Starting a business in Spain

By Lucia Lagunas Reyes | Updated on 17 March 2023

What Everyone Ought to Know on Start Business in Spain

starting a business in spain is an essential part of human life since it enables you to watch your space in life. One of the main factors to consider is the territory you want to put up your business. Spain is a hub of companies in the contemporary world, and this has seen many investors going to have their fair share of trade in the region.

Foreigners around the world come from far and wide to invest in the massive market of Spain. Investments are not limited to simple business and the creation of companies in Spain that have impressive returns annually. Therefore, it is prudent to understand how to start a business in Spain and develop some guidelines to help you be on the right track.

The Spanish business looks lucrative for several reasons. Some of which are:

• Highly improved ideal infrastructures.
• Top worldwide talent that brings a lot of tourist and visitors in a year, creating a vast market.
• A persistent and ready entrepreneurial ecosystem makes cities like Barcelona, Madrid, Valencia or Málaga. 
• A stable government that supports business.

With all the beauty you understand of Spain, to set up a business and operate effectively, you ought to be fully aware of the steps you need to take to ensure you are on the right track. Your business should also be a source of income, and starting it off the right way means that you will be able to make money and enjoy your returns.

Here, you will find a guideline that will help you start a business as an expat. Follow the guide keenly to reduce all doubts that you may have about the businesses in Spain. This is tested and well-researched information that will give you a complete guide about starting a business in Spain.

What Makes Spain Welcoming for Businesses?

Spain has seen a drastic increase over the last years, making it a European business center. The most attractive hubs in Spain are its three top cities full of talents in both sports and markets: Madrid, Barcelona, and Valencia. The elements that guide these cities can make business very successful as long as you follow Spain’s correct business procedure.

There are a lot of essential facts that guide people to go to Spain. The territory stands out for the following reasons:

• It is a welcoming market for foreign talent and investment. Several successful startups are born in the country to guarantee the country accepting the outside world with open hands.
• The perfect logistics coupled with enhanced infrastructure helps a business to gain speed and operate effectively.
• The market is massive and diverse. The market allows for varied business ideas that will operate smoothly, enabling entrepreneurs to develop unique business plans.
• Spain is an adventurous country. Having a business in any of the Spanish cities is an encounter that everybody should experience. It is fun from the people, food, culture, and the weather, making it exciting and a perfect living place.
• The business culture in the region also has a significant influence on how businesses are operated. The culture provides an optimal ground for succeeding with your venture through connection and good relationships.

Who Are Allowed to Start a Business in Spain?

Spain enjoys a lot of freedom when it comes to starting a business in Spain. The country doesn’t discriminate whether you are a foreigner or a local citizen. The fact that everybody is allowed to operate a business makes it even more popular in the European region. However, you will be required to be a legal resident before you venture into your business. The process can get a little complicated depending on the country of your origin for foreigners.

The legal steps to starting a business in Spain are similar for everyone. The only difference comes when you want to apply to be a legal citizen in Spain when you are a foreigner. Coming from a European Union country will show that you are among EU citizens. You are liable to get an NIE.

If you Are a non-EU citizen, you have first to  look for a working visa (self- employed visa)  or entrepreneur visa in order to  start a business in Spain.

Steps to Finding a Work Permit or a Business Visa

You can start a company using two different work permits, the entrepreneur visa, and the work permit, as a self-employed individual. The choice of either of the permits depends on the business idea and the ease of finding them.

Entrepreneur Visa

It applies to a business that comes with innovative ideas and technology as its base of operation. The requirements will be stringent, and the business idea must be convincing enough to get a residency which has added advantages when working in the region.

The process is also swift, and you can get a detailed response in 20-30 days. Before you start the process, understand the requirements to have them ready whenever they are needed. You also have to provide a neat and detailed business plan that will land you an opportunity to convince and have the right to operate your business. You have to show prowess and prove you are good at what you want to start, and ensure the company will grow to significant heights.

Learn also about the legal processes of getting the visa when you are applying for it. It comes in handy to help you know the right tools you need to convince the panel that you are a perfect pick to operate a business. Your business choice should also be problem-solving to ensure it impacts positively on the people who will be interacting with it. It is the sole importance of any business enterprise to be a problem solver and influence lives.

The time it takes for this visa to be granted depends on whether you are legally in Spain when you apply for it or whether you are in your country of origin.

If you are legally in Spain at the moment of the application, you must submit your application electronically to the Spanish authority, known as “Unidad de Grandes y colectivos estratégicos” (“UGE”) and if you receive positive feedback, your Business Plan is approved, and you meet the legal requirements, you will be granted a residence and work permit for two years (renewal will be for two years as well).

If you are in your country of origin, the process is longer, and your Business Plan must first be assessed by the Spanish economic and commercial office in your country, after which you will apply for your entrepreneur visa at the Spanish Consulate. It is granted for one year. Then you can travel to Spain to start the initial procedures to set up your business, and when you want to carry it out, you must apply for the residence and work permit electronically at the UGE, which will be granted if you meet the legal requirements for a period of two years.

