ENTREPRENEURSHIP / MAY. 30, 2014
version 3, draft 3

How to Start a Business in Spain

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If you live in Spain and want to start a business, you can. There are many benefits to doing this compared to working a full time day job. However, being in a foreign country requires that you know what is legally acceptable and your legal responsibilities to owning a business. You could solicit the help of a lawyer, if you are not sure.

Are You Eligible?

As a foreigner, you can start a business in the country of Spain if you are legally entitled to hold a work permit there. European citizens can start a business in Spain without any limitations if they have acquired a NIE number. If you are not a European citizen and you want to start a new business in Spain, you must have the required visa and work permit to do so. You have to also provide proof that you have the minimum investment funds readily available to start the business. You will also need to provide proof that you will offer work to people living in Spain.

Regulated Occupations

There are specific occupations that carry certain regulations and because of this, you will need to have acquired a diploma from a school in Spain to be recognized for your qualifications for business economics. These occupations may include:

  •          Doctors
  •          Nurses
  •          Paramedics
  •          Attorneys
  •          Accountants
  •          Engineers
  •          Dentists

The Self-Employed Business Owner

If you are going to be a self-employed business owner, you must provide proof that you are over the age of 21 and have legal rights to starting a business in Spain. You must not have had any trouble with the law. You must be the direct administrator of the business and be responsible for all assets, debts and liabilities with a third party. With a limited liability company, your shareholders and directors should not be responsible for any debts or other obligations.

Whether the company is set up with a limited liability or public liability status, the social security quota is the same. The minimum contributions toward social security include:

  •          Temporary disability coverage
  •          Health care coverage

Forming a Limited Liability Company

You can form a limited liability company if you have an original and valid passport, a foreigner ID number (NIE) or a DNI number if you are a Spanish national. You are also going to need a valid address and in the documentation, you will be asked certain personal questions such as is related to your marital status. If you are not going to be present during the composition of the company, you will have to sign a power of attorney. In the articles of association necessary to start your limited liability company, you will need to provide:

  •          Name of company
  •          Objective and Activity of Company
  •          Starting date
  •          Name of Shareholders
  •          Business address
  •          List of restrictions for share transfer to third parties
  •          Designated company directors

After all initial documents are signed and witnessed by a notary, you will need to:

  1.     Apply for a business license
  2.     Put in an application for a tax ID (CIF)
  3.     Pay stamp duty of 1% of your company’s capital share within 30 days of signing your deed
  4.     Complete Tax Form 036 to register into the country’s tax system
  5.     Complete Tax Form 845 to describe your potential business activity, start date and business premises description
  6.     List the company’s director into the country’s social security system
  7.     List the company into the country’s commercial registry

Hiring Employees

If your business has to hire employees, there are more steps to be completed. You will need to apply for a contribution account number for the company so you can make social security contributions. You must apply for a workplace opening request at the Provincial Department of Labor. You also will need to request a visiting book, which is mandatory for all self-employed individuals who hire employees. This visiting book has to be legalized by the inspector from the Provincial Department of Labor. The visiting book will be used to write comments while the inspection is being done by the inspector and it must be available upon request by any legal authority. The business owner also has to have a complaint book for clients to make claims or complaints. You can apply for this book by completing a special form and paying a fee to the county hall of 2 Euros. You will receive the complaint book and a sheet of paper to place visibly in your business establishment so clients or patrons will know that the forms are available.

You have to pay VAT taxes each end of quarter:

  •          January
  •          April
  •          July
  •          October

You will also need to pay a 25% company tax from your annual profits. When you file your VAT taxes, you will need to complete several forms and they have to be stamped at the local bank:

  •          VAT form 300
  •          Personal Income Tax Form 130
  •          Employee Withheld Taxes Form 110

Conclusion

You can start a business in Spain, but of course, you have to know the nuances associated with the process. Once you get all your documentation in order and know the exact government department to submit these to, you should be in business sooner than you think. Check for any extra business licenses that you may need. This will all depend on the type of business you are opening. Other than that, there are many opportunities available to start a business no matter what part of the world you are.

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