Thinking of starting a business in Spain? Our law firm helps you to set up your company anywhere in Spain in less than twenty days after we received all the needed documents. We listen patiently to your business plan and advice you accordingly about the best choice for your new company. This with regards to share holders NIE, tax office registration, company bank account and the social security registration. We also assist you at the notary for the company incorporation deed signature, and we handle the registration in the Companies Registry and the Tax office, as well as your VAT number application.
Setting up a Business in Spain
Is it impossible for you to fly to Barcelona to incorporate your company? We suggest you to sign a Power of Attorney to allow us arrange the whole process on your behalf as fast as possible. No matter where you are resident, we explain to you how to get the Power of attorney signed, translated and legalized.
The first step in the incorporation process is about registering the company name in the Central Companies Registry (Registro Mercantil Central), to this purpose you will be required to make available to us, different name options for the application endeavouring to be as original as possible, just to make sure that at least one of the names due to the frequent likelyhood that some of the names would have been taken already by other companies. We would suggest to you a list of possible options in case all of yours are already taken. We would submit the application on behalf of the shareholders, and pay the fees to the registry. A notification would be received within the following three days confirming the name registration or denying it with an explanation of the reason for denial.
If you don’t have the Spanish citizenship and you don’t have a residency permit, as a shareholder or director, you need to apply for a NIE number before opening a bank account, registering yourself in the tax office, or signing the incorporation deed. We assist you or even apply for it on your behalf in the Police Station if you are a E.U. citizen, or in the Foreigners Office if you are not from a E.U. country.
Our Law firm asks for an appointment, fill the form, pay the tax and pick up the NIE certificate to start the next step in the incorporation process.
Once the NIE and the company name certificate are issued, we will be able to apply for the company bank account, even though the company is not yet created. In Spain the banks allow you to open a bank account with only those two documents (NIE and company name certificate), although it will not be operational until the whole process is completed. It will be used only to establish the initial transfer of the company capital. The minimum required is 3.000 Euros for a Limited Liability company (Sociedad Limitada), and once the money is transferred, the bank will issue a Company Capital certificate.
After this stage, the money will remain blocked in the bank account until the company deed is signed, registered and delivered to the bank, in order to finish the bank account application. Once this is done, you will receive all the account details and the account becomes operational. If you have any doubt regarding which bank to choose, our office will advice you according to your needs.
Incorporation deed / Express Companies
Since the moment we receive the NIE, the company name and capital certificates, we will ask for an appointment in the notary for the incorporation signature. The Company bylaws have to be written according to the company activity, shareholders and directors, so it’s basic to have a clear picture about those points at this stage. Depending on the company activity it can be sent to the Companies Registry in a telematic application, which supposes a quick registration. Those are called “Express companies”, and are possible only when the shareholders are physical people, and not other companies.
The company registration has different stages. After the incorporation signature, and once the shareholders are registered in the tax Office, we can apply for the company provisional VAT number to the tax office. If it is considered Express Company, the deed is sent to the Companies Registry through a telematic application, but if not, it is submitted in person. The registration process takes around twenty days since the registry receives the deed, and it is delivered if 1) it is properly registered, or 2) It can not be registered due to a deed flaw, in which case it has to be sent back to the notary and amended. If the incorporation deed is properly registered, the next step is to apply for the Digital Certificate in the Tax Office.
The system of notification to companies that the Tax Office in Spain uses does not involve surface mail. For this reason every company has to apply for its own Digital Certificate which allows it to receive every single communication, tax requirement and submit any kind of tax statements or applications through this digitalized system. The deadline for applying for this Certificate is three months after the deed signature, so it is the first step to take after the company registration. We will apply for the appointment in the tax office, apply for this certificate through the Official site, and pick up the code on behalf of the company.
Taxation in Spain/ Annual Balance
The final decision after the company registration is to apply for activation in the tax office. This decision depends on the shareholders and company activity, because until this is done, they would be obligated to submit their tax statements quarterly (VAT) and annual (company tax).
