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How to start a small business in Spain as a foreign national
According to a recent report, the estimated number of small and medium-sized businesses in Spain amounts to 2,926,033. Many business owners from the United Kingdom elect to set up a company in Spain, or open a Spanish branch of an existing company, due to certain benefits. For small business owners, or those looking to start a small business in Spain, it is important to consider the legal structure and process which will be the most beneficial.
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This guide will explore how small business owners can form a Spanish company, their benefits, and how international lawyers (or Abogados) can help set up a business in Spain.
The available legal structures in Spain for businesses.
More about the Spanish company formation process for a small business.
Discover how freelancers can set up their business in Spain.
The benefits that foreign nationals may experience when forming a Spanish company.
Find out what small business owners should consider before forming a company in Spain.
What are the different business structures in Spain?
The most common questions on Spanish company formation as a foreign national.
A non-EU citizen can start a business in an EU country, foreign nationals can set up a company in Spain, or open a Spanish branch of an existing company. Below are the various business legal structures to consider when setting up a Spanish business:
Limited company
The most common form of limited company business structure is the sociedad limitada (SL). A limited company must present annual Spanish corporation tax returns and statutory accounts.
Self-employed workers
Freelancers (or autónomos) are self employed workers, small business owners or individuals in Spain. Being self-employed in Spain has advantages, for example, entrepreneurs can choose the clients they would like to work with, and there can be greater flexibility and time management as there is no fixed schedule.
To become self-employed in Spain, foreign nationals must register with the Spanish tax authority and social security department through a special regime called RETA (Régimen Especial de Trabajadores Autónomos).
As most autónomos must present quarterly VAT returns (IVA), self-employed workers must be aware of the various taxes and documentation required in Spain. It is recommended that you should be advised by Spanish lawyers, or Abogados, who can guide you at every stage of the company formation process.
Contact Giambrone & Partners today to find out more information.
Sole trader and partnerships
When setting up a business in Spain, the most cost-effective legal structure is forming an unincorporated company. This can be achieved by either by becoming a sole trader (empresa individual) or a partnership (sociedad civil). In these circumstances, small business owners will be responsible for their own tax returns.
This legal structure is most suitable for small businesses that are not anticipating a large annual turnover or requirement for a large complement of staff.
Find out more about the different Spanish legal structures here.
How can foreigners start a small business in Spain?
Whether you are a member of an EU country or not, you can start a small business in Spain. First, you must decide whether to start a business or simply work as a freelancer. These steps will slightly differ depending on the legal structure chosen:
- Obtain a foreigner's entity number (NIE)
- Register the company with the Mercantile Registry (Registro Mercantil Central or RMC) - this is required for a sole trader.
- Register as an autónomo with the Spanish tax authority – this is required for freelancers.
- Open a Spanish bank account.
- Register with social security authority – for freelancers; this is RETA.
Learn more about how foreigners can set up a business in Spain here.
How can you become a freelancer in Spain?
Freelancing (or autónomo) allows entrepreneurs to run their own businesses at a much lower cost and with less administration. In Spain, there are under 3.4 million self-employed workers registered with Social Security, representing an increase compared to previous years. To become a freelancer, self- employed worker or small business owner in Spain, foreign nationals will need to obtain the following:
- Foreign nationals will need to apply for a visa to enter Spain.
- Residence permit.
- Self-employed work permit - this allows foreigners to live and work in Spain for one year. After this, the work permit can be renewed for another two years, until it reaches the five year mark.
Giambrone & Partners' team of immigration Abogados can advise you on all aspects of citizenship applications. Find out more about Spanish residency permits here.
What are the benefits of setting up a small business as a foreign national in Spain?
Spain has remained an extremely popular location for foreign nationals looking to form their own company. The advantages of setting up a company in Spain include:
- International appeal
- Access to international markets, such as the EU, the Middle East, and North Africa.
- Well-developed investment
- Welcoming to entrepreneurs
- Opportunities for start-ups and freelancers
- Tax advantages
Find out more about the pros and cons of setting up a business in Spain here.
Particularly for self-employed workers, freelancers do not have to pay social security when there is no income forthcoming, which can help autónomos get started. To ensure the best outcome you should be advised by international lawyers who can provide guidance on forming a small business in Spain.
Contact Giambrone & Partners today for more information.
Considerations for foreign nationals looking to start a small business in Spain
Although Spain welcomes small business owners and entrepreneurs, certain aspects should be envisioned before starting the company formation process. Consider how many staff members you will require, which may alter your business's legal structure. If your company only requires a few staff members, becoming a sole trader (empresa individual) may be a more suitable option.
In addition, to ensure a smooth transition, consider working with international lawyers who will understand Spanish laws and have experience in setting up Spanish commercial entities.
Giambrone & Partners has a team of English-speaking international lawyers who will provide a bespoke service depending on your circumstances. For small businesses and freelancers, our lawyers can provide practical assistance in obtaining the necessary documentation and help with Spanish company formation.
Contact our team at Giambrone & Partners today.
Frequently asked questions
Can Americans start a business in Spain?
Regardless of whether you are an EU citizen or not, foreign nationals can start a business in Spain, including Americans looking to expand overseas.
If you are an American national looking to start a company in Spain, you should seek legal advice and representation that can provide a full understanding of any legal issues and the Spanish tax system.
Contact Giambrone & Partners today to find out more about setting up a company in Spain.
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