Setting up a business

Spanish law offers foreign investors several options to set up a business.

More information

Most common ways a foreign company can operate in Spain

Spanish company with its own legal personality

The most common business structures are:

  • Sociedad Anónima (S.A.) (Public Limited Company)
  • Sociedad de Responsabilidad Limitada (S.R.L.) (Limited Liability Company)

Natural person

Business or professional activity performed directly by an individual.

Branch office

They do not have their own legal personality, therefore their business and legal liability are always directly linked to the foreign investor's parent company. They file with the Mercantile Registry

Business cooperation

Business associations with other company owners already established in Spain. The Spanish legal system distinguishes different types of joint venture. The most important are:

  • Unión Temporal de Empresas (U.T.E.) (Temporary Joint Venture).
  • Agrupación de Interés Económico (A.I.E.) (Economic Interest Group).

Foreign investments in Spain do not require prior authorization, as a general rule, with the exception of investments in activities that affect public security, public order and public health.

FOTO_PANTÍN (1).png

Santiago Pantín

Information Deputy Director (Business Setup & Taxation Areas)

Our advisors

will inform and support you in setting up your business

Contact
sl-icon.png

Setting up
a Limited Company in Spain

There are two ways of setting up a limited company in Spain whose steps are as follow:

tramites-telematicos-activado.png

Online procedures

Find out more
tramites-presenciales.png

In- person process

Find out more
Close

Online procedures

1
Obtain a NIF (tax ID code) for non-resident partners/shareholders
  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.
2
Go to the Entrepreneur Service Point

Entrepreneur Service Points (PAE) facilitate the process of creating new companies. The Ministry of Industry, Commerce and Tourism’s General Directorate for Industry and Small and Medium-Sized Businesses has a search engine that can find a suitable PAE for the entrepreneur.

The following steps can be completed at a PAE:

 

  1. The applicant must complete the Single Electronic Document (DUE). Then the telematic processing system (STT-CIRCE) sends, via the Internet, each agency involved in the process, that part of the DUE it is responsible for handling.
  2. An application must be filed with the Central Mercantile Register (RMC) to reserve a company name. It can include up to 5 alternate names. Within 6 hours of receiving the application the RMC will issue the corresponding negative clearance certificate from the names submitted by the applicant in the order they were listed. It may be a name on the list of Reserved Company Names in the Law of Share Capital Companies.
  3. The date of the deed of incorporation will be set immediately via real-time communication with the Notary Public's electronic agenda (mandatory for Notary Publics), indicating no later than 12 business hours from the start of the telematic transmission, the notary’s contact information, date and time of the appointment where the deed of incorporation will be issued.
3
Open a bank account in the company's name at a credit institution that operates legally within Spain
4
Go to the Notary Public
  1. On the date of the appointment set up at the PAE, the Notary approves the deed of incorporation, attaching the receipt of deposit of monetary contributions issued by the bank. Proof of monetary payment is not required if the shareholders/partners declare in the deed that they are jointly liable to the company and its creditors.
  2. The Notary sends the Tax Administration in real time, via telematic processing system CIRCE, a copy of the deed of incorporation asking that they assign a temporary NIF.
  3. A document certifying the existence of the foreign juridical person must be attached to the census declaration. This document can be the deed of incorporation and the company bylaws recorded in any official registry in the person’s country, or proof certified by a Notary Public or tax authority that the company exists. This document must be provided with a sworn and duly 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.
  4. At the same time, the Notary Public will send via CIRCE, a copy of the deed of incorporation to the corresponding Autonomous Region to settle the Tax on Capital Transfers and Stamp Duty on its corporate transactions form where it is currently exempt.
  5. In addition, the Notary Public sends the deed of incorporation and corresponding documents to the Provincial Mercantile Register (the assigned temporary NIF and proof of exemption from Tax on Capital Transfers and Stamp Duty).
5
Final steps completed without the Entrepreneur
  1. By the Mercantile Register:
    · Within 6 business hours of receiving the electronic copy of the deed from CIRCE, and if the company uses the standard bylaws provided for in the regulations, the Mercantile Register will classify and register the company.
    · If the Company is formed without using standard bylaws, the Mercantile Register’s 6-hour period to register is limited to basic company information (name, address, mission statement, capital and selected administrative board). With this initial registration, the company is considered legally incorporated. A period of 15 days is allowed to register additional information, as revisions to the bylaws.
    · The Mercantile Register requests the definitive NIF from the Tax Administration via CIRCE.
    · On the same day of incorporation, the Mercantile Register also sends CIRCE proof of that the registration is completed. The Notary Public receives the information from the Provincial Mercantile Register and enters it into the deed of the parent company.
  2. permanent status of the NIF and immediately forwards it to the partners.
  3. Finally, the PAE carries out the steps related to starting the business by sending the information contained in the DUE:
    · To the tax authority if applicable, to file in the Economic Activities Tax (IAE), for census-related purposes.
    · To the National Social Security Treasury, to register the businessowner and activate the Social Security contributions account code (CCC), and to affiliate and register employees into the Social Security system.
6
Declaration of foreign investment

