Registering a business in Spain
Starting a business in Spain is not difficult but the paperwork can be time consuming and frustrating. If you do not have time to do all the paperwork yourself it is advisable to employ the services of a credible legal firm to do this on your behalf. Of course employing a firm of business lawyers in Spain, to see you through the whole process can be costly, but in the long run could save you money, frustration and time.
AS any operating business deals in financial transactions anyone wishing to set up/register a business in Spain whether resident and non-resident, EU citizen and Non-EU citizen must have an NIE number. Read more: ‘How to Get a NIE’ »
Types of business structures in Spain
- Sole Trader/Sole Proprietor (Empresario Individual or Autónomo)
- Partnership (Sociodad Civil)
- Co- Ownership (Comunidad de Bienes/CB)
- Limited Liability Company (Sociedad Limitada/SL, OR Sociedad de Responsabilidad Limitada/SRL)
- Public Limited Company (Sociedad Anonima/SA)
- New Enterprise Limited Company (Sociedad Limitada Nueva Empresa/SLNE)
Documents for new enterprises
Once you have decided on the appropriate business structure you should then ensure that you are aware of the legal requirements in registering your business.
Step 1 – Certificate of Uniqueness (no-name coincidence certificate)
You must apply for a Certificate of Uniqueness (Certificación Negativa de la Denominación Social) – This is to prove that the name of your company has not been already taken by another enterprise and to ensure that no-one else duplicates your name for their enterprise. This will cost a small fee and is available from the Central Commercial Registry (Registro Mercantil Central) Their website provides a platform for all the necessary procedures to be performed online – at the top right of the home page there is the option to follow the whole website in English (Inglés):
Step 2 – Bank Account
You are required to obtain a ‘deposit certificate’ from the Spanish bank where you have deposited your business capital– The type of account will depend on the type of company.
Step 3 – Public Deed of Incorporation
This must be done through a Notary. The Public Deed of Incorporation will include:
- The shareholder names
- The number of shares each shareholder holds
- The identity of the administrators
- The identity of the directors
- The type of management administering the company
- The NIE number of each shareholder
- The bank deposit certificate
- The Certificate of Uniqueness
Step 4 – CIF
(Company Tax Identification Code – Codigo de Identificacion Fiscal/ CIF)
It is mandatory that you apply for this Company Identification number within 6 months
Application for a CIF must be done at the Tax Office (Delegación de Hacienda) usually in the same province where the company will operate. You will be issued with a provisional number immediately.
Step 5 – Transfer tax and Stamp Duty
(Impuesto de Transmisiones Patrimoniales y Actos Jurídicos Documentados)
Within 30 Days of the Deep of Incorporation – the cost will be 1% of the company capital share. You will need to present:
- The Deed of Incorporation
- The CIF
- No stamp duty is payable for companies in the Canary Islands.
Registering your Company
You must register your company within 2 months of the date of the granting of the Public Deed of Incorporation.
The cost of registering a company varies according to the amount of capital invested and the number of shareholders.
Entities which must register
- Individual entrepreneurs
- Commercial undertakings
- Non-profit making organisations
- Credit and insurance entities and mutual guarantee companies.
- Collective investment undertakings
- Economic interest groups
- Savings banks
- Pension funds
- Branches of any of the above
- Branches of foreign firms
- Foreign firms which move their registered headquarters to Spanish territory
- All undertakings which carry on a commercial activity, provided that the figures for purchases made or brokered, or the sales figures, exceed EUR 600 000.
To register your company:
- Any company operating within Spain are required to keep a log book: Details of the Company, the work place/premises and the type of business activity – This book must be up-to-date and be available for inspection at any time. The book is required by The Labour and Social Security Inspectorate.
- Any foreign investments used to set up a business in Spain has to be declared on the Spanish Investments Register (Registro de Inversiones).
Procedure and documentation
Step 1 – Declaración Censal de Inicio de Actividad
A Formal Declaration to Start Company Activity, This is filed at the local Tax Office. (Declaración de Hacienda)
Step 2 – Register for Tax
You need to register your company for tax at the local Tax Office.
You will need:
- A comprehensive description of the type of business activity the company will be engage in
- A Comprehensive description of the business premises
- The date business activity is to commence
Once all the relevant paperwork has been submitted to the Tax Office your company will be allocated an official tax number/activity code.
Step 3 – Legalise the Company Books
There are two statutory Company Books in Spain which must be submitted to the Central Commercial Registry to be certified and stamped before the commencement of business.
