How to Set Up a Company in Spain: The 2021 Guide
Setting up a company in Spain can seem complicated. But it doesn’t need to. In June 2019, an EU directive was adopted to make setting up a company in Spain more simple, less costly, and to help make the process fit for the digital age.
In this article, we explain what you need to know to get started.
The 2019 directive encourages the adoption of online tools to facilitate the process between companies and public authorities.
The directive aims to develop safe and modern online procedures that remove the barriers associated with setting up companies or filing business documentation across borders.
The new rules ensure that aspects such as fees and national requirements are transparent, streamlined, and non-discriminatory.
What Type of Company Should You Set Up?
In Spain, a business is classified as a self-employed individual or a company.
Self-employed individual (Autónomo)
A self-employed individual in Spain is referred to as an ‘autónomo’, and is a common choice for people who work alone, for example, teachers or translators. They will pay personal income tax (IRPF) and are responsible for quarterly tax returns.
Partnership (Sociedad Civil)
Two or more people may enter into a contract together as a partnership, in exchange for a share of any profits.
Companies are incorporated to have their own legal personality that is distinct to that of their owner(s) or partners. Your liability is limited only to the capital invested in the business.
The most common type of company is a Limited Liability Company, which, in Spain, is called a ‘Sociedad Limitada’ or SL. This is the most common structure for Spanish companies and requires a minimum investment of €3000. This company type is most common for SMEs, companies of one person or very few partners, or family-run businesses.
A branch office is a permanent establishment in Spain that is owned by a separate entity in a different country.
Public Limited Company (Sociedad Anónima)
An SA is generally for large companies. An initial amount of capital stock of at least €60,000 is required.
Creating Your Company In Spain
Creating Your Company Online
Spain has implemented the Information Center and Network for the Creation of Companies (CIRCE) system.
This platform enables the registry, creation, and termination of self-employment, partnerships, cooperatives and limited liability companies to be completed online.
CIRCE works for the standard SL company formation, but not if you want to special statutes for the company or a social capital other than the 3000€. With CIRCE, you must activate the company for accounting and tax filing purposes.
The CIRCE system manages the business set up by facilitating agreement and communication with all organizations and authorities that are involved in the process.
The individual will only have to complete the Documento Único Electrónico (DUE), which is an electronic document that contains all the necessary information for authorities.
To complete the DUE, you have two options:
- Go in person to a Punto de Atención al Emprendedor (PAE), where you will be advised on all aspects relating to the creation of your particular business project and can begin the process of creating your company.
- Or you can fill in the DUE online through the CIRCE portal. To do this you must already have a Cl@ve / digital certificate from the Agencia Tributaria.
Once you’ve completed the DUE, CIRCE automatically carries out the required procedures.
Creating Your Company Offline
If you are not able to complete the process via CIRCE, you would need to follow the below steps.
For a self-employed individual:
- Register your business - this is done at your local office of the Agencia Tributaria to set yourself up on the Impuesto sobre las Actividades Económicas (IAE)
- Register with Social Security - following the registration of your business you have 30 days to register under the Special Regime for Autonomous Workers (Régimen Especial de Trabajadores Autónomos or RETA)
Important Note: when becoming self-employed or forming a company, all those involved, including directors and shareholders, will require a NIE/NIF number. Your NIE number will also serve as your NIF (Número de Identificación Fiscal), which is your tax identification number.
See our guide here about how to obtain your NIE.
For a company (Limited Liability Company):
- Register the company name with the Mercantile Registry (Registro Mercantil Central), where you will be granted a certificate of uniqueness for the name.
- Get a temporary CIF (Certificado de Identificación Fiscal) - this is the company tax ID number.
- Open a business bank account.
- Confirm the deposit of capital investment of €3000.
- Establish the company by applying for - and signing - the deed of incorporation. (This needs to be done at a notary).
- File Patrimonial Transfer Tax (ITP) and Documented Legal Acts Tax (AJD) Returns.
- Register the company with the Mercantile Registry, who will publish it in their Official Bulletin.
- Register the signed deed with the tax authority to receive a permanent CIF number.
- Submit a declaration of foreign investment to the Foreign Investment Registry (RIE) of the Ministry of Economy, Industry and Competitiveness.
- File Tax on Economic Activities (IAE).
- Register with the Social Security Administration.
- Notify the Regional Ministry of Labor of your workplace opening.
- Register/affiliate workers with the Social Security system.