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Running a business from Spain: all of your burning questions answered.

Barcelona: running a business

Setting up or buying an existing business in Spain is not as daunting as you might think. Despite the language barriers and bureaucracy, there is plenty you can do to get started right now. 

The benefits of running your own business in Spain

Apart from the sunshine, beaches and food, you mean? Well, there’s also the fact that the euro has made the economy in Spain relatively stable, there are plenty of international communities dotted around that need niche, bespoke services, and the cost of living (and therefore wage budget) is low. It’s reasonably hard to find high-salaried work outside of the service industries for people living near tourist regions, so setting up on your own can mean taking some control of your earnings and lifestyle. 

Our podcast guest Jonathan, a freelance personal brand strategist, speaks of the joy he found after buying a townhouse apartment in Oliva, Valencia. A digital nomad, he was looking for an area with accessible road links and good high-speed internet coverage so his business could thrive. 

The difficulties you might face

The downside is the red tape. Spain is a bureaucratic country. Yes, wage costs can be low, but you need to pay the various taxes and comply with other legal requirements.  

However, you can hire a gestor to help you. This part accountant, part solicitor’s role is to help people navigate the complicated public administration system. A good gestor will be able to help you manage the paperwork of setting up your own business.

Also, Spanish culture will be different from your home country. This might affect your marketing strategy and in-house communications. The laid-back lifestyle affects office etiquette. For example, deadlines might be seen as flexible and although Spanish siestas are a thing of the past, long lunches are still standard. 

EU citizens wanting to set up partnerships or act as sole traders have the simplest and quickest route to success. But if you’re outside of the EU, you’ll need a work permit to move to Spain and if you also want to set up a limited company, you’ll need to set aside some time and finances to make it happen.

If you are buying an existing business

First, make sure you read the paperwork carefully. Treat it like buying a house and get a legal professional to read the contracts before you part with any cash. If you’re happy with the licenses, branding and established customer base, all you need to do is register the change of ownership with the local town hall and set yourself up to pay tax.

How to set up as self-employed

Self-employed people are known as autónomos. 

If you want to set up as self-employed in Spain you will need to register your business with the Spanish tax authority and the Spanish Social Security Department

You can choose between two methods of paying your taxes. Either a fixed quarterly VAT & income tax return – based on estimated profit and loss using the “modulos” system – or a flexible quarterly VAT & income tax return based on your actual profit and earnings using the “direct estimations method.” 

Self-employed workers can also take on employees and expand their company as the business grows.

How to set up an unincorporated company

Setting up as a sole trader (empresario individual) or opening a partnership (sociedad civil) are two of the quickest and cheapest ways of setting up a business in Spain. 

It means you are responsible for your own personal tax return and there is no legal distinction between your business and personal assets. So if the business goes into debt, you will be personally liable. With the relevant documents, your business can be registered within around 15 days of the papers being signed, but you might need to obtain an opening license if you have business premises.

How to set up a limited company

There are many types of limited company structures in Spain but the most common is sociedad limitada, which will protect you personally if the business goes into bankruptcy. You’ll need to produce an annual corporation tax return and accounts. 

In this order, you will need to: 

1. Apply for the company name with the Mercantile Registry

2. Apply for a provisional CIF (company tax identification code) and register for VAT.

3. Open a business bank account and deposit €3,000 (which is the minimum share capital) or more.

4. Sign the deed of incorporation in the presence of a notario (a public servant based at the municipal Town Hall).

5. Pay transfer tax on your share capital.

6. Officially register the company with the Mercantile Registry.

7. Get your permanent CIF from the tax office. 

8. Register your company for business tax (IAE) to be issued with a business licence. 

How to set up a non-profit company in Spain

Spain recognises two categories of non-profit companies: foundations and associations. A foundation accepts donations from the public (like a charity). Associations are usually more informal and led by groups who have a common interest (like a social club). Workers for a foundation can be paid wages, but association workers are purely volunteers. It’s free to set up an association but if you want to create a foundation, you need €30,000.

If you are from outside the EU

If you are from outside of the EU and want to come over to investigate a business idea or potential you’ll need to obtain a business visa, which you can do through your Spanish embassy in your home country. They may want to see evidence of your experience and capital before they grant this. 

If you are coming to Spain to begin earning from a business, you need to apply for a work permit. For this you may need to prepare a business plan, any business contracts or commissions and any applicable licensing or registration details specific to your business before you apply. Once you’ve traded for five consecutive years, you can apply for residency and won’t need a work permit.

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