Establishing a company in Spain, in cities such as Barcelona, Madrid or the Canary Islands – where the taxation system is particularly favourable – is an easy and convenient financial investment. Spain is a country that exerts a strong attraction for foreign investments due to its tax system and the relative simplicity with which it is possible to set up a company with activities in different market sectors, from real estate to commerce. According to the latest 2020 ranking drawn up by the World Bank – Business Enabling Environment (BEE) – of countries favorable to business, Spain ranks 30th out of 190 countries in the world for ease in fulfilling the bureaucratic procedures necessary to set up a company. From a commercial point of view, the most attractive cities in Spain are Barcelona, Madrid and Malaga.
Taxation system and corporate income taxes in Spain
The Spanish facilitated taxation system imposes a 15% tax for the first two years for newly established companies rising to 25% from the third year onwards.
VAT rates are divided into:
- Ordinary VAT at 21%;
- VAT on food products at 4%;
- 10% VAT for housing, restaurants, hotels.
Exports are VAT exempt, while countries and areas that fall under Spanish legislation such as Canaries, Ceuta, Melilla have no VAT.
All questions answered on costs and procedures to establish a company in Spain
To open a NEWCO company in Spain you need to:
- Identify the partners: one or more natural persons of any nationality and residence; one or more companies;
- Request the company name form: Certificado de denominación social;
- Obtain the NIE number, i.e. the company’s tax code;
- Identify the type of business, that can be: Individual; Sociedad Civil, Sociedad Limitada SL, even with a single shareholder and minimum capital of € 3,000; Sociedad Anonima SA, with a minimum capital of € 60,000;
- Open a bank account to manage the business;
- Sign the public deed of company incorporation;
- Register the company in the business register to request the opening of the VAT number, registration with the Revenue Agency, Social Security.
Branch office or branch in Spain of a company incorporated in another country. Legal obligations and personality
The alternative to opening a new company in Spain is to set up a secondary office or branch of an existing company in another country such as Italy. The branch office of a company in Spain does not have its own legal personality but must have a permanent office in the country and a tax representative resident in Spain. The branch, on the other hand, has its own legal personality and the capital is controlled by the parent office.
The requirements for setting up a branch and / or secondary office of a company in Spain are the same as for setting up a new company. However, for the secondary office and the branch it is also necessary that the administrative bodies of the company (Italian or foreign in general) approve an agreement in which the creation of a legal entity of the company in Spain is approved.
Secondary office or branch office in Spain of a company incorporated in another country. Legal obligations and personality
The alternative to opening a new company in Spain is to set up a secondary office or branch of a company already operating in another country, such as Italy. The secondary office located in Spain does not have its own legal personality but must have a permanent seat and a tax representative resident in Spain. The branch office, on the other hand, has its own legal personality, and the capital is controlled by the ‘mother’ company.
The requirements for setting up a branch and / or secondary office of a company in Spain are the same as for setting up a new company. However, for the secondary office and the branch office it is also necessary for the company administrative bodies (Italian, or foreign) to sign an agreement in which the creation of a legal entity of the company in Spain is approved.
FAQs on setting up and opening a company in Spain:
What is the minimum capital to set up a company in Spain? R- Minimum € 3,000.
How many shareholders are needed? One or more? And in the case of one shareholder, is the capital to be paid greater? R- Minimum one shareholder, with a minimum capital of € 3,000.
How long does it take to found a company in Spain? R- About one month.
What is the main taxation on turnover and dividends? R- 15% for the first two years of activity. The general tax rate is 25%. The distribution of dividends is not taxed in Spain when the shareholder is an EU entity with a minimum holding of 25%, the rest will depend on the DTA or 19% for non-EU / non-DTA.
How much are lawyer fees to set up a company in Italy? And what are the other costs, roughly? R- About 1,000 / 1,500 Euros.
What is better? Opening a new company or a branch office? In both cases, is it an EU company or a non-EU company? R- For tax purposes there is a slight difference. However, for trade and commerce it would depend on the investor’s objectives.
Is it mandatory for the CEO to reside in Spain? Is residence in Spain required to activate the company and operate? Is residence in Spain mandatory to open a bank account? R- Tax residency of the Spanish CEO is not mandatory if the entity is tax resident in Spain. Companies can operate with non-resident bank accounts.
Is the VAT number easy to obtain? How much does it cost? R- Yes, it is mandatory. The cost amounts to 500 €.
Ask for more information. Get in touch with the firm by filling out the Contact Form
