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Company Registration in Spain: A Complete Guide

Spain is one of the most promising economies in the world. It is an important part of the European Union (EU) and significantly impacts global trade. With a rise in the manufacturing and services sector and growing employment, Spain is a dependable nation for long-term business growth.

Spain is a popular destination for investors due to its large market base and rapidly expanding spending habits of the middle-class population. These factors have made it easier for a foreigner to start a business in Spain.

Business Opportunities in Spain

Due to many variables such as international trade, government stimulus, and an overall strong economy, the Spanish corporate landscape is poised to flourish in multiple fields. 

Given below are some business opportunities that have grown significantly in the last few years:

  • Information Technology Services
  • Interior Designing
  • E-commerce
  • Insurance
  • Pharmaceutical Business
  • Organic Farming
  • Cloud Kitchen

Benefits of Starting a Business in Spain

There are several advantages for global companies looking to start a business in Spain, as given below:

Strategic location and partnerships

Access to the EMEA (Europe, Middle East, North Africa) region and good economic relations with Latin America make Spain a strong strategic location. As a member of the European Union (EU), it gives preferential access to the world’s largest common market.
Furthermore, Spain is considered the best European location for conducting business in Latin and South America. In Central and South America, Spain has 17 agreements to avoid double taxation and 19 accords to safeguard and promote investments.

Welcomes foreign investment

Foreign direct investment is crucial in US-Spain economic relations. The Spanish government believes in better conductivity of trade and investment. Hence, they have accommodating business rules and incentives to attract international enterprises and investment. According to the UNCTAD World Investment Report, these actions have helped Spain climb to ninth place internationally in terms of foreign investment.

Vibrant infrastructure

Spain’s infrastructure has advanced swiftly in recent decades, and the country currently possesses some of the best rail and subway systems in the world. With 46 state-owned ports on the country’s coastlines, the country enjoys a thriving maritime economy. Spain features three of Europe’s top 10 container ports and world-class port infrastructure. It also has a burgeoning tech sector, with more than 70 technology parks and extensive fiber optic cable deployment, allowing for high-speed Internet connections.

Types of Business Structures in Spain

Every legal entity has its own benefits and offerings. Though it is quite straightforward to set up a business in Spain, companies must evaluate their objectives to decide which structure is best for them.

Business structureAbout the structure
Sole trader (Autónomo o empresario individual)
  • Also known as an “autónomo,” this is a business that operates under the owner’s name and is equivalent to a worker
  • This company’s owner-worker has complete authority over it, leading and managing it
  • It comes with unlimited liabilities
  • There is no minimum investment required to register it
  • Owner has to file tax through IRFP and additionally submit VAT returns
Jointly owned company (Comunidad de bienes)
  • It works similarly to the Sole Trader structure, except that the ownership is divided between two or more people.
  • Another difference is the setup process, that involves creating a constitution contract between the partners, requesting a tax identification or CIF number and finally registering with IAW and social security.
  • The personal income tax is paid separately.
  • No minimum investment is required
Private partnership (Sociedad civil privada)
  • This entity involves a business agreement between two or more people to make any type of investment in the firm in exchange for a part of the profit.
  • The entity dissolves as soon as the contract expires.
  • As profit is divided individually, every partner has to pay tax separately.
  • No minimum investment
Limited liability company or SL (Sociedad Limitada)
  • A single owner can register this entity with a minimum investment of 3,000 EUR. If more partners, it can be divided as shares.
  • Partners can be one or more (maximum 5)
  • Company has to pay corporate tax
  • Setup process includes
  • Preparing documents of incorporation and getting it signed from notary
  • Getting registration done on Commercial registry
  • Getting CIF or business tax identification number for company
  • Getting register with IAE and social security
Public Limited Company or (Sociedad Anónima, SA)
  • Ideal for large-sized companies due to its broad structure and numerous regulations
  • The company’s capital can be divided into shares and easily transferred.
  • Limited liabilities
  • Minimum investment 60,000 EUR
  • Shareholders can be one or more
  • Have to pay corporate tax
General partnership (Sociedad colectiva)
  • The best option for a small-scale commercial venture
  • The shareholders are involved in the company’s management only if they contribute capital.
  • Personal and Unlimited Liabilities
  • No minimum share capital
  • Minimum 2 shareholders required and there is no maximum limit
  • Corporate tax at usual rate
Limited partnership (Sociedad comanditaria)
  • There are two types of S.C., a simple one managed by the partners, and the one by shares where the management is not decided by mere partnership.
  • The liability depends on the type of partners: general partners are personally liable for debts, while limited partners only invest in the company and have no influence in the direction of the company.
  • No minimum investment is required
  • The entity needs at least two partners, one as a collective partner and the other as a limited partner.
  • The company name must contain the names of the general partners followed by “sociedad en comandita”.
Branch office
  • A better alternative than S.L. as it does not have a minimum starting capital.
  • If the parent company is filing the statements, the branch office does not have to do the same.

