Guide to create a company in Spain
How to start a business in Spain?
Below we present the guides to set up a company in Spain:
For national / foreign resident entrepreneurs
There are different options whether you are a national or have a residence permit, but we start from the premise that you are a small business owner, therefore you have the following options:
- Develop the activity for which you have decided as an individual (Autonomous, Freelance)
- As a company (commercial company); normally the most common corporate form is the Limited Society.
The choice of one form or another depends on several factors.
Autonomous or Limited Company?
There are economic, legal or image conditions that determine what type of company to choose when we decide to start a business (Remember there is no magic formula). When setting up a company, it is necessary to choose the legal form that best suits the needs of the new employer.
The law offers two clear options: act as an independent or create a society. Although in the second case there are different types of legal forms, the limited society is the most common, especially in the case of small entrepreneurs.
There are no fixed rules to choose one or the other type of company, but there are general criteria that can be consider while creating a society: read more details
Whether you are industrial, merchant or professional, the individual entrepreneur is obliged to contribute to the Social Security through the Special Regime of Self-Employed Workers. Certain liberal professions are exempt from the payment of this contribution, when their Professional Association or Association guarantees this assistance coverage through an agreement with the Social Security.
The Ministry of Economy and Finance publishes every year the bases for The Social Security contribution.
The worker must pay a monthly fee, an amount that varies according to the chosen base. Thus, the higher the base, the more the quota will increase, which will also affect the volume of coverage offered by Social Security due to illness, work disability and retirement.
If you decide on the form of Limited Society, basically, there are 2 options;
- Constitute the Limited Company yourself.
- Buy a previously incorporated limited company; there are several companies and professional offices of lawyers and economists, specialized in the sale of already established companies.
Each of the above options has its advantages and disadvantages. Depending on our particular needs, amount of time available, and desire, we will choose one or the other option.
However, broadly speaking, it will always be more economical to establish a society directly; but in return, buying it already established has a number of important advantages that we will detail later.
For foreign investor / entrepreneur.
If you are a foreign investor and want to establish your company in Spain, you have the following options:
- Opening of a branch or a representative office.
- Constitution of a Spanish company: the anonymous society (Inc.) or limited liability companies (Ltd.). (This will become a subsidiary, if the parent company is becoming international).
- Association with other entrepreneurs already established in Spain: joint ventures are a frequent way to establish themselves in Spain; they allow sharing risks and combining resources and experience. You can distinguish different forms of joint venture. (For more details, we encourage you to make a consultation).
However, it is not essential to invest in Spain to establish a new entity or to associate with existing ones. You can have a presence in our market, without having to establish a physical operations center in Spain, through:
- Distribution agreements.
- Realization of operations through an agent.
- Realization of operations through a commission agent.
- Establishment of a franchise.
In addition to through a subsidiary or a branch, the foreign investor can operate in Spain through a representative office. Among its most relevant features, are:
- The representative office does not have its own legal personality independent of its parent company.
- In general, commercial formalities are not required for opening, although for fiscal, labor and social security purposes it may be necessary to grant a public deed (or document issued before a foreign Notary Public, duly authenticated with the Hague Apostille). or any other system of legalization that may be applicable) which shall include the opening of the representative office, the allocation of funds, the identity of its fiscal representative, natural or legal person resident in Spain, and its powers. There is no need of registering the opening of the representative office in the Mercantile Registry.
- There are no formal administration bodies, but the actions carried out by the representative of said office by virtue of the powers conferred on him.
- In principle, the activities of the representation office are limited, being essentially coordination, collaboration, etc. That is to say, these offices cannot carry out economic activities, since they should be limited to market studies and are usually the previous step of many companies to make the decision to settle permanently.
- The non-resident company is responsible for the debts contracted by the representative office in its entirety.
The opening of a branch requires the granting of a public deed, and do not need to be registered in the Mercantile Registry. From the point of view of foreign investment legislation, the branch must have an assigned capital, which is not subject to any requirement on minimum amount.
The branch must have a legal representative empowered to administer the affairs of the branch. There are no formal administration or management bodies. It usually works with business relationships with third parties as a partnership.
The choice between setting up a branch or a subsidiary in Spain may be influenced by commercial reasons (eg a company may be considered to provide a more "stable" presence than a branch) or for reasons of legal certainty (with the subsidiary the liability of the subsidiary is limited). Partner).
In general terms, the requirements, formal procedures and costs related to the opening of a branch are very similar to those of the constitution of a subsidiary.
If the company has decided to internationalize and the parent company decides to establish itself in Spain, it can do so through one of the mercantile companies; by performing this procedure, you are creating a subsidiary of your company in Spain.
Types of commercial companies
Spanish legislation provides for various forms of commercial companies, which may be used by foreign investors.
The most important are the following:
The limited liability company (Ltd.) has been gaining popularity as a result, among other reasons, of its extensive regulation under Law 2/1995 and to require a minimum capital lower than that required for public limited companies.
As a summary, we attach a table with the main differences between the three proposals presented: read more details
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