Those wanting to start a business in Spain with partners, separate personal and business assets or grow beyond self-employment (see starting a business) usually set up a company. The information below is general: always use an adviser.
Legal forms
| Form | Features | Minimum capital |
|---|---|---|
| Sociedad Limitada (SL) | the most common for small and medium firms; liability limited to capital | 1 euro, with some safeguards until capital reaches 3,000 euros (Crea y Crece law, 2022) |
| Sociedad Anónima (SA) | for large or listed companies, with transferable shares | 60,000 euros, at least 25% paid up |
| Sociedad Limitada Nueva Empresa (SLNE) | simplified version of the SL | as SL |
| Cooperativa and Sociedad Laboral | companies owned by their workers | variable |
| Sucursal | branch of a foreign company, without separate legal personality | none |
A foreign company wanting to operate in Spain can choose between a branch (sucursal) and a Spanish subsidiary, with different tax and liability consequences.
Steps for an SL
- Name certificate: ask the Central Commercial Registry to confirm that the chosen name is not already in use.
- Bank account in the name of the company being formed, and payment of capital.
- Articles (estatutos) and deed of incorporation before a notary; foreign partners need an NIE.
- Provisional company NIF, issued by the tax agency.
- Registration in the Commercial Registry of the province.
- Tax and employment registration: census declaration (form 036), registering directors and employees with Social Security, municipal licences.
Incorporation can also be done online through the CIRCE system and PAE points, in a few days and at lower cost, especially with standard articles.
Taxes
- Impuesto sobre Sociedades (corporate tax): the general rate is 25%; new companies pay 15% in their first two profitable years, and reduced rates apply to small companies.
- VAT: standard rate 21%, reduced rates 10% and 4%; the Canaries apply IGIC, Ceuta and Melilla IPSI.
- IAE, the business activity tax, from which companies with turnover under one million euros are exempt.
- Employee withholding, employer social contributions and accounting obligations, with annual filing of accounts at the Commercial Registry.
Double taxation treaties govern the taxation of dividends, interest and permanent establishments.
Doing business in Spain
- Personal relationships matter: face-to-face meetings, business lunches (sometimes long) and trust often come before the contract.
- Hours differ from northern Europe, with meetings that may start late and lunches after 2 pm (see traditions).
- Autonomous communities have their own investment agencies, such as Invest in Madrid, Catalonia Trade & Investment and Invest in Andalucía, and ICEX Invest in Spain nationally.
See also the Spanish economy.