Setting up a company in Spain costs €4500 + VAT (all included).
Spain is the hub of the modern business world and many investors who choose to set up in Spain are joining a strong European region. Foreigners from all over the world come here to invest in Spain's large market. Investing in Spain is very attractive from a tax perspective. It is therefore important to understand how to enter the Spanish business environment and find the right guidelines to help you along the way.
Currently, different types of business forms can be set up in Spain:
– A limited liability company (Sociedad Limitada, SL) is the Estonian equivalent of an OÜ.
A limited liability company (Sociedad Limitada, SL) is the Lithuanian equivalent of a UAB. The SL is the most common type of company in Spain. As the name implies, the shareholders’ obligations are limited to the amount of the capital contribution made by each of them. One of the main advantages of a private limited company is that its investment can be in the form of cash or money in a bank account, or in assets used for business purposes (e.g. company telephone). However, 100% of the initial capital must be subscribed and paid upfront, at the time the articles of association are drawn up.
The minimum investment is 3000€.
To set up an SL, one shareholder (natural or legal person) is sufficient.
– Limited Liability Company (SLNE)
The Sociedad Limitada Nueva Empresa (SLNE) is a newly created limited liability company, a simplified form of the former commercial structure, designed to simplify procedures and offer the possibility of setting up a micro-enterprise as quickly as possible. Although the incorporation
initial timeframe is quicker, it all depends on the speed of the registry, notaries and clients.
The minimum investment, as in SL, is 3000€ and maximum is 120 000€.
The number of shareholders at the time of incorporation is limited to 5 and can only be legal persons. After incorporation, this number may be increased by the transfer of shares.
– Public limited company (Sociedad Anónima, SA)
Public limited company (Sociedad Anónima, SA) – a public limited company that is highly regulated and broadly structured, ideal for large, listed companies. However, this type of public limited company requires annual reports and periodic audits. The company’s capital is divided into shares, which may be registered or bearer and are freely transferable.
The minimum investment is 60 000€, as this type of business requires a larger initial capital. This initial investment can be made as a lump sum (upfront payment) or in successive instalments (instalments).
This type of company is subject to corporation tax at a rate of 25% of the company’s profits.
– Sole trader (autónomo o empresario individual)
The sole proprietorship (autónomo o empresario individual) is the simplest form of structure and one of the most common in Spain. A sole proprietorship, or “autonomo”, is a company with employee status that acts in its own name. The owner-employee has full control over the company. If you intend to provide services as a self-employed professional or freelancer, whether it is a digital marketing service or a painting service, this form of business is the most desirable. It should be stressed that the company’s liabilities are unlimited. In other words, the self-employed entrepreneur is liable for all debts owed to third parties – with all his assets, both present and future.
One of the main advantages is the simplicity of the procedures and registration process.
One of the reasons why the self-employment structure is one of the simplest is that it does not require minimal investment.
You can start your own business without having a single euro in your bank account. Self-employed people are taxed with IRPF (Individual Income Tax) or income tax, as the profits of the company are considered as personal income. In addition, you have to file a quarterly VAT return – a tax included in the invoice.
– Joint Enterprise (Comunidad de Bienes)
Joint enterprise (Comunidad de Bienes) – a joint enterprise which is equivalent to the previous variant, but in this case the ownership of the enterprise is shared between two or more persons. There is no minimum investment and personal income tax is paid individually. However, the process itself is longer as it requires an agreement between the different partners. There are also additional tax registrations.
– Private Partnership (Sociedad Civil Privada, SCP)
Private partnership (Sociedad Civil Privada, SCP) – A private partnership or private civil partnership, an agreement between two or more persons whereby they make any investment (goods, time/labour, any assets, etc.) in a business in return for a share of the profits. A good example is music festivals, which bring together different partners to finance and manage an event over a period of time. Once the activity is finished, it is discontinued until the following year. Thus, a private partnership lasts for as long as the contract provides. Liability towards third parties is unlimited and personal.
Setting up a company in Spain involves several types of taxes:
21
Spain’s current VAT rate is 21%. In certain cases, such as newly established companies, lower rates apply.
25
And the gross margin rate is 25%.
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In Spain, dividends, interest on bank deposits and income from shares are taxed at 19% for amounts up to €6 000, 21% for amounts between €6 000 and €50 000, 23% for amounts between €50 000 and €200 000 and 26% for amounts over €200 000.