How to Start a Business in Spain as a Foreigner

Starting a business in Spain involves much more than just a business idea. From developing the plan to launching the activity, the process can be overwhelming, especially for foreigners. Language barriers, lack of knowledge about local laws, and managing paperwork and permits can become significant obstacles. But don’t worry, you’re not alone! Having the support of professional advisors can make all the difference, allowing you to focus your energy on growing your business.

Can I Start a Business in Spain as a Foreigner?

Can I Start a Business in Spain as a Foreigner

Yes! It is possible to start a business in Spain as a foreigner. However, if you want to work in your own business, you will need a residence and work permit for self-employment.

There are exceptions: if you are a capital partner and the work is done by employees or Spanish partners with work permits, you will not need these permits.

Requirements for Non-EU Foreigners

To start a business in Spain as a non-EU foreigner, you must meet the following requirements:

  • Not be a citizen of the EU, European Economic Area, or Switzerland.
  • Not have a criminal record in Spain or other countries of residence.
  • Not be in an irregular situation in Spain or have a ban on entry.
  • Have the professional qualification or necessary experience for your activity, and be registered if required.
  • Demonstrate economic capacity for the initial investment and the ability to generate employment in Spain.
  • Prove sufficient financial resources for your maintenance and business expenses.
  • Comply with current regulations for opening and operating your business.

Requirements for EU Citizens

If you are an EU citizen, the process is simpler thanks to existing agreements:

  • You can start your own business or a branch/subsidiary of an existing business in the EU.
  • Procedures to legalize your status in Spain are easier.

Procedures to Legalize Yourself in Spain and Start a Business

Procedures to Legalize Yourself in Spain and Start a Business

Once you have confirmed that you meet the legal requirements, here are the basic steps you must take to establish your business in Spain:

1. Submit Your Application and Documentation at the Consular Office

Go to the Spanish Consular Office in your country of residence and submit the following documentation, translated into Spanish or the co-official language of the region if necessary:

  • EX-07 application form: Completed and signed in duplicate.
  • Complete copy of your passport: Or valid travel document with a minimum validity of four months.
  • Responsibility declaration or prior communication: If your business activity is retail in a store of up to 300 square meters, submit this document along with the payment receipt for the corresponding tax.
  • List of required authorizations and/or licenses: For other activities, list the necessary licenses and their current status.
  • Proof of professional qualifications: Show that you have the required training or experience for your activity.
  • Proof of investment capacity: Demonstrate that you can finance the project or provide a guarantee from a financial institution.
  • Business plan: Detail the nature of the business, characteristics, financing, employment generation capacity, and the project’s viability.

2. Payment of Fees

Pay the following fees within 10 business days of validating your application:

  • Model 790 code 052, section 2.1: Initial temporary residence authorization (approximately 10.50 euros).
  • Model 790 code 062, section 1.5: Self-employment work permits (195.88 euros).
  • Visa fee: 60 euros.

3. Additional Documentation

  • Criminal record certificate: From the countries where you have lived in the past five years.
  • Medical certificate.

Remember: This is a general guide. Specific requirements and procedures may vary depending on your nationality, business type, and location in Spain. Contact Lexmovea for personalized advice and to ensure you comply with all legal obligations!

Validating Your Business Plan

Starting a business in Spain involves not only having a solid business plan but also demonstrating its viability. To do this, you will need accreditation from a competent professional organization, such as:

  • National Federation of Associations of Entrepreneurs and Self-Employed Workers (ATA)
  • Union of Professionals and Self-Employed Workers (UPTA)
  • Confederation of Self-Employed Workers of Spain (CIAE)
  • Organization of Professionals and Self-Employed Workers (OPA)
  • Union of Associations of Self-Employed Workers and Entrepreneurs (UATAE)

Residence Visa Application to Start a Business

Non-EU foreigners wishing to start a business in Spain can apply for a residence visa for up to one year. This visa allows you to manage the steps prior to the creation of your business and the development of entrepreneurial activities, provided it is innovative and has a favorable report from the Commercial Office.

