If you are running your own company at home, but are looking to set up a branch or subsidiary, doing this can be simpler than starting from scratch with a new company.
When processing your application, you must provide a series of documents, including the following:
- A copy of the main company’s certificate of incorporation and certificate of good standing
- Notarized power of attorney
- Spanish tax identification number (NIE)
- A member of staff at the Spanish branch to be a resident in Spain, who will agree to be liable for any company debts and tax payments
While additional branches and subsidiaries don’t need to file accounts on the business register, they must pay income tax and submit quarterly VAT returns through their NIE number. Some banks and business advisory companies will offer special packages to help you set up the particulars of opening a new branch in Spain.
Non-profit companies in Spain will fall into two categories: foundations and associations. Traditional charities which accept donations from the public will generally fall into the foundation category. Associations, on the other hand, are usually run more informally by groups of people who have a common interest.
It is free to set up an association, but you will need capital of at least €30,000 to do this. With a foundation, anyone can donate to the cause (they don’t need to be a member) and committee members can be paid for their work, as with a normal business. Foundations that turnover more than €2.4m or have more than 50 employees need to undergo an external audit annually.
Businesses must keep records of their accounts and order books, which can be requested for scrutiny by government bodies such as the tax authority.
Companies must also keep a book of minutes containing details of measures agreed at Annual General Meetings (AGMs). Companies must have their mandatory book of accounts certified and stamped by the local office of the Mercantile Registry before they begin to use them.
Business bank accounts are provided by all of the biggest lenders in Spain. The good news is that it is possible to get a bespoke account depending on the specific needs of your business.
Banks such as BBVA, Bankia, Santander, and La Caixa all provide business accounts. The majority of these lenders also offer specific products for self-employed people and larger companies, respectively.
To open an account, you will generally need to provide proof of your company’s registration, a registered address, and (for larger companies) at least two signatories. Business accounts vary in cost, and in lieu of a fee, some will require minimum deposits. You can find out more about banking in Spain in our full guide to opening a bank account in Spain.
How your business is taxed in Spain depends on the type of enterprise you are running. Sole traders will pay tax on a quarterly basis at the standard rate of income tax; they will need to fill out a tax return at the end of each financial year.
Partnerships work similarly, with each partner being held responsible for paying their own income tax. For limited companies, the process is significantly different. Limited companies pay corporation tax, which is levied on worldwide profit.
Tax breaks are available for new companies. For the first two years, limited companies pay 15% tax on the first €300,000 of profit, and 20% tax on profits above this threshold. After this period, you will be taxed at the general rate of 25%.
VAT for limited companies in Spain
While some businesses are exempt from VAT, the vast majority need to pay this. Unlike in some other countries, there is no threshold when VAT kicks in; rather, it is applicable on all profits. VAT is generally charged at 21%, although companies in some industries can pay a lower level of either 4% or 10%.
Social security for companies in Spain
Sole traders and partnerships in Spain need to contribute social security at a charge of around €265 per month, plus a further contribution if they are employing staff.
Limited companies will need to register for social security payments and make contributions at 29.9% of their employees’ salaries. They will also have the responsibility of deducing the required social security contributions from their employees’ salaries each month.
The level of business insurance you will need to take out varies significantly depending on the size of your company, whether you employ staff, and the nature and value of the assets the company owns.
As an owner of a limited company, you will need to take out a personnel insurance policy to protect your employees in the event of accidents or sickness. As with all insurance schemes, the levels of cover and costs vary, so it is best to take advice from an expert broker.
Public liability insurance is vital if you are running a business. This will cover you against any claims by third parties regarding injuries, accidents, or damage of property that is incurred on your watch, or as a result of negligence from within your company.
Finally, you will also need buildings and contents insurance. This will protect you against any damage to your offices or loss of stock; as well as covering theft of stock owned by your company.
Employment in Spain is highly regulated, so you will need to ensure that you meet the rules before expanding your team.
Employees in Spain generally work a 40 hour week and have their salaries paid in 14 payments per year (one payment each month then an extra one in July and December). Employees are also entitled to 30 calendar days vacation per year. The minimum wage in Spain is currently €900 a month, based on 14 payments a year.
To find out more about Spanish employment rules and rights, check out our guides to working in Spain.