Setting up a business

1. If the partners/shareholders are non-resident juridical persons, they must apply for the NIF by submitting census declaration form 036 from the Register of Businesses, Professionals and Withholders to the Spanish State Tax Administration Agency (AEAT).
2. If the partners/shareholders are non-resident individuals, the NIF is generally the same as the Foreign Identity Number (NIE). The NIE can be obtained in Spain from the Directorate-General of the Police and Civil Guard. It can be acquired abroad at the partner/shareholder’s local Spanish diplomatic mission or consular office.
3. The census declaration must also include the first and last names or corporate name or full name and tax identification number of the legal representatives of the juridical person applying. The Spanish NIF must also be acquired by any administrator (s) of the foreign entity who will assume legal representation of the company before the State Tax Administration Agency.
4. The census declaration must be accompanied by a document that certifies that the foreign entity exists. This document can be the deed of incorporation or any officially recorded account of company bylaws filed in the foreign entity’s country; or a document certified by a Notary Public or tax authority proving the company’s existence. This document must be submitted with a duly sworn and legalized translation in one of the following ways: · An authentication certificate (Apostille) if the country issuing the document is party to the Hague Convention, dated October 5, 1961. · Legalized through diplomatic channels, if the country issuing of the document is not a member of the Hague Convention.

1. Acquired from the Central Mercantile Register, it certifies that no other company in the Registry is operating under the same name. 
2. To expedite the process, you can go to the Central Mercantile Register’s Company Name Bank which has 1,500 names and can immediately verify that no other company is operating under the same name.

Before a business can operate, the census declaration must be filed with AEAT, to make the government aware of its intention to operate a business in Spain. Use form 036 (from the Register of Businesses, Professionals and Withholders) for this.

The same form is used to apply for a temporary Tax Identification Number (NIF). The corporate entity’s tax ID number is temporary until a copy of its public deed of incorporation and company bylaws is filed and proof that it is registered with the Mercantile Registry is provided.

• In a Limited Liability Company, at the time of incorporation the shareholders must have fully paid a minimum of 3,000 euros in Share Capital. There is no maximum limit to the amount of capital. 
• As an exception, an LLC can currently be formed with less than the legal minimum of share capital when a company is set up as a Series LLC, which operate under the same legal system as LLCs, except for certain guarantees designed to bolster the company's own resources and foster self-financing. 
• The usual way of proving that funds have been deposited is for a Notary Public to sign the bank receipt. The date of the deposit cannot pre-date the deed of incorporation by more than two months. 

• Setting up an LLC must be documented in a public deed issued by the founding partners, either themselves or through an attorney. 
• If the foreign citizen who is establishing the company does not appear before the notary in person, his representative must take the original power of attorney with a duly sworn and legalized translation. 
• Spanish law allows single-member companies, so an individual can act as an LLC. 
• The public deed must include the following:

Identity of the partners

Willingness to create an LLC

Contributions made by each of the partners and the number of shares assigned in payment.

Company bylaws

Specify how the board of directors was initially formed, in case the bylaws contemplate other alternatives

Identity of the board members, company representatives, and any possible auditors

Cannot allow people with conflicts of interest to hold a position in the company.

The CNAE code that defines the company’s economic activity.

Any other agreement or condition that the partners deem appropriate.

Incorporation of companies is exempt from ITP and AJD as a corporate transaction. However, in order to list and record the company in the Mercantile Registry a tax return must be presented to the corresponding regional tax authorities showing zero tax imposed and noting the exemption.

• A period of two months from the date that the company’s deed of incorporation was granted is allowed for it to be filed in the Mercantile Registry. 
• Filing the deed of incorporation is mandatory, since the company will only acquire its juridical personality when the registration process is completed. 
• Once done, the company incorporation is published in the Official Bulletin of the Mercantile Registry.

Within one month of registering with the Mercantile Registry apply to change temporary tax ID for a permanent NIF (AEAT form 036). Include on the form, any modifications made since filing the temporary NIF application. Attach a copy of the public deed of incorporation, the company bylaws and a certificate of registration in the Mercantile Registry. 

A mandatory though merely informative document (Form D-1A) that as a rule, must be submitted to the Foreign Investment Registry (RIE) of the Ministry of Economy, Industry and Competitiveness within one month of establishing the New Company. This can be handled by the Notary Public upon request.

In cases where, according to Spanish tax regulations, the investment originates in a territory referred to as a tax haven, an informative declaration must also be filed prior to the company’s incorporation. (Form DP1).

Within a month of starting the business, the company must file the Tax on Economic Activities (Form 840 of the declaration of Tax on Economic Activities).

Companies that are exempt from IAE should not register until the month of December that falls just before the year in which they have to pay IAE. The official registration (form 036) must identify their economic activities and the establishments and locations where the activities take place. Any change or cancellation of the activities or establishments must be declared. Exemptions include individuals, juridical persons during the first two years of the business, and entities with a net revenue of less than one million euros.

Registration is the administrative act by which the General Treasury of Social Security assigns the employer a number to identify and control his or her obligations to the Social Security system. This number is the Payments Account Code (Código de Cuenta de Cotización). Use form TA.6 to apply. Before starting business activities file it at the local Provincial Directorate or General Treasury Social Security Administration where the employer resides.

Before launching a business or within thirty days after opening the workplace, the company, if required, must notify the Regional Ministry of Labor of its opening, in order to control Occupational Health and Safety conditions. A workplace is defined as any area, built up or not, where employees must remain or have access to work.

Businesses must apply to Social Security for coverage of any employee who enters their service and is not already included in the system. The application for affiliation (form TA.1) must be filed with the local Provincial Directorate of the Treasury of the Social Security Administration where the company’s office is registered and the employee works, or where the self-employed worker’s business is located. Applications for employee coverage must be made before hiring their services.