Spain, and cities like Barcelona and Madrid, have become international hubs attracting talent and investment for startups and newly created businesses. And that should not surprise anyone: the country is one of the best places to launch your company, not only because of positive market conditions but also due to the high living standards the country offers.
But how to do it exactly? Which are the required steps, and the options to start a business?
In this comprehensive guide to business, we will explore the 8 steps to set up a company in Spain as a foreigner, including all the details you need to know so that you can navigate the process without hassle.
How can a foreigner start a business in Spain?
There are 2 different ways to start and operate a business in Spain: you can do it as a freelancer or sole trader (called “autónomo” in Spanish), or register a limited liability company (“Sociedad Limitada”).
Perhaps the main difference comes when talking about how you respond to what happens to the company. As an “autónomo” or freelancer, you yourself are the company, so you respond entirely with all your personal assets. On the other hand, opening an SL helps reduce that burden as you would just respond with the assets provided to the company.
Choosing one or the other will entirely depend on your particular situation, but usually, it is advisable to move to SL if you are making more than 60.000€ per year (as tax advantages will be greater).
Bear in mind that ONLY those with a valid residence and work permit in Spain can register as freelancers in the country, whereas non-residents can set up and run a company (they will just need to get their NIE, as we will see in a second).
Steps to set up an SL company
The process to set up a company in Spain as a foreigner is quite clear and straightforward.
It consists in 8 full steps that must be followed in order.
Let’s see those steps.
Get your NIE number
The NIE is the basic identification number any foreigner in Spain needs in order to carry out any kind of legal procedure.
And that is true for buying a property, buying a car, obtaining residency, or setting up a company.
Hence, you would not be able to sign all the different constitution documents without a valid NIE that identifies you.
Each of the partners (and directors) of the company must possess an NIE number.
When talking about how to obtain it, we find two different scenarios.
- If you are already a resident and hold a valid residence permit in the country (or a student visa), you already have your NIE number (printed on your TIE) so you don’t need to do anything in this step
- If you are not a resident (you are not in Spain and haven’t applied for residency), you must first request your NIE number (in this case, a non-resident NIE). You can find out all the details on how to do it here
The application process is carried out at any police station in Spain if you are in the country, or at the Spanish consulate if you are abroad.
There, you must make sure to include a notarized letter explaining and detailing why exactly you need this NIE.
Requesting the company name
Once you have your NIE number, you must then request at the Commercial Registry of Companies the name of your company.
You must propose 5 potential names for your business, in order of priority.
As long as none of those proposed names is already taken, the Registry will grant you one name.
Which one? The one ranked higher on your proposed list, but also the less contradictory one considering the business and other already existing companies. So yes, they do have the discretion to decide.
Bear in mind that before your submission, you can research and find out if your name is already taken.
This process is carried out online through a formal application (ideally you would have a lawyer by your side managing this part), and can take approximately 24 to 48 hours.
In case the name is already taken, you will get notified and must apply again.
Open a business bank account
With the recently granted company name, your NIE, and your passport, you then must open a business bank account.
This account must contain a capital of at least 3.000€, otherwise, you would not be able to use it for the business setup later on.
Those 3.000€ are the minimum legal capital required by law to set up an SL.
Nevertheless, in some cases, you could instead use assets (which must be required for your business operations) of similar value and avoid just using cash.
Bear in mind this is quite complicated and it is advisable to use cash in order to enjoy a smoother business opening.
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.
Establishing the shareholders at the notary
For the next step, you will have to visit the notary.
There, you must designate and specify:
- Who the director of the company will be
- List the names of all shareholders (and their share of the company)
- The official address of the company
- The activities the business will carry out (from a list provided by the Ministry of Economy)
- Company bylaws and internal decision-making structure
And you will also have to submit your bank account statement demonstrating the possession of at least 3.000€.
Bear in mind that it is required that at least one of the members speaks Spanish at this point, otherwise you will need a translator.
There are associated notary fees in this step.
Registering your company
Once you leave the notary, you will have with you the company constitution deed.
And you must submit it to the Commercial Registry in Spain (the “Registro Mercantil”) so that they can register the company.
This registration process can last approximately 2 weeks.
At that moment, you will be granted a temporary CIF (which basically is the NIE for companies). With this provisional CIF, you are allowed to start your business operations.
There are no taxes associated with this constitution.
Registration at the tax agency
No business can escape taxes. And that implies registering at the tax agency before starting your day-to-day activities.
With the provisional CIF you have been granted in the prior step, you must go to the tax agency and activate your company.
This will enable you to legally start offering your services or selling your products, and fill in the corresponding taxes; which are the quarterly VAT, annual corporate tax, and accounts.
Social security number
In case you want to hire workers and employ individuals within your company, you must request a Social Security number for your company.
This is crucial as part of the salary you pay to your team is made up of the social security contribution, which you must pay on their behalf.
Start doing business
Finally, once you have completed all prior steps, you will be ready for the most important stage: starting your business operations and trying to make them successful.
This is, for sure, the most important step, and the one you should put in your whole heart and effort.
That is why it is always ideal to hire an expert business lawyer to handle all the other steps so that you can focus on what is really important: making your business grow.
At ImmigrationSpain, we can manage all required steps and be next so you throughout the entire process, helping you find the most optimal business structure and drafting all required documents.
Get in touch with our lawyers and let us guide you step by step: