Here you will find information that will help you with starting your own company or business in Spain. Examples of things that are being explained here are: which organizations in Spain can advice you, which certificates do you need to start a company and which types of business entities you have in Spain (including the advantages and disadvantages). Next to this you will find some useful tips for starting a company.
 

Why should you start a company/business in Spain?

 
Spain is globally a pleasant country to live and work. The quality of life in Spain is generally high thanks to the sunny weather, friendly people, interesting culture, relatively many holidays and the Mediterranean lifestyle. Although there’s changed much since the past years, the bureaucracy in Spain is much higher than in many other European countries. This means you will have to take time to arrange your things.

Where do you have to go when starting a company/business?

If you want to start a business in Spain it is advisable to first visit the Chamber of Commerce, for more information look here

Also for younger people (till the age of 35) there’s an organization that helps with starting a business, for more information look here

For help with writing your business plan and for doing a feasibility study you can go to the organization SECOT


How can you set up your company/business?

 
When you want to start a business it is important that you first come up with a good product or concept.

You can collect information concerning the founding of a company at the Chamber of Commerce (Cámara de Comercio). On the Cámera de Comercio’s website you can look up the address of the nearest establishment.  The Spanish CvC can provide you with lots of information you need for founding your company. Furthermore the CvC can answer many questions regarding this, like: Are there any subsidies available for my company? What’s the best type of entity for my business? What are the costs? It can be the case that you can get subsidies for your sole proprietorship  but not for your limited liability company.
 

What are the required standards for the building where my company is housed?


For example look at: fire safety, development plan, permits and so on. These  things can also be asked at the Cámara de Comercio.

Next you can choose a type of entity for your company. Just like in England you can choose from different comparable forms:
The most common ones are:
  • Sole proprietorship (Autónomo or Empresario Individual)
  • General partnership (Comunidad de Bienes)
  • Limited company (Sociedad Limitada, S.L.)
To start an SL you need an initial capital of  €3005,06.
An important element in founding a company is, like said before, writing a business plan in which you elaborate your idea. Among others, you have to give an extensive description of your concept, market research, feasibility study and a marketing plan. In case you need help with the writing of your business plan, you can go to SECOT, as mentioned above. If you’re younger than 35 it is possible to do a free course as preparation for starting of your own business, also at SECOT.

Since the credit crisis, it is much harder to get a loan. You will find it nearly impossible to get a bank loan unless you own a property or have a salary and plan to run your business on the side whilst still working.


Costs


You will need to pay an accountant or Gestor to set up the company. Next to this you need to obtain accounting books and get them stamped by the Mercantile Registry office before commencing any business activity. You will also need a “libro de socios” which records the contributions of each shareholder, and  a “libro de matricula” that shows any staff you employ have been registered correctly.

Once trading, you will be required to file tax returns annually

In case you choose the company entities Autónomo or Empresario, or a Comunidad de Bienes,  there aren’t any establishment costs attached to the founding. Though, when starting one of these types of businesses, take into account that you have to pay a monthly amount of money to the Securidad Social or social insurances.

With a ‘Sociedad Limitada’, next to the starting capital you need to deposit, you also need to pay start up costs (like legal fees) of about €100


Taxes you need to be aware of


Of course Spain has also taxes that you need to bear in mind.
  • Impuesto de Socidades (or Corporat Income Tax)
  • The standard corporate income tax in Spain is 35%
  • There are certain tax incentives for companies with a turnover less than 8 mln Euros
For example: - A tax rate of 30% on the first €120.00 of the taxable income
- For investments in communications, information technology or internet you can get a 10 % tax credit.
 

VAT Tax or IVA

IVA (Impuesto al Valor Agregado) is a turnover tax, a tax the government levies over the sales on products or services.

Tariffs IVA
In Spain there are two common IVA tariffs which were raised by the 1st of July 2010. The low IVA tariff is 8% (formerly 7%) and the high IVA tariff is 18% (formerly 16%).

There are a few exceptions on the IVA. The IVA tax is for example not being levied in Ceuta and Melilla (the two enclaves in Morocco). There you can buy all products tax free.