If You Are in an Irregular Situation in Spain

If you are in Spain irregularly, you must regularize your situation through arraigo (rooted residency) or return to your home country to apply for a self-employment work permit. Arraigo requires demonstrating a minimum of three years of residence in Spain.

If you have been in Spain for less time, consider processing the authorization from your home country through the Spanish consulate. Once granted, you can apply for and collect your visa, and you will need to return to Spain within three months.

Afterward, register with the Social Security to activate your residence and work authorization, and process your foreign identity card within a month.

If You Are Legally in Spain

If you already have a self-employed work permit in Spain, you can request a modification of this permit to start your business. Gather the required documentation, including your residence and work permit, and submit it along with the payment receipt for the corresponding fees.

Steps to Start a Business in Spain Once You Obtain the NIE and Other Permits

Steps to Start a Business in Spain Once You Obtain the NIE and Other Permits

Once you have regularized your situation in Spain and have obtained the NIE and necessary permits, you can begin forming your business by following these steps:

  1. Company Name Request: Choose a name for your company and check its availability with the Central Commercial Registry.
  2. Open a Business Bank Account: Open a bank account in the name of the company to manage its finances.
  3. Sign the Public Deed: Visit a notary to formalize the company’s constitution through a public deed.
  4. Register with the Commercial Registry: Register the company with the Commercial Registry of the province where its registered address will be located.
  5. Apply for a Tax Identification Number (CIF): Obtain the company’s Tax Identification Number (CIF) from the Tax Agency.
  6. Register with Social Security: Register as self-employed (autónomo) or complete the necessary procedures to hire employees, as applicable.

Request the Official Company Name

  • Propose 5 names in order of preference to the Central Commercial Registry.
  • The Registry will grant one, prioritizing the first names on your list and avoiding conflicts with existing names.
  • You can check the name’s availability online before submitting the request.
  • The process usually takes between 24 and 48 hours, and you can receive assistance from a lawyer.

Open a Business Bank Account

  • With the company name, your NIE, and passport, open a business bank account.
  • Deposit at least 3,000€ as the minimum share capital for a Limited Liability Company (SL).
  • In specific cases, you can use assets of similar value, but it’s recommended to use cash to speed up the process.
  • If there are multiple partners, each must contribute their proportional share of the capital.

Establish the Partners at the Notary

  • Visit a notary to define:
    • The company’s director.
    • The names and shares of the shareholders.
    • The company’s official address.
    • The activities the company will engage in (according to the Ministry of Economy’s list).
    • The company’s bylaws and decision-making structure.
  • Present the bank statement showing the minimum share capital.
  • At least one partner must speak Spanish or have a translator.
  • This step incurs notary fees.

Register the Company with the Commercial Registry

  • Submit the deed of incorporation obtained at the notary.
  • The registration may take about 2 weeks.
  • You will receive a provisional CIF to begin commercial operations.
  • There are no taxes associated with this stage.

Register with the Tax Agency

Register with the Tax Agency using the provisional CIF. This will allow you to operate legally and fulfill your tax obligations (VAT, Corporate Tax, annual accounts).

Obtain the Social Security Number

If you plan to hire employees, request a Social Security number for the company. This is necessary to manage your workers’ social security contributions.

Start Growing Your Business!

Once the previous steps are completed, you are ready to start! Consider consulting a lawyer specialized in commercial law to guide you through the process and focus on growing your business.

Types of Companies Foreigners Can Create in Spain

Types of Companies Foreigners Can Create in Spain

Although the Limited Liability Company and the Limited Liability Entrepreneur are the most common options, there are other legal forms available for foreigners who wish to start a business in Spain:

  • Limited Liability Company (SL): This is the most commonly used legal form due to its flexibility and limited liability to the contributed capital.
  • Public Limited Company (SA): Suitable for larger companies that need to raise capital by issuing shares.
  • Limited Liability Entrepreneur: This allows the entrepreneur’s personal liability to be limited to the company’s assets.
  • Branch or Permanent Establishment: An option for foreign companies that wish to establish a physical presence in Spain.
  • Cooperative: A business model based on democratic participation and joint management by the partners.
  • Temporary Business Union (UTE): A temporary association of companies to carry out a specific project.
  • Economic Interest Grouping (AIE): A flexible structure for collaboration between companies with a common goal.

