
Here are 10 steps to setting up a sociedad limitada:
- First, consider engaging the services of a lawyer. Setting up company is a complicated business.
- If you don’t already have one, get your foreigner identification number (NIE) as outlined above.
- Get a certificate from the Registro Mercantil Central (the Central Mercantile Register) to confirm that the company name you want isn’t already taken. You can do this online at www.rmc.es.
- Apply for a temporary tax ID number – your certificado de identificación fiscal (CIF) – for your new company. This needs to be done through the revenue service, the Agencia Estatal de la Administracion Tributaria. Download tax form 036 at www.aeat.es then take it to your local tax office with your NIE.
- Open a Spanish bank account in the name of your company, pay in the minimum investment to the account and get a receipt.
- Visit a notary and prepare the deed of incorporation. You’ll need to take along your RMC certificate, tax form, NIE and bank receipt. Find a local notary at www.notariado.org.
- Take the deed of incorporation and the rest of your documentation along to the local tax authority to have the deed stamped. See www.agenciatributaria.es.
- Take the stamped deed to the Registro Mercantil Central (the Central Mercantile Register) for the company to be added to the register.
- Visit the tax office (again) to acquire your permanent tax ID number.
- As the company’s director, you’re now required to register with the social security ministry – the Tesoreria General de la Seguridad Social (TGSS) – by visiting your local office.
And if all that doesn’t deter you, it’s a testament to your spirit and determination – just the qualities you’ll need to make a success of your new business in Spain.
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