This article will provide an overview of the different requirements for the establishment of your business in Spain. We have made a general checklist regarding the most typical business forms in Spain.
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What you should know:
- Freelancers (“autónomos”) are not required to provide a minimum share capital or register their business to the Mercantile Register – although in certain cases, registration may be recommendable.
- Freelancers are fully liable for the business’ debts, losses, etc.
- In Spain, the most typical forms of company are “S.L.” (limited liability) or an “S.A.” (normally limited liability).
- “S.L.” and “S.A.” are subject to more formalities (e.g. registration to Mercantile Register is mandatory) and are required to provide a minimum share capital at the time of incorporating the company.
- E-business are subject to the same requirements as the other business forms.
Freelancers
Being a freelancer (“autónomo”) in Spain is relatively simple and does not require as much paperwork as the other business forms.
Unlike for the other business forms, it is not necessary for freelancers to provide a minimum share capital, however, the freelancer is fully liable (not limited liability) for any losses, debts, etc. that the business may incur. The best comparison to a Danish business form would be the Danish sole-proprietorship (Danish “Enkeltmandsvirksomhed”).
In order to establish yourself as a freelancer in Spain, you will need fulfill the following requirements before starting your business:
- Application for an identification number in Spain: NIE/NIF documents.
- Registration with the Spanish tax authority (“Agencia tributaria española”, AEAT), “Employers, Professionals and Withholders” Register (“Censo de Empresarios, Profesionales y Retenedores”).
- Registration for the special security scheme for freelancer (“Régimen Especial de Trabajadores Autónomos, RETA”).
- Registration for VAT.
- Specific licenses to operate specific types of businesses may be required.
- Registration in the Mercantile Register is not mandatory for freelancers, however, it is recommendable – especially, if the freelancer is married, in order to limit the personal liability.
Unlike for the other business forms, it is not necessary for freelancers to provide a minimum share capital; however, the freelance is fully liable (not limited liability) for any losses, debts, etc.
Small and medium enterprises, SME
SME’s are known as “PYMES” in Spain.
Incorporation of SME in Spain is subject to certain conditions and formalities, which can vary depending on your “business plan” (e.g. business activity, general and long-term planning/strategy, risk assessment, financial capacity, etc.) and “business form” or “company form”.
Based on your “Business Plan” the next step will be to choose the suitable company form. There are different establishment requirements for every type of company, e.g. minimum share capital, minimum number of business partners, liability towards debtors, etc.
The most typical forms of companies in Spain are “sociedad limitada” or S.L. (limited liability, which is comparable to ApS in Denmark) or “sociedad anónima” or S.A. (normally limited liability, which is comparable to A/S in Denmark). The incorporation of a S.L. in Spain requires a minimum share capital of 3,000 EUR, and the incorporation of a S.A. requires 60,000 EUR as minimum share capital.
Depending on the business form selected, you should follow different terms and formalities, in order to incorporate your business in Spain. As a general orientation, these are some of the most important conditions that you should be aware of if you plan to incorporate a S.L. or an S.A.
- Application for an identification number: NIF document.
- Registration with the Spanish tax authority (“Agencia tributaria espñola”, AEAT), “Employers, Professionals and Withholders” Register (“Censo de Empresarios, Profesionales y Retenedores”).
- Certification from Mercantile Register in Spain, confirming that the commercial name that you intend to use is not currently used by another registered company (this condition is especially important at the time when the company formation is formalized in the “company formation deed” by a notary in Spain).
- The company’s representatives should sign a company formation deed in front of a notary.
- Registration with the Mercantile Register is required.
- Fulfill the tax obligations regarding incorporation and registration of the company: VAT, Corporate tax (“Impuesto de Sociedades”, “IE”), etc.
- Specific license to operate specific types of businesses may be required.
- Registration of the company with Social Security System (“Tresorería General de la Seguridad Social”, TGSS), before hiring any employees (if relevant).
- Legalization of a Daily book, an Accounting book, and annual accounts may be required.
E-business
If you are considering establishing an e-business in Spain, you should know that you will be subject to the same requirements for incorporation as for SME, i.e. it will still be necessary to register to the Mercantile Register, etc.