Company Registration in Spain
Spain is a doorway to the European market, making it an ideal destination to open an entity. Indian residents seeking to start a company in Spain have to plunge into various legalities, including securing an NIE and opening a bank account. Visa consideration is another area that plays a vital role in setting up a business in this part of the world. Let’s take a detailed walkthrough of the process concerning company registration in Spain and learn about key norms.
How Can Indians Apply for Company Registration in Spain?
All non-native persons or Indians are required to register as non-residents and apply for NIE. Those already running an entity in India can opt for a brand office to diversify their footprint. Such entities are responsible for each and every action of their branch offices.
It is worth noting that all branch offices, local or cross-border, must register with the Spanish Mercantile Registry. Foreign branch offices can also plunge into a legal tie-up with local businesses to legalize their existence. The following business arrangements can be chosen for this purpose.
- Unión Temporal de Empresas (U.T.E.) (Temporary Joint Venture).
- Agrupación de Interés Económico (A.I.E.) (Economic Interest Grouping).
Types of Company Structures in Spain
There are plenty of company structures available to foreign entrepreneurs for registration purposes. Each structure adheres to distinct legalities and establishment norms. Common structures available for company registration in Spain include the following:
Empresario Individual (Autónomo):
This is best suited to individual entrepreneurs, offering minimal operational compliances and unlimited liabilities.
Sociedad Anónima (S.A.):
This is akin to a public limited company and ideally suited to businesses with a larger footprint. The minimum capital required to set up a company is €60,000. This structure supports public share trading. It is often used for entities seeking sheer funding or to go public. Registration of such a company with the Mercantile Registry is vital.
Sociedad de Responsabilidad Limitada (S.L or S.R.L.):
This is equivalent to LLC i.e. a limited liability company. It is majorly preferred by medium businesses or entities with a moderate business footprint. The minimum share capital required to incorporate such a company has been capped at €3,000. As the name suggests, this structure allows partners to enjoy liability to the extent of their contributions. Again, registration with the Mercantile Registry is a mandate for such a company.
Other key structures include the non-stock corporation and joint ownership. Both structures are distinct and attract unique legalities. Get in touch with Adviso to know more about them.
Steps to Secure Company Registration in Spain: A Guide for Indian Entrepreneurs
The process of securing company registration in Spain differs based on the business structure. The section below entails the generalized procedure:
Step 1: Secure Foreigner’s Identification Number (NIE):
None can serve the business endeavors in Spain without this number. In the case of the overseas applicant, NIE is issued alongside the visa, reinforcing the permission to work in Spain.
Step 2: Select an apt business structure
Decide which business structure best suits your entrepreneurial affairs and goals. Refer to the structure above before finalizing your decision. The selection should be based on your appetite to withstand compliance and taxes. Once selecting the structure, draft a contract with a partner and prepare the charter document. A notary might plays a key role here.
Step 3: Choose a company name:
This step involves selecting a unique company name and having it registered with the competent authority i.e. Mercantile Registry.
Step 4: Get a Tax Identification Code (CIF):
After name reservation, secure the CIF from the tax authority viz. (Agencia Tributaria).
Step 5: Open a bank account:
You have access to various designated banks in Spain that can oversee your banking affairs. However, probing each one of them for flexibility and performance is highly recommended.
Step 6: Adhere to tax reporting obligation:
Adhering to Spanish tax laws and requirements is paramount to staying compliant and penalty-free. Businesses with taxable income must file their return with the competent authority. Get in touch with Adviso to know about the tax applicability.
Step 7: Follow labour laws:
Spain has a comprehensive legal framework for the protection of workers’ interests. Different provisions have been enacted under a law, spanning different facets including contracts, wages, and working hours.
Note: Do not forget to register with the Spanish social security system.
Step 8: Secure industry-specific licenses or permits:
You may need to visit local or regional authorities to secure industry-specific licenses, especially if your business belongs to sectors like beverages, food, health, production, etc. Get in touch with Adviso to get clarity on that.
Cost Consideration for Running a Company in Spain
The business footprint will decide how much cost you will bear. Since every business adheres to distinct requirements, estimating exact running costs shall be taxing. However, one can consider the given expenses to get a fair idea about the operational cost.
Salaries
Employee salaries constitute the larger portion of the company’s expenses, generally speaking. All companies must meet the minimum salary threshold (which is €15,108/year) to stay compliant.
Social Security contributions:
For employers, social security contributions can be overwhelmingly expensive when contrasted with India. Employee contributes almost 30% of the worker’s wages for social security.
Office and maintenance:
Office rents, stationeries, maintenance, etc can add to the company’s expenses, elevating the overall operational cost. It can be financially taxing to run a business in locations like Barcelona and Madrid. The smaller cities, on the other hand, are more budget-friendly and ensure cost-effective business operations.
Taxes:
In general terms, a 19% / 24% withholding tax rate applies to those reaping dividends, interest payments, rents, royalties, or management fees within the Spanish territory. The tax system comprises three levels of taxation: National level, State level, and local level. Corporate tax and personal tax fall under the state level.
Professional services
With business comes the operational and legal implications, which require expert supervision. Hiring professionals to manage these would incur significant expenses.
Licenses and Permits
Some licenses or permits require annual renewal. Therefore, factoring these into account is paramount.
Conclusion
So that is our take on the company registration in Spain. Let us know if you have any doubts regarding anything. Transforming your overseas business into reality requires careful research of various factors including compliance, taxes, permits, expenses, etc.
Skipping any of these factors would incur ambiguity, making the overall process bothersome. That is why Adviso is here to help. Adviso takes pride in facilitating top-notch global incorporation services. So whether you are planning to take your business abroad or just starting from scratch, Adviso lets you meet every goal with zero hassle, unparalleled professionalism, and undisputed clarity.
Read Our Article: 8 Undeniable Benefits of Opening A Business In Indonesia
