Procedures for setting up a business in Spain as a non-resident

Discover the difficult procedures for setting up a business in Spain as a non-resident, and how to know in advance which taxes you will have to pay (what nobody had told you before)…

Are you aware of the procedures to be carried out when setting up a company in Spain? Every entrepreneur wishing to invest in our country needs to know in advance which procedures must be carried out, so he or she can be agiler and more far-sighted. We reveal all the details to you.

The Spanish business sector is a really dynamic one. In fact, during the last 10 years more than one million companies have been set up, according to the information published by the rating company Axexor. Investing in our country has important advantages and many foreign investors are aware of them. But for them, the procedures can be enormously complex. Let’s first see which are the procedures for setting up a business in Spain…

Steps to be taken when setting up a business in Spain

Below we explain the steps to be taken by any investor in order to set up a business in Spain. Though there are different types of mercantile companies, we are going to focus on the two most usual ones: the limited liability company (LC or LLC) and the public limited company (PLC).

  • Application of a negative company name certificate in the Company Register (Mercantile Register). This certificate is applied for in order to check that no other company is already operating under a name similar to the chosen one. To prevent a long procedure due to the name denial (and paying the tax again), it is advisable to apply for the 5 names allowed, in order of preference, at one time.This application can be carried out through the Central Company Register website or in person (it can also be done by a legal and tax representative, in the event of non-resident foreign entrepreneurs).
  • Obtaining the NIE (for non-resident foreign investors). The shareholders and the company’s manager, when foreigners, must have a NIE (Foreigner’s Identification Number). You can obtain it after making an appointment if you are in Spain, or visiting the nearest Spanish consulate or through a representative in Spain if you are abroad.
  • Provision of equity capital and opening of a current account. The capital must be deposited in a bank entity, in a current account held by the company. The current minimum capital for a limited liability company is 60000 € and 3000 € for a public limited company. Nevertheless, our Law (Ley de Sociedades de capital) allows the fourth part (€ 15,000) to be disbursed for the constitution, providing for the payment of the remaining 75 percent in the deed itself.
    The bank account must be opened in the presence if the shareholders or the company’s manager. But before starting the process, every foreign investor should be aware of the difficulties inherent to the opening of a bank account with a non-resident NIF (you can read more about this in this post about cash handling services).
  • NIF application. To apply for the company’s provisional NIF (Tax Identification Number) you will need:
    • Model 036 (registration in the taxpayers’ register).
    • The company’s constitutional deed and a copy of it.
    • The concurrence of wills for the constitution of the company.
    • The negative company name certificate issued by the Company Register.
  • Granting of the Constitutional Deed before a Notary. The company’s constitutional deed must be granted by all the founding shareholders, and its contents (regulated by the Royal Legislative decree 1/2010, of 2 july, approving the consolidated text of the corporate enterprises act (Ley de Sociedades de Capital)) are as follows:
    • Shareholders’ identity.
    • Will to constitute a company (public limited or liability limited).
    • Contribution of each member and numeration of shares or stocks
    • In a PLC, initial method of administration should the company’s bylaws provide different options (sole, solidary or joint administrator, or management board).
    • Identification of the administrator or administrators.
    • Pacts between shareholders according to the law.
    • Company’s bylaws with the following contents:
    • Name of the company
    • Company purpose (activities to be carried out).
    • Company address.
    • Equity capital (amount, shares or stocks it is divided in, numeration and rights ascribed to the shareholders).
    • Method of administration (there are different methods, as stated before), term of office and retribution.
    • Method in which agreements are to be deliberated and adopted.
    • Starting date of operations.
    • End of the reporting period.
    • Special rights of the founding shareholders in limited liability companies.
  • Payment of the Spanish Property Transfer Tax and Legal Documents (ITP-AJD). This is an autonomous tax for onerous property transfers, company operations (such as the constitution of a company, increase or decrease of the capital amount) and the legal documents (granting of public deed before a Notary).
    In particular, the constitution of a company is an operation subject to tax, but exempt. In spite of this, it is necessary to present the 600 model duly completed before the Dirección de Tributos of Madrid (in our case), upon presentation of the deed of incorporation in the Mercantile Registry of Madrid for its correct registration.
  • Registration in the Commercial Register (Mercantile Register). With this registration the company acquires legal personality. For the registration, the following documents are needed:
    • Articles of association of the company
    • Photocopy of the provisional NIF
    • A provision of funds of 200 € in the Mercantil Register and the bank certification of it.
  • Definite NIF. In order to apply for it you will have to file in the model 036 online, sending the certification of registration in the Commercial (Mercantile) Register.

Tax commitments according to the type of establishment

Here we will focus on a relevant feature to which (mainly because of poor advice) many non-resident foreign investments do not pay attention when setting up a business in Spain. First, foreign investors can use different formulae: subsidiary company, branch company, representation office… This is an interesting issue, as in order to know their future tax commitments they will previously have to be clear about the type of establishment they wish to open in our country: a permanent or non-permanent establishment.

In Leialta we can advise you about the type of establishment that best fits your interests via a study previous of the constitution, if you are going to set up a business in Spain.

Learn more about the tax obligations of foreign business in Spain.

Speed up the procedures for setting up a business in Spain with Leialta

As you can see, setting up a business in Spain requires a series of complicated procedures if you are a non-resident investor, and they can take longer than you would wish. Moreover, in Spain public workers are not required to speak other languages and most official websites are not translated into English.

So it is best to have a business consultancy specialized in these subjects, such as Leialta. For instance, we will provide you with a cash handling service or will design a tax and legal representative through a power of attorney, who will carry out most procedures on your behalf. Our experts speak fluent English and commit themselves to solve your doubts in less than 24 hours.

With our business consultancy you will have all the information about the best legal form for your company in Spain and the procedures that must be carried out to comply with the law, and will find out beforehand which are the tax commitments for the establishment you choose. Thinking of setting up a business in Spain? We can help you!

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