Company Registration Process

Get your NIE number: This number will help operate your business in Spain. An NIE number will act as your identification number and help you open bank accounts, pay taxes, etc. It is the most important data for a foreigner to legally operate in Spain. Get an appointment at the Spanish consulate in your country to obtain this identification. The process usually takes 3-5 working days.

Register your business name: The next step in forming a company in Spain is to get a certificate of uniqueness, stating that the company name is not already in use. The Mercantile Registry (RMC) provides the no-name coincidence certificate. You must prepare a list of 3 names and send them to the Corporate Register of Spain (Registro Mercantil). The business name will be registered in the order of availability of the names provided.

Employers can apply for this certificate online by going to the RMC website. This stage takes around three days until you receive the RMC’s response through courier.

Open a bank account: You must create a business account with a Spanish bank and deposit €3,000 to get a bank certificate after obtaining a tax code and a certificate of no-name coincidence. A bank certificate must be presented to a notary or lawyer to show the company’s act of incorporation.

Shareholder Agreement: You must decide the number of shareholders and appoint a company director. Then, you need to draft a shareholder agreement with the help of a business lawyer. This step is essential for the smooth running of the business, as it will detail each shareholder’s ownership, rights, and influence over company matters.

Prepare a deed of incorporation: This is the official document that contains the company’s vital information (name, address, details of directors, board members, shareholders, etc.). 

You can request a local notary to sign the articles of incorporation. Depending on the notary, this procedure can take anywhere from one to three days.

The following documents are required in this step:

  • Tax form 036
  • Certificate from the Mercantile Registry
  • NIE (Número de Identificación de Extranjero)
  • Evidence of cash in your bank account

Register deed of incorporation:  The next step involves visiting the Local Government Tax Authority to register the original deed of incorporation. This fact will be certified by a stamp on the deed and the process should take no more than two hours. Remember to bring your original papers, a photocopy of the deed, and your NIE with you. 

The stamped deed must next be taken to the RMC to be registered in the Spanish Register of Limited Companies. The deed should be recorded and original documents returned in around 15 days.

After the incorporation process is completed, you must return to the tax office to get a permanent Corporate Tax Identification Number (CIF).

Obtain the Tax Code: For this, you need to fill out tax form 036, which you can do online or print out and bring to your local tax office. The Spanish Tax Agency has information about the form, as well as form downloads and links to complete it online (Agencia Tributaria).

‍Register for social security: For this step, you need your deed of incorporation, NIE, CIF, and form TA 0521. The social security website contains information on local social security offices in Spain.

Foreign Companies Opening Up a Branch or Subsidiary in Spain

If you already have a business outside Spain, it is better to open a local branch or subsidiary instead of a separate company. For a Spanish branch or subsidiary, you must provide the following documents:

  • Copy of the company’s certificate of incorporation and certificate of good standing
  • Notarized power of attorney
  • Spanish tax identification number (NIE), for tax purposes
  • A staff member to be a Spanish resident and present at the Spanish branch, agreeing to be liable for the company’s debts and tax obligations

What is the Cost of Incorporation of a Company in Spain?

The cost of starting a company in Spain comprises both fixed and variable expenses. The minimal capital necessary to form a limited business is a minimum deposit of 3,000 euros in a Spanish bank account. Furthermore, there are Mercantile Registry costs to pay. A negative company name certificate will set you back 13.52 euros plus VAT. Depending on the company’s location, the final registration cost falls between 40 and 100 euros.

Other small fees may apply, such as those for getting the NIE (Número de Identidad de Extranjero), a digital certificate, and so on. An NIE costs 10-15 euros to process, depending on how it is obtained (i.e., in Spain or abroad). The price of the digital certificate will be 14 Euros plus VAT.              

The most expensive costs are the services, which will differ depending on who you employ. Hiring someone to design the partnership agreement can cost anywhere from 300-1000 EUR. A notary charges a fee ranging from 200-400 EUR. Finally, some documents may require professional translation, costing anywhere from 60-80 EUR.   

How Can Multiplier Help?

Starting a business in Spain can be challenging if you do not possess the knowledge and expertise to navigate Spanish laws and legislation. Developing internal teams for legal and HR assistance can be time-consuming and expensive. Multiplier’s EOR solutions help you grow your Spanish workforce without setting up a business entity.

With Multiplier, you can easily manage and pay your full-time employees worldwide. Without setting up a company in Spain, you can develop international teams, adhere to labor laws, offer benefits and contracts to your employees and pay them in their preferred currency. 

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