If you’re setting up a business in Spain, doing it as a limited company has several advantages over being self-employed.
It is, however, a more complex operation and involves considerably more paperwork.
Unless your Spanish is very good you’ll probably need to hire the services of a professional to help you with this.
Setting up a limited company in Spain takes the following steps:
Step 1: Register the name of your company
You must submit your business name to the Central Business Registry in Spain (Registro Mercantil Central) to obtain a certificate that states your business name does not belong to any other registered company.
You can submit your business name proposals online
Top tip – choose 3 possible business names and try to make them as original as possible. This increases the chances of it being unique and therefore available.
Once you receive the certificate it is valid for 6 months. However, you must register your business name at the notary (see step 4 below) within 3 months of receiving the certificate.
Step 2: Open a company bank account
You should open an account in your company name at the bank of your choice. Shop around for preferential terms. You must deposit €3,000 in the account and obtain a certificate from the bank stating that this amount (the minimum capital to set up a sociedad limitada) is available in your account.
Top tip – make sure the bank of your choice knows you are opening a business account so that you qualify for preferential account and loan terms, if available.
Step 3: Establish the company’s rules
These are similar to articles of association in the UK and known as ‘estatutos sociales’.
Given that this is a legal requirement in Spain you may wish to take professional advice on this aspect of setting up a company. The estatutos sociales set down important aspects of your business such as:
- The company’s business activity.
- The company’s address in Spain.
- The company’s capital (legal minimum €3,000) and shareholders (legal minimum of one).
- The company’s administrative system.
Step 4: Set up the company deeds
In Spain, this step is carried out before a notary public (notario) and is the final stage before the company can be registered. At the notary you must present the following documentation:
- Certificate stating your company name is unique and available.
- Bank certificate stating you have deposited the required capital.
- The company’s estatutos sociales.
- Proof of identity for each shareholder.
The notary checks all the documentation and prepares the company title deeds.
These are signed by the notary and all shareholders. The notary charges a fee based on a percentage of the amount of company capital.
Top tip – ask around for recommendations on which notary to use. Many on the Costas speak English.
Step 5: Pay the set-up tax
All new companies in Spain have to pay tax when they set up. The amount is 1% of the company’s capital – e.g. €30 if your company’s capital is €3,000.
You should pay this at your local tax office within 30 days of signing the company title deeds.
Step 6: Register the company
You must now register your company at the Business Registry (Registro Mercantil) in the province where you have registered your company address. You must do this within 2 months of obtaining the company title deeds.
Step 7: Set up the company’s tax obligations
The final step in setting up a company for your business in Spain is to visit your local tax office to do the following:
- Obtain the company tax number (número de identificación fiscal, known as NIF or CIF).
- Sign up for the appropriate tax number (depending on your company activity).
Top tip – hire a professional to help you with the day-to- day administration of your company to make sure it meets all legal requirements.
For more details on tax obligations please see here.