Spain Archives - Credit Card Processing & Merchant Services

Starting a business in Spain as a foreigner is a great idea. Not only will you have access to the European and Latin American markets, but you’ll also be able to enjoy the country’s laid-back lifestyle and warm Mediterranean climate while you get set up. If you’re thinking of expanding your existing company in Spain or starting a new life with your family abroad, understanding the options and process of establishing your business will help you succeed. ADVANTAGES OF STARTING A BUSINESS IN SPAIN AS A FOREIGNER Ease of Doing Business According to the 2018 World Bank Ease of Doing Business Survey, Spain is ranked 28th out of 190 countries for the ease of doing business. This means that it’s easier to trade in Spain than in many neighbouring countries. Entrepreneurial Culture Madrid, Barcelona, and Valencia are hubs for start-ups and are very friendly to entrepreneurs. The relationship-oriented culture is also perfect for creating social and business connections, which is essential for anyone starting a new company. Infrastructure While Spain has a bit of a reputation for having become modernised later than its neighbours, this country today has excellent logistics and infrastructure, making it easier than ever to run a successful business. LANGUAGE AND CULTURE Languages Spoken in Spain While Castilian Spanish is spoken by 98% of the population, there are other co-official languages spoken in the country’s autonomous communities. In Barcelona, the co-official language is Catalan. In Valencia, the co-official language is Valencian (a variety of Catalan). If you already speak Castilian Spanish, you should have no trouble getting around in any of the country’s major cities. Over time, learning and incorporating the local language(s) will help you expand your customer base. Business Culture in Spain Business culture in Spain is far more laid-back than business culture in countries like Germany. While Spanish businesses no longer stop for siesta, long lunch breaks are common, and shops typically stay open until late. If you’re used to everything happening on time, you might need to adjust your expectations when starting a business in Spain as a foreigner. Meetings often run late into the evening, and what doesn’t get done today gets left for mañana. RESIDENCY PERMITS An EU citizen can start a business in Spain without a work permit. If you are from an EU country, all you need to do is get an NIE (número de identidad de extranjero) and an EU registry certificate and move straight on to company incorporation. Any non-EU citizen will need a residency permit to start a business in Spain. There are two options for starting your own company in Spain: Entrepreneur visa Self-employed worker visa Entrepreneur Visa If your business idea is especially innovative, you might qualify for Spain’s entrepreneur visa, which has faster application and turnaround times. First, however, you’ll need to show sufficient funds for incorporation and present a detailed business plan. Regular Business Visa If you plan to offer a product or service that already exists, you will need to apply for a self-employed worker visa. This list of business opportunities in Europe can help you find a solid business idea. BUSINESS STRUCTURE There are several business structures from which to choose when starting a business in Spain as a foreigner, including: Sole trader Partnership Limited liability company Stock corporation Branch office Sole Trader A sole trader business is the simplest business structure and is ideal for anyone with a turnover of less than €50.000-60.000 per year. If you earn more than €60.000 per year, you might end up paying more in taxes with this structure and should consider incorporating. As a sole trader, you will file a personal income tax return and pay income tax on your earnings. You are also personally liable for your company’s debt, so it’s important to manage your business well. Autónomo A self-employed worker or freelancer in Spain is referred to as an autónomo. You will need to file a quarterly VAT (IVA) return as well as an annual income tax return (I.R.P.F.). Profesional Autónomo If you are a professional, you might prefer to set up as a freelance professional or profesional autónomo. You might be asked to show your professional qualification and register with the relevant professional association. Empresa Individual An empresa individual is a sole trader business or unincorporated company. This is a popular option if you want to open a small shop rather than offer a professional service. Partnerships Small companies with two or more partners can set up as a sociedad civil (partnership) or a sociedad comandataria (limited partnership). While the partners in a sociedad civil are held personally liable for the company’s debt, a sociedad comandatiaria offers some protection and a more formal company structure. Sociedad Limitada – Limited Liability Company A sociedad limitada (abbreviated to S.L.) is the most common kind of company in Spain. It requires €3,000 of capital and several steps to get set up, but you’ll end up saving on taxes. You’ll also be protected from having your personal assets seized in the event of bankruptcy. An S.L. in Spain needs a company tax identification number and has to pay corporate tax (impuesto de sociedades) set at 25% of the profits as well as the value-added tax (VAT) which in Spain is known as the IVA (impuesto sobre el valor añadido) and social security. It’s a good idea to hire an accountant if you decide to start a company in Spain. Sociedad Anónima – Stock Corporation A sociedad anónima (S.A.) is