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 the incorporation of 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)

7
Announce workplace opening

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.

In the autonomous regions of Madrid and Murcia, this process can be done through the DUE.

Close

In- person process

1
Obtain a NIF (tax ID code) for non-resident partners
  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.
2
Apply for a trade name clearance certificate
  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.
3
Apply for a temporary NIF (tax ID code) for the new company

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.

4
Open a bank account in the company name at a credit institution legally operating in Spanish territory
5
Deposit company share capital into an account, on behalf of the company
  • 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. 
  • Although much less common, the notary can receive the money in cash and deposit it in a bank account in the company's name.
6
Issue public deed of incorporation
  • 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.

7
File Patrimonial Transfer Tax (ITP) and Documented Legal Acts Tax (AJD) Returns

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.

8
List the company in the Mercantile Registry
  • 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.
9
Apply for the permanent NIF (tax ID code)

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. 

10
Submit a declaration of foreign investment

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).

11
File Tax on Economic Activities (IAE)

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.

12
Register the Company with the Social Security Administration

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.

13
Announce workplace opening

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.

14
Affiliate/register workers with the Social Security system

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.

More information on setting up companies
sl-sa-icon.png

Main corporate forms:

S.L. and S.A.

The most common way of operating in Spain is through a Spanish company. There are corporate forms that can be incorporated in Spain.

More information
The two most common forms for commercial companies are:
Check icon

Public Limited Company (S.A.):

  • The S.A. is intended for companies of a certain size or where partner rotation is expected.
  • Listed companies must be public limited companies.
  • Minimum capital stock of 60,000 euros. Minimum initial payment of 25%.
  • An S.A. can consist of one person.
  • Partner liability is limited to the capital contributed
  • S.A. is basically an open company
    • Capital stock divided into shares, as securities.
    • The shares are freely transferable, unless otherwise defined in the company bylaws.
  • More complicated management and legal system than a S.L.
  • Must file with the Mercantile Registry.
  • Liable for Corporate Tax (25% general rate) although the average effective rate is lower (22%).
Check icon

Limited Liability Company (S.L. or S.R.L)

  • The S.L. is the most common and suitable company for SMEs, companies with very few partners and for family-run businesses.
  • Minimum share capital of 3,000 euros fully paid.
  • As an exception, an S.L. can be formed with less than 3,000 euros of share capital when it is set up as a Series LLC
  • An S.L. can consist of one person.
  • Partner liability is limited to the capital contributed.
  • Set-up is faster. To streamline the establishment of of new companies, the process can generally be done online.
  • An S.L. is essentially a close company
    • Share capital divided into shares, which cannot be incorporated into negotiable securities.
    • The shares cannot be freely transferred.
  • More flexible management and legal system than an S.A.
  • Must file with the Mercantile Registry.
  • Liable for Corporate Tax (25% general rate) although the average effective rate is lower (22%).
office-icon.png

Branch office

More information
  • Does not have legal personality of its own. It is subordinate to and an accessory of the parent company.
  • Secondary establishments in which the company’s senior management has no role.
  • To some extent independent in managing the business, and therefore, has its own installations and organization, separate from the parent company, and a management body that the parent company entrusts to have its own customers.
  • Branch liability extends to the parent company; therefore, creditors can settle directly with the parent company.
  • Must file with the Mercantile Registry.
  • Subject to Non-resident Income Tax (IRNR) which refers to Corporate Tax regulations. Companies and branch offices are taxed alike.