Self-Employed Worker Visa

The type of visa works for stores such as supermarkets or cafeterias in the region. The project is considered non-innovative since other businesses are working simultaneously, offering similar services that you want to provide. It would be best if you had this permit to set up your business and start operating.

Not every company can be valid to start up such an investment even if they are already existing. You have to show proof of competing maturely with the existing businesses. It would be best if you had a unique service that you are coming with to make your business stand out from the rest.

How to Operate Your Business in Spain

After you put all your legal information in order, it is best to develop a business form that will enable it to work effectively. There are options to choose from, and they have varying opportunities to build your business. Getting the right one to improve your company is of sole importance.

You have the following three options of how you can do business:

• Sole traders
• Partnership
• Limited liability company

Sole Traders  (“ Autónomos”)

It is the cheapest and easiest way to operate a new business. The business is very flexible, and you can customize your services as much as possible to satisfy your clients. If you are running the business as a sole or your own, you make the rules by yourself, and you can decide the kind of experience you want your clients to get. It is also considered the most straightforward business to set up in Spain.

The process of starting a sole trader business involves:

• 1º: Registering with the Spanish tax office (Agencia Tributaria)

Registering for tax is simple, and you need to visit the local tax office with a valid passport and the NIE. The procedure involves filling a form that will be chosen according to your specific terms. There are two forms, and you can get any to fill. They are modelo 036 or 037. You will also receive a tax certificate that you have to take for safekeeping.

A sole trader is referred to as Empresa individual or profesionales autonomos which means freelance professional. As you operate your business as a freelance professional, you are tied to the terms of service. The percentage to be included in each invoice will depend on the residence of the clients to whom you provide the service (if they are Spanish, EU or non-EU citizens). It is paid to the tax authorities on your behalf, for which we recommend that at the beginning you hire a consultancy to do it on your behalf before the Spanish Tax Authorities, in order to avoid any mistake.  They will also be able to help you meet your tax obligations to the tax authorities on a quarterly basis. 

The amounts paid are accumulated and included in the final annual tax return. These tax returns only apply to freelance professionals.

• Get a social security number (Seguridad social)

After you register with the tax authority, the next step is to get your social security approved. It is a special regime for employed workers. You can register using:

• A passport
• The NIE number
• The copy of either Modelo 036 or 037
• The IRPF form

• Acquire a license for your business. The license is only meant for those professions that are regulated.

Anyone who works and lives in Spain is entitled to free healthcare as long as you make social contributions and update your papers. When you are self-employed, you will join Mutua, which is a health insurance fund group. The health plan from the insurance is a policy that covers every member of your family and living in your named address.

There are other legal formalities to follow whether you will be acting as a sole trader or freelance professional. You are required to file income tax annually as well as the quarterly tax return. The copies of the receipts and invoices must be kept safe when you need to deduct them on the final annual return.

Check out other legal obligations by consulting with your lawyer about the periodic filing requirements you may need to fill.

Partnership (Sociedad Civil)

It is applicable where you want to start a business as a group. A partnership maybe two people or more interested in starting a business in Spain in one place. The requirements differ with the sole trader, but it is still a very flexible form of business.

Unlike the sole trader, the process is tedious, time-consuming, and expensive. You can be involved in either of these two partnerships:

• General partnership (sociedad general)
• Limited partnership (sociedad comanditaria)

Each type of these partnership schemes has unique requirements that you have to fulfill. The process involves:

• Establish your group’s partnership agreement with a lawyer as a witness
• The business name should have the words Sociedad Civil
• Register the business with the tax authorities
• Get your social security
• Apply for licenses, including the license for your business premise

Limited Liability Company (Sociedad de Responsabilidad limitada)

It is the most common of the three legal forms, with advantages that surpass the former two forms due to favorable taxation. It is a lucrative form of business that the law can guide as a limited company.

You can start your limited company by following this process:

• Hire a lawyer: the process is very complicated, and you need someone who understands the country’s laws. Consult a professional for this task.
• Certificate of reservation of the company name to the Central Commercial Registry: obtain a certificate from the mercantile register that confirms if your chosen name is available.
• Acquire a spanish tax identification number (NIF) of the shareholder (if it is a company before the Spanish Tax Agency and if it is a natural person, the shareholder must get the NIE. (“Spanish foreign identity number”).
• Open a bank account that has the name of the company
• Grant a public deed of incorporation before the Spanish Notary and the bylaws of the company and also to appoint the director of the company (should be sole director, joint and severally directors or joint directors)
• Register the company before the Commercial Registry.
• Get the definitive Tax Identification number of the company (NIF) 
• Register yourself with the social security authorities.

Can foreigners start a business in Spain?

Yes, any foreigner can create a business in Spain, our law firm can help you in the whole process.

Is Spain a good place to start a business?

Yes, Spain is a good place to open a business since it is within the European framework and is a fast way to expand to Latin America.

How can a non European start business in Spain?

Conclusion starting a business in Spain

Starting a business in Spain is simple if you follow this guide. Enjoy the plethora of opportunities and set up a company that will offer you excellent results. It would be best to ensure you get more customers by providing you fulfill the market’s needs.