Business in Spain for foreigners.
Opening a business in Spain as a foreigner is possible and available for both – EU and non EU citizens. The process of setting up a business in Spain by foreigners consist several steps:
1. NIE number (Número de Identidad de Extranjero)
Any foreigner wishing to have a business in Spain must obtain a NIE number, or foreigner identification number. This number is needed to set up a business and contact the authorities. It can be obtained from the Spanish immigration office or from Spanish consulate in your country.
2. Decide on the legal form
There are several ways do to business in Spain:
– autónomo (self-employed person). The simplest form for those who wish to operate individually
– limited liability company (Sociedad Limitada, SL): a popular form of company that offers limited liability
– public limited company (Sociedad Anónima, SA): a larger business structure designed for large investments.
3. Registration with the Spanish tax authority (Agencia Tributaria)
Registration with the Spanish Tax Authority and declaration of the form of taxation in required. When you register your business with the Tax Agency, you will receive a tax identification number (NIF), which is necessary for tax settlements.
Most important local tax obligations:
– income tax: autónomo, subject to personal income tax (IRPF) with progressive rates that start at 19% and can go up to 47% depending on income. Companies (SL) pay coporate tax (Impuesto de Sociedades) at a rate of 25%. Newly established companies can benefit from a reduced rate of 15% for the first two years of operation
– VAT (IVA): the standard VAT rate is 21%, but there are also reduced rates (10% and 4%) for certain goods and services. VAT is settled quarterly (Model 303) and summarily at the end of the year (Model 390)
– Social Security Contributions (Seguridad Social); these are mandatory-autónomos pay a fixed contribution that starts at around €230 per month, depending on the contribution base chosen. In the case of a company, contributions must also be paid for employed workers
– business activity tax (IAE) is mandatory only for companies that generate annual revenues in excess of €1 million. The value of the tax depends on the type of business and location
– personal income tax (IRNR). If an entrepreneur is not a tax resident in Spain, a tax on non-residents (Impuesto sobre la Renta de No Residents, IRNR) applies. The amount of tax depends on the tax residency status.
Recommendations: Spanish tax laws are quite complex, so it is advisable to hire a tax advisor to ensure compliance and help with tax optimization.
4. Registration with the social security system (Seguridad Social)
A business person must register with the Spanish social security system and pay contributions to Seguridad Social. These contributions are mandatory and the amount depends on the form of business and the contribution base chosen.
5. Setting up a bank account
Establishing a bank account with a Spanish bank is recommended, especially for those setting up a company, as the initial capital is deposited into this account.
6. Start-up formalities
In the case of companies, it is necessary to register the company´s articles of incorporation with a notary public and register the company with the Commercial Registry (Registro Mercantil). If the business requires additional permits or licenses (e. g. in the catering or construction industries), these must be applied for at the appropriate authorities.
7. Tax accounting and bookkeeping
Spanish regulations require bookkeeping and the filing of quarterly and annual tax returns. It is recommended that you work with a local tax consultant or accountant.
Summary: Business in Spain for foreigners. Starting a business in Spain is accessible and affordable for foreigners, but it is advisable to familiarize yourself with local tax laws and hire professionals to help with accounting and paperwork.