How to Choose the Right Company

Before starting your business in Spain, it’s crucial to understand the different legal structures available and choose the one that best fits your needs and goals. Each type of company has its own characteristics and advantages, so it’s important to understand the differences.

Sole Proprietorship

  • Ideal for: Small businesses and freelancers with activities that don’t require a complex business structure (e.g., painters, web designers).
  • Advantages: Simple setup process with no initial investment required.
  • Disadvantages: Unlimited liability, meaning the personal assets of the entrepreneur are at risk for the company’s debts.
  • Taxes: A sole proprietor pays Personal Income Tax (IRPF). If your income exceeds 50,000-60,000€ annually, consider a Limited Liability Company (SL) to optimize your tax burden.

Self-Employed vs. Sole Proprietor

Although similar, they are not the same. A self-employed person can be a sole proprietor or a manager of a company, whereas a sole proprietor is always self-employed.

Limited Liability Company (SL)

  • The most popular structure in Spain: Offers flexibility and ease of incorporation, with a minimum capital of 3,000€.
  • Advantages: Limited liability to the contributed capital, protecting the personal assets of the entrepreneur.
  • Taxes: Pays Corporate Tax (25%) on profits and VAT, with potential exemptions to reduce the tax burden.
  • Recommendation: If your projected income exceeds 60,000€ annually, opt for an SL instead of being self-employed or starting a sole proprietorship.

Public Limited Company (SA)

  • For large businesses: A more rigid and formal structure, suitable for companies listed on the stock exchange and those that need to raise capital by issuing shares.
  • Minimum capital: 60,000€.
  • Advantages: Allows external funding through the sale of shares.
  • Recommendation: If you’re just starting, consider an SL and transition to an SA when your business is ready for an Initial Public Offering (IPO).

Branch

  • Ideal for foreign companies: If you already have a business in another country and want to expand to Spain, opening a branch is a good option.
  • Advantages: Allows you to leverage your brand and experience in a new market.
  • Requirements: Submit a power of attorney, a copy of the incorporation deed, and, in some cases, a certificate of good standing.
  • Important: If you manage the branch in Spain, you must be a resident in the country.

Frequently Asked Questions About Starting a Business in Spain

  1. Can I Start a Business in Spain from Abroad? Yes, you can start a business in Spain from abroad. You will need an NIE, register the company name with the Commercial Registry, and open a bank account. It’s recommended to have a legal representative and specialized advice to meet the requirements for starting a business in Spain as a foreigner.
  2. How to Start a Business in Spain as a Foreigner? Many of our clients ask how to start a business in Spain as a foreigner. The answer is yes, as a foreigner, you can start a business in Spain. You will need to obtain an NIE, register the company name, open a bank account, and submit the company bylaws to the Commercial Registry. Having legal and tax advice will make the process easier and ensure compliance with all requirements.
  3. How to Register a Business in Spain as a Foreigner? To register a business in Spain as a foreigner, you need to obtain an NIE, reserve the company name with the Commercial Registry, open a bank account for the share capital, draft the company bylaws, and register the company. Finally, you will receive the provisional CIF to begin operations. With proper legal advice, the process of starting a business in Spain will be simpler and more efficient, helping you meet all the necessary requirements.
  4. Is It Legal to Start a Business Abroad? Yes, it is completely legal to start a business abroad as long as you comply with the laws of the country where you wish to establish it and report activities and profits to your tax residence country, if applicable. It’s important to seek legal advice to ensure that you meet all international regulatory and tax obligations.
  5. How Can I Move My Business to Spain? To move your business to Spain, first review the local regulations and those of your home country. Choose the appropriate business structure, register the company with the Commercial Registry, obtain the NIF, and comply with tax and labor regulations. Be sure to manage the necessary permits and consider consulting with a specialized lawyer to facilitate the process and ensure legal compliance.
  6. Do You Need Help Choosing the Right Legal Structure for Your Business in Spain? Contact Lexmovea! We will provide personalized advice to help you make the best decision for your business project.