Spain

SETTING UP IN BUSINESS

Introduction

Spain has one of the most robust economies in the EU, thanks to strong inward investment, a booming manufacturing sector and a liberal business environment. Annual growth, currently well over three per cent, has been outperforming the EU average for a number of years. Spain has a deserved reputation as a low-cost land of opportunity for foreign investors but bureaucratic requirements are strict. Contact us to help ensure your new Spanish company gets off to a good start.

What are the main types of company in Spain?

The two most popular forms of corporate structure in Spain are as follows:

• public limited company (S.A.)
• private limited company (S.L.)

What are the main features of a public limited company?

• standard structure for large businesses
• minimum share capital is €60,101.21, at least 25% paid up
• minimum number of shareholders is one
• annual audit is required, subject to company size

What are the main features of a private limited company?

• usual format for small and medium businesses
• minimum share capital is €3,005.06, all paid up
• minimum number of shareholders is one
• annual audit is not usually required

What other types of company are there in Spain?

Other business formats, less common but equally valid, are as follows:

• sole trader – one owner with unlimited liability
• joint ownership – two or more proprietors with unlimited liability
• general or limited partnership
• branch or representative office

Is it complicated to set up a company in Spain?

Spain has a deserved reputation for bureaucratic inefficiency and whilst this has improved as the business climate has become more liberal, professional advice remains absolutely essential when establishing a company. We are experts in company formation in Spain, so please contact us for further details.

What about corporation tax?

Corporation tax in Spain is fairly high although there are concessions for smaller companies. The full rate is 35%, but smaller companies pay 30% on their first €90,152 of profits. A smaller company is defined as one whose annual turnover is below €3 million.

How easy is it to recruit staff in Spain?

Spain’s long-running economic boom has put pressure on the labor market but unemployment remains relatively high. However recruitment is rarely a problem for foreign companies seeking local staff. The workforce is well educated and flexible, labor costs are low and there are recruitment agencies throughout the country. We will be happy to refer you to our network of local recruitment specialists – please contact us.

What is the regulatory environment like?

In line with standard EU practice, companies are required to register and to submit annual accounts to the regulatory authorities. Annual audits are compulsory for larger companies. There are very few controls on foreign investment apart from restrictions on non-EU residents in certain strategic sectors, such as telecommunications. The labor market, however, is subject to tighter regulation. The maximum working week is 40 hours and companies have to provide six weeks annual leave to all workers.

Are there financial incentives available?

Spain offers a broad range of incentive schemes, many of them funded by the EU. These include regional incentives for investment in less developed areas of the country, measures to encourage investment in specific sectors and tax breaks aimed at reducing unemployment among young people.

And what about banking facilities?

Spain is said to have more banks than any other EU country. There are two reasons for this. First, there is a plethora of regional banks and second, Spain’s economic boom has made it a magnet for international financial institutions. Although finding a bank is easy, opening a bank account is more difficult. We will be happy to tackle the bureaucracy on your behalf, freeing you to focus on your business.