a large company that trades in stocks. You will need an initial investment of €60,000 to establish an S.A. The main advantage of this legal structure is that you can receive finance through the sale of shares. However, as the structure is much more rigid, it’s generally advised to start as an S.L. and change categories once you are well-established. Branch Office Foreign companies already incorporated elsewhere can establish a branch in Spain without setting up as a separate company. In this case, you would need: A notarised power of attorney A copy of your company’s public deed of incorporation A certificate of good standing (if required) Proof of residency in Spain STEPS TO INCORPORATION It’s fairly easy to set up as a self-employed person in Spain, so this section will focus on the steps required to set up a Spanish company. Obtain an NIE The first step to starting a business in Spain as a foreigner is to obtain an NIE (número de identidad de extranjero). This will be your tax identification number as well as the number you use for opening a bank account in Spain. To obtain your unique NIE, you can go to the Spanish embassy or consulate in your country of origin or make an appointment at any police station (comisaría) or at the processing office for foreign citizens (Oficina de Extranjeros) in Spain. Obtain a No-Name-Coincidence Certificate Next, you’ll need to apply for a certificado negativo de denominación social (often referred to in English as a “no-name coincidence certificate”) for your company’s legal name through the Registro Mercantil Central. You can apply for this certificate in person, through the mail, through a notary, or online and should receive the certificate within 48 hours. Once you receive this certificate, your preferred company name will be reserved for a period of six months to give you time to finish setting up your business. Please note that you can request an additional name to use for non-legal purposes. Trademarks need to be registered separately. Obtain a CIF Once you’ve obtained the certificado negativo de denominación social from the RMC, you can go to the local tax office and obtain a temporary tax ID number (certificado de identificación fiscal or CIF) through the Agencia Estatal de la Administración Tributaria. You will need to take a document signed by all future shareholders that confirm the intention to incorporate. Eventually, after the public deed of incorporation is signed in front of a notary, you will go back and get your permanent CIF within a month of registering the public deed with the RMC. Please note that unincorporated businesses will use a NIF (número de identificación fiscal) instead of a CIF. Open a Spanish Bank Account As mentioned earlier, the minimum share capital for a limited company in Spain is €3.000, deposited into a new business bank account. To open a bank account in Spain, you will need all of your personal identification documents, evidence of residency in Spain, and anything else required by the bank. If you plan to accept debit and credit card payments, you will need to sign up for merchant services. You can apply for a merchant account after the incorporation process is complete. Established Your Shareholders Your public deed of incorporation will list the shareholders of the company and members of the board, so you’ll need to work out beforehand who the shareholders will be, who the director will be, and what percentage each of the shareholders will have. The corporate director (director mercantil) doesn’t necessarily need to have a salary or even have a work permit and only needs to sign off on the company’s annual paperwork. However, if the director doesn’t work or receive a salary, you’ll need at least one other employee. Sign the Public Deed The public deed of incorporation needs to be signed in front of a notary. For this appointment, you will need: Your NIE The bank certificate The no-name-coincidence certificate Proof of a Spanish address On the deed, you will describe the activity of your company and name the company’s director and shareholders. It’s best to describe your activity as broadly as possible so that you won’t have to go back and redefine the company’s activity in the future. With the original signed and notarised deed, you will then: Go to the Local Government Tax Authority to register it and have it stamped. Take the stamped deed to the RMC to have your company placed on the Spanish Register of limited companies (this takes around 15 days). Once all of this is done, go back to the tax office with your original deed and a copy (plus a photocopy of your NIE and Form 036) to get your permanent Corporate Tax Identification Number (CIF). If you plan to import or export within the European Union, you can apply for an EORI number while you’re there. Register with the Social Security System The final step is to register your company with the local social security office. To register, you will need to take: The public deed NIE CIF Form TA 0521 (they have the form there) You can search for your nearest social security office on the Social Security online portal. RUN YOUR BUSINESS! As you will have seen, starting a business in Spain as a foreigner involves quite a few steps, but none are difficult to complete. After you’re set up, you’ll need to purchase several kinds of insurance and comply with the country’s labour laws for employees. From there, focus on looking after your customers and delivering a fantastic product to reap the rewards of doing business in Spain!

How to Start a Business in Spain as a Foreigner

How Much Does It Cost to Start a Business in…

The Expat’s Guide to Banking in Spain