This application has to be submitted using the 036 form, which has to be filled out to reflect the specific company activity, and the date this activity began. In the event the company decides to stop the activity, the communication to the tax office must be done using the same form.
The current taxation format in Spain for companies is 15% of the profits during the first two years of existence of new companies. After this period, the tax rate rises up to 25% and for a 300.000 Euro profit, the rate would be 28%. The maximum tax rate for companies is 30%.
The general VAT rate is 21%, and is paid by invoice issuing companies, the only exception to this are companies domicile in the Canary Islands, or European companies in case the Spanish one has the European VAT number. Otherwise, the VAT has to be charged.
If you have further questions about Setting up a Business in Spain, please do not hesitate to contact us.
E.U. V.A.T. Number / R.O.I.
Spain is the only country in the E.U. wherein, company VAT numbers are useless when it comes to including VAT in the invoices issued to other E.U. companies.
If you have a company in Spain and you want to invoice other European companies (except Spanish) without V.A.T., previously you have to apply for E.U. V.A.T. number in the Tax Office after the company registration process. Once the company is created and proper-ly registered you will be able apply for its registration as an E.U. operator.
After the application, the tax office will request some documents to prove that the company activity is current and regular, like any invoices issued to other companies and ac-tivity reports. You may have an inspection in the company. This could be tough, because the tax office expects a separate and specific office for your company with someone staying in-side that works or represents your company.
If the tax office finds everything is all right, they will issue the decision including the number in a few months. Its application can be submitted for non resident companies too, which has already their Spanish VAT number.
Do I really need a company in Spain?
Before deciding to create a company, it is essential to have a clear picture of the ac-tivity, because depending on your needs, you may be register your foreign company as non resident in Spain, instead of creating a new one.
If your activity does not need any physical office or address in Spain, and you’re not going to be billing any Spanish companies with the Spanish one, because you’re plan is to invoice them through your foreign company, you can even have employees with your non resident company. If you choose this option, you would only be obligated to pay the compa-ny tax in your country, and not in Spain, except the VAT you get from any Spanish Compa-ny.
If this solution fits to your needs, then you have to apply for non resident VAT num-ber.
The required documents for this application are basically your foreign company by laws, a Company Registry certificate from your country stating the company name, address, shareholders, director, capital and incorporation date, as well as the director’s passport copy and a Power of Attorney to manage the application on behalf of your company.
Every single document has to be translated to Spanish by a Sworn Translator, and legalized by the Hague Apostile, otherwise the tax office won’t accept it, and you will have to start again the whole procedure.
Once the application is submitted, and after the document verification, a new VAT number will be issued for your foreign company, which allows you to open bank accounts, or register it in the Social Security for the purposes of hiring of any employees.
Since the Express companies regulation are in force, the shelf companies becomes quite useless, as it is faster to create a new company than using an existing one. This hap-pens because after a shelf company is sold, a new deed has to be signed by the sharehold-ers and the seller including the shares transmission, the new company name (attaching the new name certificate), the new address and sometimes the company activity. This deed has to be signed, registered, and re activated in the Tax Office, which needs more time than managing a new company creation deed.
The registration is definitely faster, the process is much simpler, and above all, there is no risk of buying a company with outstanding debts that would be assumed by the buyer if the seller does not say anything about it.
Branch in Spain (Sucursal)
A branch in Spain is theoretically part of a foreign company in Spain, and has a dif-ferent regulation from the Limited Liability companies. Those companies are thoughts for big foreign companies who need to make big investments for starting the activity, and their crea-tion process is longer and requires a lot of information from the foreign company, being that they are linked.
If your activity is a common one, and you’re planning to make the minimum invest-ment (3.000 Euros) we don’t recommend you to open a branch, because it will take longer, but mainly because the main foreign company balance will be required before submitting the Spanish branch balance, which is hard to deal with because deadlines taxes in every coun-try are different.
However, you have the choice to set up a Limited Liability company appointing your foreign company as share holder, or the foreign company shareholders as shareholders in Spain, which simplifies quite a lot the process, as well as the accounting and taxation pro-cess.