On the Canary Islands there’s only one IVA tariff. There it isn’t named IVA but IGIC instead. This is Impuesto General Indirecto Canario. The tariff is always 4,5%.

Furthermore there’s a super low IVA tariff of 4% for certain products, like for example books.

The paid Spanish IVA can be claimed back in many cases. Think of reclaiming the Spanish IVA concerning costs for attending a fair or congress, import of goods, hotels and restaurants, gasoline and toll, hiring of labour, invoicing of costs and so on.
 

Employment law


In Spain employment is very regulated. This of course for protecting employee’s rights. The most important thing for employers and employees is to be aware of the different types of contracts, social security requirements and work contracts when considering to work or start a business in Spain.

Things to watch out for as an employer:
  •  Salaries in Spain are lower than in the USA or Northern Europe
  • If making a salary offer, be aware to give a gross annual salary (sueldo en bruto), so there aren’t any surprises
  • A lot of businesses avoid giving ‘ indefenidos’ or indefinite contracts because laying off employees is quite difficult in Spain.
  • You can never be too careful with issues concerning your employees. Spain isn’t always that strict with regulations except when someone gets fired



Types of contracts

 

The Indefenido or Indefenite contract

Here you have the normal indefinite contract and several types of indefinite contracts with government incentives. The standard characteristics in the normal indefenido contract are as following:
  • Without any other contract type, the contract is presumed to be a normal indefenido
  • Repatriation bonus for improper dismissal is paying a 45 days salary for every year worked to a maximum of 42 months
  • Financial incentives or social security subsidies don’t count.

When to use indefenidos with incentives:
  • With People older than 45 that have been unemployed for 1 year or longer
  • Women, that are also unemployed for 1 year or longer, that have been hired in sectors where they have been traditionally under represented
  •  People between 30 and 44 that are unemployed for 1 year or longer
  • Unemployed people under 30 and people with disabilities/handicaps

Characteristics of an indefenido with incentives are:

  • Repatriation bonus for improper dismissal is paying a 33 days salary for every year worked to a maximum of 24 months
  • Tax benefits
  • Subsidies up to 75% from the social security contribution of the employer
Like said before, indefenido contract are quite rare nowadays cause of the difficult procedures when laying off employees.


The Temporary contract

Here you got several temporary contracts:
  • Contract which is temporary for a service or specific project (uncertain duration)
  • Casual contract as result of overproduction, this contract has a duration of maximum 6 months
  • Contract to substitute an employee until he/she returns to his/her job
  • Contract for work experience. This is a contract mostly arranged with universities or college regarding student that have to do internships (6 months to 2 years)
  • Trainee contract. This is a contract for people aged 16 to 21 that not necessarily have to obtain work experience. (6 months to 2 years)

What do I need to pay to Social Security as an employer:

 
Reason for contribution            Employer    Employee    Total

Standard                                    23,6%           4,7%         28,3%
Unemployment*                            6,0%           1,6%         7,6%
Other**                                         2,0%           0,1%         2,1%
Total                                           31,6%           6,4%         38,0%

The percentages displayed above can be slightly different looking at the work contract*, salary guarantee in case of failure, professional studies, add amounts looking at the professional classification of the employee**.


The ID numbers in Spain

 
Finally here is some information about the ID numbers necessary in Spain.

NIE

This is the Número de Identidad de Extranjero, or your identification number in Spain. You need this number for:
  • filing your taxes
  • establish a company in Spain
  • opening a bank account
The NIE number exists out of an ‘X’ followed by some digits (7 or 8) and then again a letter.


DNI

The Documento Nacional de Identidad, it is the ID number for Spanish citizens.

NIF

The Número de Indentificación Fiscal or tax ID number. For Spaniards it’s the DNI and for foreigners it’s the NIE.


CIF

The Certificado de Indentificación Fiscal, or the tax ID number for all companies. It is a letter followed by 8 digits. The letter refers back to the type of company, most common is the ‘A’ for a Sociedad Anónima and a ‘B’ for Sociedad Limitada.


Social Security Number

As an employer you have to apply for a social security number for you employees, at least that is when it’s the employees first job in Spain. For you as self-employed, you apply yourself to get the number.
 

CCC Number

The código de cuenta de cotización, this is your social security number (employer).
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