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
- ~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.
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.
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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