Spain has an attractive and open economy and offers a multitude of business possibilities to investors. Its location in Europe, along with a good business framework and good logistic support, make it a suitable place to base an international business or to open the branch of a foreign company. Moreover, Spain offers a positive climate for expatriates and investors who also decide to live in the country.
This guide shows you how to open a company in Spain, from the first incorporation steps to the taxation and reporting requirements for companies.
The company set-up process in Spain
Entrepreneurs wanting to invest in Spain have a number of options when choosing a suitable form of business. The limited liability company (sociedad de responsabilidad limitada, SRL) is the most popular business type, proper for small or medium-sized businesses where the investors have limited liability, according to their contribution to the share capital. The public limited liability company is suitable for larger corporations, which can also be listed on the Stock Exchange.
The requirements for public and private limited liability companies differ, a notable difference being that the public limited liability company (SA) has a larger minimum share capital of 60,000 EUR, with 25% being paid up when the public deed for the company is granted.
The key steps for company formation in Spain
The main steps for company formation in Spain are as following:
– checking the name availability and obtaining a certificate for the use of a unique company name;
– opening a bank account for the company;
– drawing up the company’s incorporation documents;
– granting the public deed for the incorporation of the company (in front of a notary in Spain);
– registering the company with the Companies Registry and obtaining a taxpayer identification number.
There are no restrictions on the nationality for shareholders in Spain. For some foreign investments and the incorporation of an SRL or an SA, entrepreneurs will need to declare that investment to the Investments Registry of the Ministry of Economy, Industry and Competitiveness. When the said investment comes from a tax haven, it must be declared in advance.
Foreign companies can establish their presence in Spain by setting up a branch. This is not a separate legal entity from the parent company abroad, which means that the parent company bears liability for the debts of its Spanish counterpart. Non-Spanish companies can protect their copyrights and trademarks in Spain because the country has aligned its intellectual property protection rights with the EU laws. Foreign investors who need help opening a company and those who want to know more about the applicable laws can talk to a lawyer in Spain.
Requirements for companies in Spain
Spain levies taxes for companies both at a national level and at a municipal level. The most important taxes for companies in Spain are the following:
– the corporate income tax;
– the value added tax;
– capital duty;
– stamp duty;
– transfer tax;
– real property tax.
Companies incorporated in Spain are liable for the corporate income tax on their worldwide profits and capital gains. The value of the corporate tax in Spain is 25% and the rate of the value added tax is 21% (and reduced 10%, 4% and 0% rates are available for certain goods and services).
Double taxation relief is possible in Spain due to a large number of double tax treaties. These agreements help eliminate double taxation for companies that derive income both from Spain and from another jurisdiction and help reduce the rates of the withholding taxes on dividends, royalties, and interest.
Spain offers tax credits for investments in artistic fields, like cinema production, music, and artistic performances and for the employment of young individuals or handicapped ones. Research and development tax credits are also available.
The accounting rules are included in the Spanish GAAP (generally accepted accounting principles) and companies must prepare their annual financial statements according to these rules. Both the SA and the SRL should undergo external audits performed by a registered auditor in Spain.
Investors who want to open a company in Spain and find out more about the regulations for doing business in this country can talk to a local expert.