How to start a business in Spain

In recent years, Spain has become a true entrepreneurial hub, an important business centre in the south of Europe that is attracting talent and major foreign investment. It also has an excellent infrastructure and logistics system that will help you run a successful venture.

To start a business in Spain you need to know the proper steps and procedures and get the right advice to make yours a prosperous enterprise. Starting a new commercial activity always involves a long bureaucratic process, but it is not that different from other countries in the region.

At Breezom, we are sharing some key points for you to get a head start. Nevertheless, you will need to plan ahead, have enough capital and provide the right documentation. As a first step, make sure you know the local regulations and requirements, especially those related to taxation and legal documentation.

First, you need to decide on the type of business you will be setting up. As a self-employed worker, as a sole-trader or partnership, or as a limited company. This will depend on the nature and size of your business as well as your initial investment. Self-employed workers, sole traders and partnerships have fewer legal requirements, although you will need to register your company with the local tax authorities and social security department.

If you are looking to set up a limited company, make sure to do your research, as there are different types and you should choose the one that best adapts to the business you want to open. The most common is usually S.L. or sociedad limitada. With this type of company, you will have to pay the Spanish corporation tax return annually and present statutory accounts, as well as VAT returns (if applicable).

Cost of starting a business in Spain

Setting up as a sole-trader or self-employed worker is the cheapest way to start a business in Spain. You need to cover the cost of running the business and accounting services to file the right tax returns. This includes your personal income tax and VAT (currently levied at rates ranging from 4% to 21% on certain products and services), and social security contributions.

If you want to set up a limited company you can do so at a low cost. In September 2022, legislation changed, making the registration cost for limited companies much cheaper than before. Previously, the process required an initial investment of €3,000, now it will only cost €1. This was changed to encourage the development of companies to boost the national economy.

Can a foreigner start a business in Spain?

In Spain, foreigners can start businesses, but requirements may differ depending on your place of origin. If you want to begin your entrepreneurial journey in this Mediterranean country you will need to obtain a work permit. There are two possibilities:

  • If you are from any country in the EU, this will be a straightforward process. To move to Spain, you will need to register your address and prove you have sufficient funds to sustain yourself. Getting your NIE which will be fundamental to registering your company, opening bank accounts and more.
  • If you are a citizen from any other non-EU country such as the United Kingdom, you will need to get a work visa before starting your new business.

There are two types of business-related visas that allow you to start the process of setting up a business: a self-employed worker visa and an entrepreneur visa. The first option is suitable for small businesses that won’t employ much staff or have a large annual turnover.

  • Self-employed worker visa: This is the most common worker’s permit. To get the visa you will need to submit a detailed business plan, prove your expertise in the enterprise you want to open, and show the authorities you have enough funds to support yourself and your future business until it generates sufficient turnover. For more information about the exact documentation, you should contact your local Spanish consulate.
  • Entrepreneur visa: if you plan to set up a larger company and develop an innovative enterprise in the country, you will need to apply for an entrepreneur visa. The requirements are different, as you will have to present an intricate and detailed business plan, proving you have the skills to be successful in your project. You will also need to prove your financing methods and the Spanish government continues to encourage foreign investments through new legislation for stat-ups.

We hope you find this post informative and it brings you one step closer to starting your business and new life in Spain!