- A Minutes book
- VAT (IVA) register books
Step 4 – Opening Licence
A licence to open for business (Licencia Municipal de Apertura) is required and can be obtained from the Town Hall. The cost depends on the business activity, area and district in which the business will operate.
You will need only submit: The Public Deed of Incorporation
Step 5 – Regional Work Authorities Notification
Before your company can open for business you must notify the Regional Work Authorities (Delegación Provincial de la Consejería de Tabajo de Industria) of your intention to do so.
The Sole Trader: (Autónomos)
- NIE number is your first requirement – Non-EU citizens will also need to apply for a combined self-employment work and residence visa at the same time.
As a sole-trader you are self-employed and therefore regardless of your nationality you will need to:
- Register to pay IAE – Tax on Business Activity (Impuesto de Actividades Económicas)
- Register a declaration for starting a business at the tax office. (Declaration Censal de Inicio de Actividad).
- Register for social security within 30 days of your registration for IAE – Once done you will have to make monthly payments into RETA (Régimen Especial de Trabajadores Autónomos) – This must be paid regardless of whether the registered person as an income or is on sick or maternity leave:
A Partnership: (Sociodad Civil)
This applies to 2 or more persons and there is no minimum investment requirement. All debts and/or financial obligations are then equally shared among the partners of the entity.
To set up a partnership you will need :
- To sign a partnership agreement (contrato de constitución) – This requires the services of a notary. This is not compulsory however, it is wise to do so. If an agreement is drawn up the words Sociedad Civil must be included in the company name.
- Register to pay IAE tax (Impuesto de Actividades Económicas).
- Register your Declaration for starting a business (Declaración Censal de Inicio de Actividad), at the local Tax Office (Delegación de Hacienda).
- Register for social security.
- If the business operates from business premises then you need to apply for an opening licence (Licencia Municipal de Apertura) at your local Town Hall.
Co-Ownership (Comunidad de Bienes)
A CB requires a partnership agreement (contrato de constitución) which must be drawn up by the members (comuneros). The partnership agreement must stipulate the amount contributed by each co-owner – there is no minimum financial investment requirement.
To set up a co-ownership entity you will need to:
- Register to pay IAE tax (Impuesto de Actividades Económicas)
- Register a Declaration for starting a business (Declaración Censal de Inicio de Actividad), at the local Tax Office (Delegación de Hacienda)
- Register for social security
- If the entity is to operate from premises then the Co-Ownership must apply for an opening licence (Licencia Municipal de Apertura) at the local Town Hall.
A Limited Liability Company
(Sociedad Limitada/SL, OR Sociedad de Responsabilidad Limitada/SRL)
Requires at least 1 shareholder and has a minimum starting capital of €3,000.00 – Liability is limited to the amount of capital contributed.
The executive managing body of a Limited Liability Company consists of one or more directors who do not necessarily need to be shareholders or Spanish nationals and has the authority to appoint or remove any director of the S.L. at any time. Management is carried out at the shareholders’ meetings.
A Limited Liability Company must include the words sociedad limitada in its name, and must be registered with Spain’s Trade Register.
To register a Limited Liability Company in Spain you need to:
- To ensure you have an NIE number (Foreigner’s tax idenitification number)
- No-name Coincidence Certificate – register the company name
- CIF (Company Tax Identification Code – Codigo de Identificacion Fiscal/ CIF)
- Proof of a deposit of minimum share capital of €3000.00 in the company bank account
- The prepared company constitution
- The Deed of Incorporation including your appointment as a founding administrator/director of the company – this must be done through a notary, and you will need:
- Tax form 036
- Your CIF
- Your NIE Number
- Evidence of your share capital paid to the bank
- Register the Deed of Incorporation with the Local Government Tax Authority (AEAT)
- Register the Deed of Incorporation on the Spanish Register of Limited Companies at the Registro Mercantil. This will take approximately 15 days. Your Deed will now also bear a certificate of registration.
- Register the company for social security
- All Limited companies pay Corporate Income Tax (Impuesto sobre Sociedades).
New Enterprise Limited Company (Sociedad Limitada Nueva Empresa/SLNE)
This a simpler version of the Limited Laibility Company although there must be between 1 to 5 founders or shareholders, but the main difference is in the requirements for naming the company. The law stipulates that the company name include the words Sociadad Limitada Neuva Empresa (SLNE).
The available investment must be between €3000,00 and €120,000.00 and all requirements for setting up and registering the company are the same as the Limited Liability Company.
- All Limited companies pay Corporate Income Tax (Impuesto sobre Sociedades).